Congress is back in session and tax reform plans are expected this month. It's been 31 years since the tax system was rewritten, and Donald Trump has promised a 15% corporate tax rate and big, across-the-board cuts to individual income taxes.
Why it matters:
The government makes its money from taxes to fund the 430 departments, agencies and subagencies, millions of employees, health care and various other initiatives and programs. Big tax cuts give the government less money to budget with, and could add trillions of dollars to the deficit. Traditionally, Republicans have supported both lower taxes and at least balancing the budget (if not attempting to tackle our national debt), but Trump's original tax plan was estimated to add $7.2 trillion to the national debt, according to Forbes.
- Individual and corporate taxes make up about 60% of the government's revenue, but individual income taxes make up the bulk of that.
- Today, the government makes more from Social Security taxes than it does from corporate taxes. Corporate taxes already make up a fairly small portion of the government's income.
- Before 1940, excise tax — taxes on specific purchases like gasoline, gambling, alcohol, tobacco, airline tickets, etc. — provided most of the government's income.
- "Other" includes controversial taxes like the gift tax and the "death tax."
- The last president to balance the budget was Bill Clinton with a Republican House and Senate in 2001.