What would taxes be in a small govt system?
US federal, state and local goverments are a lot bigger than originally created by the founders of the country in 1776. What would govt spending and taxes look like if we went back to small govt?
Imagine the US as it was founded - with small govt just for police force, justice system, prisons, fire station, build our own roads and bridges, and protect our own borders. What would govt spending and taxes look like? Across both federal, state and local govts.
everybody should be paid in full and have to count back the tax money, and people would pay closer attention.
That is how the income tax worked when it was started. You got 100% of your wages/salary and quarterly you paid the govt. For small biz owners in US it still works this way.
I would guess to provide those country basic protection services would be less than 5%. That is assuming a regular military and militia for defense as opposed to an Empire sized military. Let’s do some math to see what the real numbers might be!
Current govt spending on small govt tasks of police, justice, fire, borders etc is as follows:
US federal spending on justice $72B, local spending on police $128B = total $210B approximately. (police, courts, prisons)
Fed transport spend $154B local $108B Total $255B
Local fire protection $50B (I couldn't find fed spend on this item)
Border protection guess $50B (include CPB, wall, coast guard and minimal military + local militia)
Congress, admin for small govt etc lets put $5B
Total $575B. Let's round that up to $600B to allow for other stuff small govt has that we forgot.
Current total US government spending, federal, state, and local, is “guesstimated” to be $9100B , with breakdown:
federal $5850B;
state $2310B;
local $2160B
So small govt spending would be about 600/9100 = 6.6% of current levels.
On the tax side total Federal taxes last year were $3863B (the rest of the $5850B spend came from new debt), State $2300B, Local $1500B (city, county, school district). Total US govt tax income $7600B
So small govt total taxes would be 600/7600 = 8% of current levels.
sources:
Police funding https://usafacts.org/articles/police-funding-local-governments/
US spending https://datalab.usaspending.gov/americas-finance-guide/spending/
US federal tax income sources https://www.thebalance.com/current-u-s-federal-government-tax-revenue-3305762
US federal budget https://usgovernmentspending.com/federal_budget
State taxes by state https://wallethub.com/edu/states-with-highest-lowest-tax-burden/20494
State tax revenues https://www.taxadmin.org/2021-state-tax-revenue
Fed, State and local tax revenues https://www.usgovernmentrevenue.com/total
Note I found it quite hard to research local govt spending and tax income as it is spread over so many districts (cities, county, school districts etc)
Also the way taxes come from so many different places (fed, state, local) and in so many different ways, some hidden, that it is hard to get a full picture of US taxation. For example we have personal income tax, sales tax, estate tax, cap gains, new wealth tax, payroll taxes (hidden for most folks), corporate taxes, property taxes etc.