TABLE 2.--GOVERNMENT RECEIPTS, NATIONAL INCOME AND PRODUCT ACCOUNTS BASIS, 1946, 1956 AND 1966 Source: U.S. Department of Commerce, Office of Business Economics, The National Income and Product Accounts of the United States, 1929-1965 (Washington, D.C., U.S. Government Printing Office: August, 1966); and Survey of Current Business, July, 1967. Despite this spectacular rise in tax yields, the overall burden of National, State and local taxes in the United States is lower than that of most Western Nations.1/ A recent report issued by the Organization for Economic Cooperation and Development computes the American tax burden, including social insurance taxes, at 27.3 percent of GNP in 1965, which placed it in tenth place as to size of tax burden among other Western Nations:* Further evidence of the dynamic characteristic of fiscal federalism is available in employment data. The National, State, and local governments employed about 11-1/2 million civilians in October 1966, 16.7 percent of the monthly average of nonagricultural civilian employment that year (Table 3). total, which includes both full-time and part-time employees, 2.9 million worked for the Federal Government, 2 million for the State governments, and over 6 million for local governments. This, however, is like looking at one frame of a motion picture. Unparalleled Growth in State and Local Payrolls State and local government employment has grown by leaps and bounds since 1946. With burgeoning demands for domestic public services, State government employment jumped from about 800 thousand to well over two million in the past 20 years, and local government employment more than doubled from almost three million to over six million. As a result, with differing rates of Federal, State and local employment growth, the distribution of public employees among the three levels of government shifted from 2/5 Federal and 3/5 State-local in 1946 to 1/4 -3/4 in 1966. Similar but less marked shifts are evident in the trend of payroll costs (Figure 2). 1/ See Appendix G for numbered textual footnote references. * The OECD figure does not agree exactly with the 26.7 percent figure for 1965 taxes and social insurance contributions on a national income and product account basis, but is close enough to that figure for comparative purposes. The Agency for International Development reported similar comparative tax burdens for 1965, with the U.S. figure at 26.7 percent (AID, PC/SRD, June, 1966). TABLE 3.--PUBLIC AND PRIVATE CIVILIAN EMPLOYMENT IN THE 2/ As of October of each year (full-time and part-time employees). 3/ Comprises all Federal civilian employees, including those outside the United States. Data include civilian employees of the National Guard paid directly from the Federal Treasury (in October 1966, 40,000 persons). Source: U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings and Monthly Report of the Labor Force, June, 1967; and U.S. Bureau of the Census, Compendium of Public Employment (1962 Census of Governments, Vol. III), and Government Employment in 1966, Series GENo. 4. |