Government Vacuum

Imagine a world where a quart of milk costs the same in 1950 as it does in 2000. That’s the imaginary world of inflation adjusted or constant dollars, which adjusts current dollars by the Consumer Price Index (CPI). Although imperfect, constant dollars gives us a way to compare apples to apples.

Tax cuts and increases have been a hot topic of political discourse leading up to the elections. In my earlier blog, I showed the income taxes (in inflation adjusted dollars) collected over the past half century. As you may have noticed, those taxes kept rising. With a growing population, it is natural that income taxes collected should continue to rise. What may not be so apparent is the rise in taxes collected PER PERSON.

In the table below (click to enlarge in a separate tab), I divided Office of Managment and Budget (OMB) data on individual income taxes by annual population figures from the U.S. Census Bureau to come up with a per person average of income taxes collected.

Per person means everyone! The federal government is collecting triple the amount of real money that they collected 60 years ago. If the cost per person of government was about $1000 in 1950 and it is $3000 now, are we getting triple in services from our government? Or are we getting screwed?

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