Unexpectedly Intriguing!
June 21, 2011

Looking back over the past fifty years, we find that before 1978, U.S. corporations and businesses paid the largest portion of their taxes in the form of federal corporate income taxes. After 1978, they paid the largest portion of their taxes in the form of the employers' portion of federal payroll taxes.

Corporate Income and Payroll Taxes, 1960-2010

Despite these changes, the total amount that U.S. corporations and businesses pay in federal taxes as a percentage of annual GDP has been fairly steady through all that time, typically ranging between 4.5% and 5.5% of annual GDP, at least outside of the deep recessions or short-lived economic booms that have taken place since 1960.

Food for thought: For the years since 1978, what is the most significant outcome of that single change in how U.S. corporations pay the majority of their taxes?

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