Government spending and taxation is a perennial issue, but given the pending proposals to increase US spending by an unprecedented amount I thought it would be interesting to take a quick look into the history of the federal government’s balance sheet.  Given that the burden of government income is borne by the people and the benefit of government spending theoretically accrues to the people, I thought the best way to view the history of government income and expenses would be through a per capita lens.  Additionally, since modern fiscal policy has continuously and severely eroded the value of the currency, I thought it would only be fair to compare things adjusted for inflation.  So I marshaled data on the US population (source) and US federal government balance sheet (source) to calculate a per capita basis and ran the results through an inflation calculator (source) to standardize values across time, with the results below.

The first thing that sticks out to me from this data is the fact that government spending in per capita real terms has increased one hundred times over during the past 110 years.  Whereas it took just under $200 per person (in 2020 dollars) to run the government in 1910, in 2020 it took just under $20,000.  Whether this enormous increase in expenditures is justified or whether the individual tax-payer receives $20,000 worth of services from the government I will leave to the reader.

The second thing that sticks out from the data is the departure from fiscal responsibility.  While the government has regularly run deficits, these were typically small until the 1980s, at which time the current pattern of spending beyond its means was established, to only briefly be corrected in the late 90s/early 2000s.  Deficits went from being nothing ($5/person in 1910) and small ($221/person in 1950) to being significant ($1,023/person in 1980) and unsustainable ($9,441/person in 2020).  As it is unlikely that the average citizen could afford an extra ten grand in taxes per year, this deficit spending will have to be corrected sooner or later.  Hopefully fiscal sanity will prevail before a fiscal disaster, but I wouldn’t bet on it.

As government spending has increased, by necessity so too has government income, primarily derived from taxes.  The per capita burden in constant dollars has increased fifty-fold over the past 110 years, rising from approximately $200 per person in 1910 to over $10,000 per person in 2020.  While this burden in constant dollars has increased significantly, the question arose whether the burden in proportionate terms has increased, or has increasing wages meant that the burden of government has stayed the same?  To investigate, I found average data on wages from the Social Security Administration (source 1, source 2), although this data only stretched back into the 1950s, so a comparison could not be made as far back as the previous data I had gathered.  This makes sense, as taxes on income did not encompass the majority of the population in the early part of the 20th century, so the government would have had no need (and no mechanism) of keeping track of wages in the country, and therefor it would have been difficult to impossible to accurately calculate the average wage.  The data I found is presented below, compared to the previous information on government income and expenses on a per capita basis.

The remarkable thing here is that wages have grown considerably in constant dollars, yet nevertheless government income and expenditures have grown even faster.  Per capita government income has grown from 13% of the average salary in 1960 to 20% of the average salary in 2020, despite the fact that the average salary itself increased by $17,500 in constant dollars over the same time frame.  And, as should be no surprise given the fiscal irresponsibility discussed previously, government spending has ballooned from 13% to 37% of the average salary in the same time frame.  It would appear that the government’s appetite is insatiable.

To iterate on this investigation, I decided to also look at things on a household basis.  Not everyone is a participant in the taxed labor force and most people don’t live separately but rather pool their resources in households, so considering the household rather than the individual as the basic unit of measure may provide a more accurate picture of the situation.  I was not able to find as extensive data on households, so once again our time-frame of investigation is shortened, but what I did find (source 1, source 2) I incorporated into my analysis below.

Considering things on a household basis does not improve the situation.  In 2019 (the most recent year of household income available in my source) government income per household clocked in at 39% of median household income while government expenses per household exceeded 50% of the median household income.  If the government were not running a deficit a very large number of households would be seeing more than half of their income consumed by the government, and even as it is the bill will come due one day, in some form or another, so I think it is fair to say that the government in the US places a heavy burden on its people.  And this is only the federal government, most households must also contribute to their state and local governments as well.

A caveat is that with the progressive taxation system in the US not all household must bear an equal burden of the government, some being made to carry more of the load than others.  And likewise the benefits provided by the government are not equally distributed, so some will see the government financial structure as more of a boon while others will see it as more of a bane.  Also, households are not the only taxpayers in the country.  Companies are taxed and do in fact produce wealth on their own, not merely extract it from the people, which complicates matters further and puts the question of exactly how burdensome the government is beyond the scope of this elementary analysis.  But I do think this basic analysis does demonstrate that it is burdensome, and only getting more-so.

As an addendum, I thought about selecting a few other countries for comparison to the US, to put things into perspective, but relevant data from most of the other candidates I thought of was even more difficult to come by (with the exception of the UK), so I abandoned that endeavor.  I attach the charts for the UK and Canada below, for anyone who is curious, but will not comment on them further than to say that it looks like they are generally in the same boat as the US.

For those who are interesting in delving into this topic a bit further, in my search for data I ran across an interesting website with some nice graphs on US government revenue and expenses as well as a website with nice graphs comparing government spending across countries, but as both of these websites had information as a % of GDP rather than in hard figures I did not use any of their data in the analyses in this article.