Welcome to the Cato podcast. Today we're going to be talking about taxes. I'm Chris Edwards,

the Kiltz family chair in Fiscal Studies at Cato, and I'll be joined by Adam Michel, Director

of Tax Policy Studies at Cato. We're coming be joined by Adam Michel, Director of Tax Policy Studies at Cato.

Well, we're coming up to April 15th, which is Tax Filing Day in 2026. We're going to talk about

today, who pays federal taxes, complexity in the tax code, changes made by President Trump

to the tax code, and reforms we'd like to see in the tax code here at Cato.

I'm going to provide a brief overview, and then we're going to get into some questions here,

talking to the real expert here, Adam Michel.

So in 2026, the Congressional Budget Office estimates that the government will raise

$5.6 trillion in federal taxes. About half of that, $2.7 trillion will be personal income taxes.

1.8 trillion will be payroll taxes. Corporate taxes are about 400 billion. Customs revenue or

tariff revenue will be over $400 billion this year. And that's actually more than doubled

since last year, 2025. And so American taxpayers can thank President Trump for hiking their taxes more than $200 billion

this year in tariff taxes or tariff revenue.

An interesting thing about the federal taxation is that while federal tax rates have changed

a lot over the decades, if you go all the way back to the 1950s, the federal government

has raised around 18% of GDP and revenue every year. It fluctuates up and down a bit, but we

kind of been raising the same amount of money for decades and decades. The problem is just that

spending keeps going up.

If you look just at personal income taxes, they've raised around 8% of GDP a year ever since the 1950s as well,

despite large changes in tax rates. So let's work, taxpayers will be filing for 2025 this year. The Joint Committee on Taxation

has estimated how many returns will have for 2025. They figure that there's going to be

...