Enjoy Tax Day 2010, because it's all downhill from here

How big a tax increase would be needed to close the gap? Well, huge. To put things in perspective, all federal taxes (income, payroll, and excise) averaged 18.1 percent of GDP from 1970 to 2009. Under CBO’s assumptions about Obama’s policies, taxes in 2020 would already be slightly higher, at 19.6 percent of GDP. But on top of that, there’d need to be a further tax boost approaching a third to balance the budget, because spending is projected at 25.2 percent of GDP. Needless to say, this would be the largest tax burden in U.S. history, even including World War II…

Almost all the pressures on taxes are in the same direction: up. It will be hard for President Obama to keep his promise not to raise taxes on households with incomes below $200,000 (for singles) and $250,000 (for couples). It will be hard for economic conservatives or the tea party to achieve meaningful tax reductions. Just about everyone will be tempted to deplore federal budget deficits—and do nothing about them. But this escape route may close; many economists warn that endlessly large deficits risk big jumps in interest rates. Someday, higher taxes may be unavoidable.

So, the lesson for tax day 2010 is simple: enjoy it while you can. It’s not going to get any easier.