Economy

US Businesses Paid Less Than 8% of Federal Income Tax Collections Last Year

Paul Ausick

Published: May 20, 2019 1:35 pm

Last Updated: January 11, 2020 8:40 am

The U.S. Internal Revenue Service (IRS) on Monday released its fiscal year 2018 Data Book (October 1, 2017, through September 30, 2018). U.S. taxpayers paid a total of $3.465 trillion in taxes last year, the highest total ever. In fiscal year 2017, the total was $3.416 trillion, down from $3.333 trillion in 2016.

In 2018, individual income tax payments totaled $1.933 trillion, or 55.8% of the total, and business income tax totaled $262.74 billion, about 7.6% of the overall total. Employment taxes (Social Security and Medicare/Medicaid taxes, unemployment insurance and railroad retirement taxes, which are shared by employers) totaled $1.133 trillion (32.7% of the total). Estate and trust income taxes totaled $38.46 billion, and estate taxes totaled $22.66 billion.

In 1960, individual income taxes, including taxes on estate and trust income, totaled $44.95 billion, about double the $22.18 billion in business income taxes. Employment taxes of $11.16 billion represented about half the amount collected in business taxes. Total tax collections in 1960 amounted to $91.77 billion.

In 2018, combined individual and estate and trust income taxes totaled $1.97 trillion, about 44 times the 1960 collections. Business tax collections rose by a factor of nearly 12. As a percentage, business tax income accounted for about 24% of all federal tax collections in 1960, compared to less than 8% of total tax collections in 2018. Individual plus estate and trust income tax collections amounted to about 49% of all tax collections, compared to about 56% today.

Employment taxes accounted for 12.1% of all tax collections in 1960, compared to nearly 33% last year.

Tax refunds totaled $463.88 billion in the 2018 fiscal year. Individual income tax refunds accounted for $394.89 billion (85% of the total) of the refunds and refunds to businesses totaled $60.09 billion (13% of the total). As a percentage of taxes paid, business tax refunds amounted to about 22.9% while individual refunds amounted to about 20.4% of taxes paid.

Net tax collections last year totaled just over $3 trillion. Business income tax accounted for 6.8% of the total while individual income taxes made up 52.4% of the total. More than a third (37.6%) came from employment taxes. Federal spending in 2018 totaled $4.1 trillion.

The full IRS report is available at the agency’s website.