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Ron Paul said in December 2007 that if the government stopped collecting income tax, we would have about the same level of funding that we did 10 years ago. "And the size of government wasn't all that bad 10 years ago," concluded Paul, who advocates limited government.
It made us wonder: Do today's tax collections, minus the income tax, really equal the tax collections of 10 years ago?
We asked Paul's campaign what numbers he used to arrive at that conclusion, but we didn't hear back. So we dug into IRS statistics ourselves.
The most recent detailed data available on income tax collected in the United States is for 2005. Besides income tax, the IRS collects corporate taxes, employment taxes, estate and gift taxes, and excise taxes.
After issuing refunds, the IRS collected $880-billion in individual income tax in 2005. Subtract that from total tax collections for 2005 – which equaled close to $2-trillion – and you get $1.12-trillion.
By comparison, total tax collections in 1995 were about $1.27-trillion.
Those are two big numbers that sound close. But take out the calculator: The difference between the two numbers comes to about 12 percent, and when you're talking about the federal government, that's a chunk of change – about $150-billion. To put that in perspective, it would pay for almost a year and half of the war in Iraq. Adjust for inflation, and the gap widens to a roughly 30 percent shortfall.
We'll concede that it's possible Paul could reduce the budget by that much, based on some of the positions he advocates. Paul has said he'd like to slash the defense budget by pulling back all U.S. troops on foreign soil, zeroing out foreign aid and reducing the size of the active military. He also advocates abolishing other federal functions, like the Department of Education.
Whether he makes up that 12 percent difference or not will have to wait for a Paul presidency. Meanwhile, we find his statement that ending the income tax would roll back revenues 10 years to be Mostly True.
Internal Revenue Service, SOI Tax Stats – Collecting Revenue , 2005 and 1995
Congressional Research Service, Foreign Aid: An Introductory Overview of U.S. Programs and Policy , April 15, 2004
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