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

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.