The FY2025 President's Budget in Historical Context (CRS Report for Congress)
| Release Date |
Revised Sept. 10, 2024 |
| Report Number |
IN12340 |
| Report Type |
Insight |
| Authors |
D. Andrew Austin |
| Source Agency |
Congressional Research Service |
| Older Revisions |
-
Premium March 28, 2024 (6 pages, $24.95)
add
|
Summary:
On March 11, 2024, the Biden Administration submitted its budget for FY2025, which proposes increased
federal revenues, continued growth in mandatory outlays, and decreased discretionary outlays relative to
the size of the economy. In June 2024, the Congressional Budget Office issued its analysis of the
Administration’s discretionary proposals and updated baseline estimates. This Insight discusses the
Administration’s fiscal proposals in the context of longer-term budgetary trends and highlights selected
events and legislation.
Figure 1 shows federal receipts by major category as a share of gross domestic product (GDP) since
FY1962. Federal receipts exceeded outlays (dark blue line) in five years (FY1969, FY1998-FY2001). In
every other year, the government ran a deficit, which required borrowing through the sale of Treasury
securities. Economic conditions and employment levels affect tax receipts, as do major tax measures.
Individual income taxes and payroll taxes, such as for Social Security and Medicare, have long been the
largest revenue components. Corporate income taxes as a share of GDP fell from 3.5% in FY1962 to
1.6% in FY2023.
The Revenue Act of 1964 (proposed in 1963 by President Kennedy and signed in 1964 by President
Lyndon B. Johnson) lowered high Korean War-era marginal tax rates. Other acts adjusted the tax code to
offset bracket creep, where inflation pushed households into higher tax brackets. The 1981 Kemp-Roth
act indexed brackets and cut marginal rates by about a quarter. The 1986 Tax Reform Act lowered
marginal rates and curtailed many tax preferences while aiming to be budget neutral. A 1993 omnibus act
increased certain taxes, helping to reduce deficits. Major tax acts in 2001, 2003, 2013, and 2017 reduced
various tax rates.
