3. 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 195019551960196519701975198019851990199520002005 T OP I NCOME T AX B RACKET T OTAL T AX R EVENUE AS P ERCENT OF GDP I NCOME T AX R EVENUE AS P ERCENT OF GDP T AX R EVENUES D O N OT C ORRELATE W ELL WITH T AX R ATES F ISCAL Y EAR C HART 3 S OURCE : H ERITAGE F OUNDATION

4. T AX R EVENUES ARE H IGHLY C ORRELATED W ITH GDP R EAL 2006 GDP ($B ILLIONS ) R EAL 2006 T AX R EVENUES ($B ILLIONS ) 195019601970198019902000 $3,500 $7,000 $10,500 $14,000 $500 $1,000 $1,500 $2,000 $2,500 R EAL T AX R EVENUE R EAL GDP C HART 4 S OURCE : H ERITAGE F OUNDATION

6. W E A RE I N A S PENDING -D RIVEN D EBT C RISIS H ISTORIC /P ROJECTED S PENDING & R EVENUE A S A P ERCENTAGE O F T HE E CONOMY S OURCE : O FFICE OF M ANAGEMENT AND B UDGET H ISTORIC T ABLES, C ONGRESSIONAL B UDGET O FFICE ; PROJECTIONS BASED ON THE CBO’ S A LTERNATIVE F ISCAL S CENARIO. C HART 6

9. W HAT D RIVES O UR D EBT ? (G OVERNMENT S PENDING AS S HARE OF E CONOMY ) W HAT D RIVES O UR D EBT ? (G OVERNMENT S PENDING AS S HARE OF E CONOMY ) C HART 9

10. C HART 10