US Local Government Revenue Since 1900

Local government began the 20th century as the dominant tax collector, with annual revenue of 3.5 percent of GDP. Local revenue increased rapidly in the first three decades of the century, peaking at over 9 percent of GDP in the depths of the Great Depression. Over the middle decades, from 1935 to 1950, local government revenues crashed, declining to 3 percent of GDP in the late 1940s. Local revenues recovered briskly through 1960, hitting over 7 percent of GDP. From 1960 to 1990 revenues increased more slowly, reaching just under 7 percent of GDP in the mid 1990s. In the early 2000s local revenues are showing a slight increase, from 6.5 percent in 2001 to over 7 percent by 2010, but seem to be reaching a limit at about 7 percent of GDP.

Federal, State, Local Revenue in 20th Century

At the start of the 20th century, about half of government revenue was local government revenue. Out of a total of 7 percent of GDP, a full 3.5 percent was collected at the local level. Federal revenue spiked in World War I, but by the mid 1920s, local government revenue and federal revenue were about equal at 5 percent of GDP, with state revenue below 2 percent of GDP. During the 1930s this changed, as state revenue surged to 5 percent of GDP while federal revenue increased to 7 to 8 percent of GDP and local revenue increased to about 6 percent of GDP. After the spike of World War II, when federal revenue briefly hit almost 24 percent of GDP, state and local governments entered the 1950s at about 4 percent of GDP while federal revenue fluctuated between 16 and 18 percent of GDP. Since the 1950s state and local revenue has steadily increased, with state revenue reaching 10 percent of GDP and local revenue reaching 6.5 percent of GDP in 2000.

After major revenue fluctuations in the dot-com recession of 2001-02 and the Great Recession of 2008-09 federal revenue in the mid 2010s was about 17 percent GDP, state revenue 8 percent GDP and local revenue 6.5 percent GDP

State-by-State Comparison of State and Local Revenue

The bubble chart shows total state and local revenue for each state in dollars per capita compared against the Gross State Product (GSP) in dollars per capita. The chart shows that the overwhelming number of states show a correlation between state and local revenue and GSP. Notable outliers are New York, California, Wyoming and on the high taxing side.

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Revenue Data Sources

Revenue data is from official government sources.

• Federal revenue data since 1962 comes from the president’s budget.
  
• All other revenue data comes from the US Census Bureau.

Gross Domestic Product data comes from US Bureau of Economic Analysis and measuringworth.com.

Detailed table of revenue data sources here.

Federal revenue data begins in 1792.

State and local revenue data begins in 1820.

State and local revenue data for individual states begins in 1957.

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