Federal Revenue as a Share of GDP

Think of it this way

It is the household's paycheck expressed as a percentage of what the whole neighborhood produces.

What is Federal Revenue as a Share of GDP?

What the federal government collects each year, measured against everything the country produces.

How to read Federal Revenue as a Share of GDP

It is the steadier of the chart's two lines. Its range of variation is narrow compared with spending, and that steadiness is precisely the point.

What Federal Revenue as a Share of GDP means for the market

The fact that it barely moves is why the deficit is not closed by collecting more. Changes in tax rates show up far less in this line than public debate suggests.

Where the money flows

The circuit is the same as for the per capita accounts: the Treasury pays and that money lands in private accounts; it collects taxes and money leaves them. The only thing that changes is the yardstick. Dividing by GDP instead of by population answers a different question: not how much falls to each person, but what share of everything the country produces in a year passes through the government's hands. It is the yardstick used to judge whether a debt is sustainable, because what pays it is output, not the headcount.

What to watch in Federal Revenue as a Share of GDP

Compare it with spending. On its own, this series says almost nothing.

Taxes leave the private system and enter the Treasury's account.