Did Laura Tyson Just Send You A $5000 Tax Bill?

Lost amid the hubbub over the second stimulus package hinted at by Laura Tyson, was how the US was going to pay for it. Tyson smoothly intimated that if the US could raise revenues then paying for the stimulus would not be problem. Her exact quote from the WSJ:

If the government could get a way to get to Canada’s intake, the debt and deficit problem would go away. In five years, we would go from deficit to surplus.

This is political speak for a tax increase. We thought it may be enlightening to look at the numbers.

Canadian revenue is 33.3% of GDP, while the US takes in 28.3% of GDP. The following chart is from the OECD.

Tax Revenue as a % of GDP

Assuming the US GDP remains at about $14 trillion the tax increase would be $700 billion.

Calculation

Canadian Revenue as a % of GDP 33.3%

- US Revenue as a% of GDP 28.3%

Increase 5%

5% * $14 trillion = $700 billion

According to the IRS there are approximately 138 million taxpayers in the US. Dividing the $700 billion by 138 million we find that Laura Tyson just raised your taxes by $5072.46 per year.

Disclosures: none

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