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turned into private companies, and effectively nationalized in 2008.As of December 2011, the government had pumped a net of $151 billion into them and they weren’t close to standing on their own. The ultimate cost depends on housing prices.
    The share of income most American families pay in federal taxes has been falling for more than thirty years. Today, Americans pay less of their income in taxes than citizens of nearly every other developed country.
    There are a dozen ways to measure the slice of income that the government takes in taxes, and most point in the same direction. One meaningful metric: the CBO estimates thatfor families in the very middle of the middle class, the federal government took an average of 19.2 percent of their gross (before deductions) income in 1981 in income, payroll, and all other federal taxes. State and local taxes have risen for some since then, but the federal tax bite has eased. In 2007, just before the recession hit, according to the CBO, the tax take for these Americans was 14.3 percent—and it has fallen since. The Tax Policy Center, a joint venture of two Washington think tanks, the Urban Institute and the Brookings Institution, estimates that the folks in the middle of the middle paid 12.4 percent of their income in taxes in 2011.
    Nearly half of American households—46 percent—didn’t pay any federal
income
taxes at all in 2011. It’s not that they all cheated, though some did. Rather, the vast majority didn’t make enough money to owe taxes, or they took advantage of tax breaks that Congress has created to help the working poor, the elderly, and students, or to reward investors who put money into municipal bonds or other favored investments. About half of those who didn’t owe federal
income
taxes were hit by
payroll
taxes levied on wages to finance Social Security and Medicare.
    Americans turn over less of their income to local, state, and federal governments than citizens of almost any other rich country, even when taking into account that budgets of foreign governments often include the cost of providing health care forall, and in the United Statesless than a third of the populace gets health insurance through the government. The Organization for Economic Cooperation and Development, a Paris-based consortium of developed-country governments that makes apples-to-apples comparisons, saysgovernment at all levels in the United States took in taxes about 25 percent of the income in the economy in 2010. Twenty-seven countries took more, including Japan (27 percent), Canada (31 percent), the United Kingdom (35 percent), Germany (36 percent), and France (43 percent).
    The federal government gives up almost as much money from tax loopholes, deductions, credits, and all other tax breaks as it collects in individual and corporate income tax.
    The U.S. tax code is like a big piece of Swiss cheese. It has a lot of holes. Over time, Congress and presidents have cut new holes and expanded old ones. Taxpayers and their clever lawyers and accountants have also enlarged the holes, sometimes with help from the courts. More holes means the government has to get more money from somewhere else.All these tax breaks added up to about $1.1 trillion in 2011. That is approaching the total take of $1.3 trillion from the individual and corporate income tax.
    When “tax cuts” are politically popular and “government spending” is not, politicians favor new or bigger tax breaks overspending increases—to help college kids meet tuition bills, to encourage energy companies to develop alternatives to fossil fuels, you name it. This “spending through the tax code,” as it is sometimes called, is cherished by those who benefit and pushes up tax rates needed to finance the government. Hence, the growing enthusiasm for “tax reform” that would eliminate some of these tax breaks and bring down tax rates. But—and there’s always a
but
in these conversations—the bigger income tax breaks are by