The Expanding Role of Government and the Ever-Increasing Tax Burden

Written By dKay in Maine

In my blog, "The History of Taxes in the U.S.: From No Income Tax to Today's Reality," I reviewed the history of income taxes in the United States and shared a brief overview of other taxes withheld from an individual's paycheck. In this post, I aim to answer why taxes keep increasing.

Why Do Taxes Keep Increasing?

Of course, there are various reasons why taxes keep increasing, and one of them has to do with the constantly growing responsibilities of the U.S. government. As of December 2024, the U.S. federal government comprises approximately 120 executive agencies, along with 15 cabinet-level departments. These agencies span various functions, from environmental regulation to national defense.

There are ~428 agencies in total; however, not all are part of the Executive Branch, and the numbers fluctuate slightly due to restructuring, consolidation, or the establishment of new entities. To give you an idea of the budgets associated with them, I’m sharing with you some data from the USA Spending website. The data below provides an overview of all 15 cabinet-level departments, their year of creation, and their respective budgets for Fiscal Year 2024 (through September).

The image shows a table with the 2024 budget of all 15 cabinet-level departments of the U.S. federal government, with the DHHs on top with a budget of 2.96 trillion USD, followed by the DoT with 2.2 trillion USD, and the DoD with 1.99 trillion USD.

While the budget for the 15 departments alone was already $9.49 trillion, it only represents 77.48%. With a bit of straightforward math, we uncover that the combined budget for all departments and agencies adds up to an impressive $12.25 trillion! In comparison, in 2023, the IRS collected $4.7 trillion in Gross Taxes (before refunds), as highlighted in their 2025 budget request. This also leads me to the first reason why taxes keep increasing:

Growing Government Responsibilities

Increased government spending is often tied to establishing and expanding federal government agencies tasked with addressing national priorities. Over the last 100 years, eight new departments and several agencies have been created. I selected two agencies and one department to have a closer look at when and for what purpose it was established and how it has evolved, demonstrating how the U.S. federal government’s responsibilities and spending have grown over time.

Social Security Administration (SSA) - est. 1935

The Social Security Administration was founded to "provide general welfare by establishing a system of Federal old-age benefits, and by enabling the several States to make more adequate provision for aged persons, blind persons, dependent and crippled children, maternal and child welfare, public health, and the administration of their unemployment compensation laws; to establish a Social Security Board; to raise revenue; and for other purposes," as the Preamble of the Social Security Act from August 14, 1935 states.

Social Security was initially designed as a retirement program for workers, limited to certain industries. In 1939, Survivors' Benefits were added to provide support for the families of deceased workers. Disability Benefits followed in 1956, and since 1965, SSA has begun administering aspects of the Medicare program related to Social Security recipients. This expansion is reflected in the respective tax rates, which were initially at 2% but are now at 12.4% (up to a certain limit), reflecting increased program costs.

  • While the DoD was established in 1947, its origins trace back to the War Department, created on August 7, 1789, to oversee the operation and maintenance of the Army. Initially, it supervised the Navy as well, but with the establishment of the Navy Department, including the Marine Corps, in 1798 to manage naval operations, it ceded that responsibility.

    However, during World War II, the separate branches struggled to communicate, which resulted in inefficiencies in communications and operations. In response, after the war, President Harry Truman called for Congress to unify the military branches to improve efficiency and prevent further conflicts, leading to the National Security Act of 1947to reorganize the military, establishing the National Military Establishment (NME), which included the Department of the Army, Department of the Navy, and the newly created Department of the Air Force. The act also created the Central Intelligence Agency (CIA), the National Security Council (NSC), and the National Security Resources Board (NSRB).

    Two years later, in 1949, the NME was renamed the Department of Defense (DoD). The change rescinded the cabinet-level statuses of Army, Navy, and Air Force secretaries. It made them all subordinate to the Secretary of Defense, whose authority and responsibilities increased.

    The latest addition to the DoD was the U.S. Space Force, established on December 20, 2019, in recognition of the growing need to strengthen defensive capabilities to protect space-based economic and military assets.

    In 1947, the DoD's primary mission was to maintain post-war military readiness and deter conventional military threats. In contrast, today, the mission has expanded to countering threats such as terrorism, engaging in cybersecurity and defending against digital threats, addressing global threats, including pandemics, and maintaining readiness for both conventional wars and multi-domain operations, including space and cyberspace.

  • When founded in 1970, the EPA's mission was to tackle urgent environmental crises such as air and water pollution, chemical hazards, and waste management. This led to the implementation of regulations, including the Clean Air Act (1970), the enforcement of the Clean Water Act (1972), the Safe Drinking Water Act (1974), and the regulation of hazardous waste under the Resource Conservation and Recovery Act (1976).


    Today, the EPA's responsibilities have expanded to include tackling complex global challenges such as climate change mitigation, greenhouse gas regulation, and addressing emerging contaminants like per- and polyfluoroalkyl substances (PFAS). The agency also emphasizes environmental justice, ensuring that pollution and environmental harm do not disproportionately impact vulnerable communities, and supports the transition to renewable energy and sustainable practices.


    While the EPA initially focused on visible pollution and acute environmental disasters, it now addresses broader issues in the realm of environmental health and public health. For example, the agency is involved in addressing the health impacts of lead in drinking water, a concern also shared by the Centers for Disease Control and Prevention (CDC).

    For 2024, the EPA, through the Bipartisan Infrastructure Law (BIL), received substantial funding for lead service line replacements, including a federal allocation of $15 billion over five years. For fiscal year 2024, specific funding details varied by state, but the EPA emphasizes addressing disadvantaged communities and schools in its Lead and Copper Rule improvements. Additionally, the CDC received approximately $38 million in fiscal year 2023 to support health departments in lead exposure prevention and management efforts.

This list could go on and on. Please leave me a comment if you want me to look at more departments or agencies.

Remember that initially, Congress approved collecting taxes for the common defense and general welfare of the United States. The U.S. federal government's primary responsibilities were limited to defense, foreign affairs, regulating interstate commerce, and infrastructure development like roads and postal services. This minimalist model kept federal spending low, and the tax burden was correspondingly light. But through the above 'scope creep,' the taxes have also crept up on us. But that’s not the only reason for increasing taxes. Let’s look at the other ones.

Political Incentives and the Cost of Popular Policies

Politicians often introduce new programs or expand existing ones in response to pressing societal needs or political demands, but they enact those initiatives frequently without corresponding reductions in other areas of government spending. This tendency to prioritize short-term political gain or popular policy solutions over long-term fiscal responsibility is driven by several factors. One of the main political incentives is to gain immediate public approval by addressing urgent issues, such as healthcare, education, or infrastructure, without making difficult decisions about cutting existing programs.

For example, the Affordable Care Act (ACA), passed in 2010, expanded healthcare coverage to millions of Americans, aiming to reduce the number of uninsured individuals and improve access to care. However, while the ACA introduced new taxes (such as taxes on high-income earners and medical devices) and increased borrowing to finance its provisions, it did not significantly reduce spending in other areas of the federal budget. As a result, the ACA contributed to rising deficits and national debt over time. In the same vein, many policy decisions, from military spending to social programs, are often expanded with the expectation that the costs will be covered by borrowing or increased taxes rather than making cuts to existing programs.

This lack of fiscal offsetting can lead to what is known as "fiscal illusion," where the immediate costs of new programs are obscured, and the burden of financing them is pushed into the future, ultimately increasing the government’s long-term financial obligations, requiring higher taxes or more borrowing down the line.

As a result, such policy decisions, while intended to address immediate concerns, contribute to a cycle of increasing government debt and a need for future tax increases to maintain the sustainability of these programs. The challenge of balancing immediate political incentives with long-term fiscal responsibility continues to be a defining issue in public policy debates, particularly when it comes to programs like healthcare, social security, and defense spending.

National Debt: A Growing Financial Burden

Another reason for increased taxes is the U.S. national debt, which has surpassed $36 trillion, a milestone that reflects decades of accumulated deficits. National debt refers to the total amount the federal government owes, including public debt (money borrowed from individuals, corporations, and foreign governments) and intragovernmental debt (money the government owes to its own programs, such as Social Security and Medicare). As the debt continues to grow, servicing the debt — or paying the interest on it — has become a significant and ever-increasing portion of the federal budget.

In 2024, interest payments on the national debt are projected to be one of the largest items in the federal budget, surpassing even spending on defense or domestic programs in some cases. The cost of servicing this debt is a result of borrowing to fund annual deficits, where government spending exceeds tax revenues. The high level of debt means the U.S. government must pay substantial interest to bondholders, and these interest payments limit the government's ability to use funds for other priorities, such as healthcare or infrastructure, as they are mandatory, even during periods of economic difficulty.

Additionally, as the debt grows, the interest payments continue to rise. This leads to a vicious circle, where the government must borrow even more money to cover those interest costs, and rising interest costs make this even more challenging. For example, if the Federal Reserve raises interest rates to combat inflation, the interest the U.S. federal government pays on its debt also rises.

To combat this financial burden, higher taxes are often seen as a necessary response in an effort to generate more revenue. Apart from tax hikes, closing tax loopholes is also seen as a solution to increase tax revenue, but increasing taxes, one way or another, can slow economic growth, discourage investment, and reduce disposable income for individuals. Especially for those impacted by a tax increase, the reduction of disposable income can increase the reliance on social programs as they may turn to government aid, such as food stamps or housing assistance.

With that in mind, some policymakers might advocate for more borrowing instead of raising taxes, hoping that future economic growth will help offset the growing debt.

Inflation and Bracket Creep: Hidden Tax Increases

Another reason for a tax increase is inflation, the general increase in prices over time. While tax brackets and government revenues typically rise with inflation, the process of adjusting these brackets—called indexing—can sometimes be slow or inadequate. Indexing is meant to prevent "bracket creep," which occurs when taxpayers are pushed into higher tax brackets purely due to inflation, not because their real income has increased. Essentially, even if a person's wages stay the same in purchasing power, inflation may result in their nominal income rising, pushing them into a higher tax bracket or reducing the value of credits, deductions, or exemptions, causing them to pay more taxes.

This happens because, in many tax systems, the income thresholds for different tax rates are not automatically adjusted at the same pace as inflation, or they may not be adjusted at all for certain years. As a result, taxpayers might find themselves paying higher taxes even though they haven't experienced any real increase in their standard of living. For example, if inflation increases wages but tax brackets are not sufficiently adjusted to reflect this, workers may face higher effective tax rates, leading to a loss in purchasing power despite earning more nominally. The map below from the Tax Foundation shows state indexation of major features of the individual income tax.

Bracket creep can have long-term economic effects, particularly on middle-income earners, as they can be more susceptible to tax increases caused by inflation, which can reduce their disposable income, making it harder to keep up with rising costs of living. As outlined above, reducing disposable income can also increase the reliance on social programs as those impacted may turn to government aid, such as food stamps or housing assistance.

Some governments have periodically adjusted tax brackets to keep pace with inflation to combat bracket creep and its impact on taxpayers. However, if these adjustments are insufficient, individuals may still end up paying a disproportionate share of taxes.

But where does the reliance on government support come from?

As we've seen, the increase in taxes is closely tied to the growth of government responsibilities and the expanding number of federal agencies as, over the last century, programs and policies aimed at addressing societal needs have not only broadened the scope of government but also significantly raised the financial obligations placed on taxpayers.

The question becomes not just about how to balance the budget or manage debt but also about when the American people began to rely more heavily on government support and how this dependency could be addressed.

In my next post, "From Independence to Dependency: America's Journey to Government Reliance and How to Overcome It," we'll explore the evolution of the growing reliance on government support and potential steps to reduce it. In the meantime, leave me a comment about which government programs you think have had the most impact on tax increases!

On a personal note, thank you for being a part of my blog journey! If you enjoy the content I create and would like to support my work, you can now do so through Buy Me a Coffee. See the resources section below for more info about Buy Me a Coffee.

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dKay in Maine
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