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Tilting at Windmills

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May 11, 2010

LOWEST TAXES IN MORE THAN A HALF-CENTURY.... Confused far-right activists chose an odd time to launch a "Taxed Enough Already" revolt.

Amid complaints about high taxes and calls for a smaller government, Americans paid their lowest level of taxes last year since Harry Truman's presidency, a USA TODAY analysis of federal data found.

Some conservative political movements such as the "Tea Party" have criticized federal spending as being out of control. While spending is up, taxes have fallen to exceptionally low levels.

Federal, state and local taxes -- including income, property, sales and other taxes -- consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.

"The idea that taxes are high right now is pretty much nuts," says Michael Ettlinger, head of economic policy at the liberal Center for American Progress.

Of course, one of the driving factors for these low tax rates was last year's stimulus bill -- which included one of the largest middle-class tax breaks in U.S. history, which Republicans staunchly opposed, and which apparently inspired throngs of misguided conservatives to complain bitterly that they're "taxed enough already."

Looking ahead, tax rates more in line with the recent norm -- say, tax rates of the 1990s, when the economy was strong and the budget was balanced -- would do wonders to reduce the deficit the right pretends to care about.

Steve Benen 9:20 AM Permalink | Trackbacks | Comments (31)

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In another indication that we in American are immersed in a blizzard of misinformation; I present an analysis from noted leftist ax grinders at the FT (and the generally more pro-business Lex column at that):

"The 700,000 figure includes both start-ups and new locations (such as a new Starbucks), but research for the Kauffman Foundation finds that other measures of business creation also show remarkable consistency. While an individual may start a business from necessity or by spotting an opportunity, there appears to be a natural level of entrepreneurship irrespective of wider credit conditions or encouragement. Indeed, a ballooning in both venture capital funding and university courses on entrepreneurship since 1980 has had no effect on the rate of business formation.

"But new firms are essential to recovery. From 1980 to 2005, virtually all net new jobs were created by companies under five years old, and the one- to five-year-olds created two-thirds of jobs. So voters should be extremely sceptical of promises to create jobs through tax cuts, subsidies or spending. Policy in the US appears to have no appreciable short-term impact on entrepreneurship, and so by extension levels of joblessness."

http://www.ft.com/cms/s/3/e7e4835e-5c0f-11df-95f9-00144feab49a.html

Posted by: jhm on May 11, 2010 at 9:30 AM | PERMALINK

The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.

The last half of that sentence is all they need;>

Posted by: martin on May 11, 2010 at 9:37 AM | PERMALINK

As news of their Obama-lowered taxes slowly begins to seep through the remarkable obtuseness of the 'bagger brigade, I've noticed they've been moving the goalposts of late: "It's not about taxes. It's about the deficit!"

Just as it was liberals' fault that these tools chose to call themselves teabaggers, somehow it'll be on us that they've renamed themselves the DEA.

Posted by: shortstop on May 11, 2010 at 9:38 AM | PERMALINK

These numbers make no sense, and appear to exclude payroll taxes. Look, I am not one of the anti-tax crowd, but given my tax bill this year, I am not buying this number. It only looks good if you factor in those who don't pay income taxes or have no property tax obligations. For those of us who do, and from my personal experience, this story is pure b.s.

Posted by: Scott F. on May 11, 2010 at 9:51 AM | PERMALINK

Let us also give credit to Bush as the article states:

"Why the tax bite has eased:

• Stimulus law. One-third of last year's $862 billion economic stimulus went for tax cuts. Biggest reduction: The Making Work Pay tax credit reduced income taxes $800 for married couples earning up to $150,000.

• Progressive tax rates. Presidents Clinton and Bush pushed through a series of tax changes — credits, lower rates, higher exemptions — that slashed income taxes for poor and middle-class families. A drop in income now can trigger big tax breaks and sharply lower rates, sometimes falling to zero.

• Sales tax. Consumers cut spending sharply in this downturn, thereby paying less in sales taxes."

Posted by: tm on May 11, 2010 at 9:53 AM | PERMALINK

There aren't lower taxes just because the liberal media says they're lower.

See how that works? Living in ignorance and cognitive dissonance means you're accountability-free!

Posted by: terraformer on May 11, 2010 at 10:02 AM | PERMALINK

I have already seen the argument that this number is BS because 50% of Americans pay no federal income tax. Thus, most Americans are taxed to death. (Regardless of the fact that people who don't pay income taxes nonetheless do pay a much higher percentage of income in taxes, and regardless of the fact that the article is about the total tax burden.)

Posted by: Christopher on May 11, 2010 at 10:11 AM | PERMALINK

I have to agree with Scott F. What people flip about is taxes in general. Local taxes, property and sales are up. School taxes are going through the roof as the state cuts aide to local districts. Here in NY, income tax rates are up and way up for the 500,000 plus crowd. So the "Gubbamint" gets blamed and to most uneducated Americans that means Obama raised taxes. An example was here Nassau County. The County Executive lost in an upset. County taxes have risen marginally if at all but property taxes, mostly school went up. The morons, in an educated community I might add, booted the County Exec. who was not responsible for any tax increases.
Same fate awaits many incumbents. BTW, the new County Exec is a real buffoon with a tin ear. Four and out for this clown, wholly unprepared for the job.

Posted by: KK on May 11, 2010 at 10:13 AM | PERMALINK

I have already seen the argument that this number is BS because 50% of Americans pay no federal income tax.

Wow, the winger chain emails have upped that 10 percent in the last four weeks or so.

Posted by: shortstop on May 11, 2010 at 10:13 AM | PERMALINK

Obeisance to the rich must be in the genes...

Lower taxes.
The rich getting richer.
And white people marching on Wall Street shouting "Socialism."
How do you explain that?

Check out this Doonesbury strip from last week poking fun at a Civil War reenactment:

Fox News Corespondent: Jed, I notice you're barefoot and have a headful of lice. What role are you playing?
Jed: I play poor, white trash dispatched as cannon fodder by rich landed slave-owners.

I probably wouldn't have written this up if I hadn't watched the History Channel's documentary on Sherman's March last night. In it, Sherman wants to know why these poor southern whites are doing the bidding of rich landowners. The answer is: "They promised us niggas and land of our own." Conclusion: In 150 years the rich owners have only gotten wiser. They don't promise anything anymore...

Posted by: koreyel on May 11, 2010 at 10:21 AM | PERMALINK

"I have already seen the argument that this number is BS because 50% of Americans pay no federal income tax. Posted by: Christopher

The 50% number was people who has to pay additional taxes. It means 50% of the people had withheld enough during the tax year to cover their obligations.

Only a complete idiot think half this country doesn't pay taxes. God damn, has reason left the building along with common sense.

Posted by: ScottW714 on May 11, 2010 at 10:29 AM | PERMALINK

i'll admit to be a bit confused about some of the above comments concerning property taxes...the article steve cites specifically mentions them...."Federal, state and local taxes -- including income, property, sales and other taxes -- consumed 9.2% of all personal income in 2009"...it does appear that the article doesn't factor in social security or medicare taxes...

Posted by: dj spellchecka on May 11, 2010 at 10:32 AM | PERMALINK

While spending is up, taxes have fallen to exceptionally low levels.

Teabaggers only care about taxes on rich people, who otherwise could not defend themselves.

Posted by: qwerty on May 11, 2010 at 10:35 AM | PERMALINK

The problem isn't that tax rates are down. The problem is the govt is spendig too damn much money it doesn't have. And I don't see either party addressing that.

Posted by: J on May 11, 2010 at 10:35 AM | PERMALINK

Yes J. The government not having the money to govern, that has nothing to do with taxes going down. Nothing at all. How could the lowest taxes in half a century have anything to do with the deficit! I can't even imagine how they'd be related.

You mouthbreather.

Posted by: Yes_J on May 11, 2010 at 10:48 AM | PERMALINK

Thank you, koreyel. Did that segment mention that rich landowners were exempted from serving both before and after the implementation of the 1862 Draft? Poor whites had, also, been told that if the slaves were freed, then, they would be equal with the poor whites and would compete for their jobs. However, did they, also, mention that thousands of poor whites fled into the mountains of the Carolinas and refused to fight for either side? They even tied up Reb units in their attempt to force them down and into the army.

Posted by: berttheclock on May 11, 2010 at 10:50 AM | PERMALINK

berttheclock,

They didn't mention the renegade poor whites. Which is actually the larger context of my point: Instead of being America's greatest retarding force, how do you turn poor whites into America's greatest progressive force? How do you get them to shout "Robber barrons" instead of "Socialism"?

That's the question that matters.
If anybody can figure that out... wow.

As an aside: They did mention the use of IED's to try to stop Sherman. Which I find interesting given the GOP rhetoric of "insurgency." What did Sherman do? He made his capture rebels walk ahead of his army. That ended that.

Posted by: koreyel on May 11, 2010 at 11:00 AM | PERMALINK

I know the bright side here is that conservatives are demonstrably ignorant about taxes. But shouldn't the whole "lowest taxes in five decades" vs. "highest deficit in history" concept scare the ever-loving shit out of us? Isn't that the bigger takeaway here?

It's kind of like: "Honey, the bank is here to take our house." "That's OK. I just bought a speed boat, a Playstation 3, and a truck with a hemi with this here credit card!"

Posted by: chrenson on May 11, 2010 at 11:13 AM | PERMALINK

Could we please refer to these people as the teabag people. I know they don't like it and there's your reason for doing it. If the repubs were asked to refrain from phrases like San Fran Liberal, the Democrat Party and the rest, would they stop? These people began as teabaggers. They wore teabags on their heads. Call em what they are and if they don't like it, well, good.

Posted by: pat meaney on May 11, 2010 at 11:27 AM | PERMALINK

The only thing "Taxed Enough Already" is their capacity for critical thinking and discernment.

Posted by: e henry thripshaw on May 11, 2010 at 11:56 AM | PERMALINK

thrip! Nicely done!

Posted by: shortstop on May 11, 2010 at 12:07 PM | PERMALINK

Several comments mention that the numbers cited do not include payroll taxes (SS and medicare taxes). But the point of the USA TODAY research was a comparison of the percentage of income represented by the listed taxes now vs in previous years. It's reasonable to assume that the USA TODAY staff understands statistical comparison, so whether the 9.2% did or did not include payroll taxes is a moot point as long as all the numbers being compared included the same group of taxes. The point was that, of the taxes included in the statistic, the percentage of income is lower than any point since the 1950's. They could not get an accurate comparison if they included medicare taxes, because they did not exist 60 years ago. They were trying to compare oranges and oranges, income tax, property tax, sales tax level now vs over history.

Posted by: Grammy Pat on May 11, 2010 at 12:12 PM | PERMALINK

I don't know how the 9.2% number was calculated, but I suspect the author took total tax revenues and divided by the total number of people in America, including children. As is noted the calculation doesn't appear to include social security and related payroll taxes, which by all official accounts, really taxes. For some reason articles about taxes, right and left, simply refuse to acknowledge social security and medicare taxes are taxes. Maybe it is something taught in journalism school.

My bitch about the percentage aside, the underlying truth is right. For the remainder of 2011 we are going to enjoy the lowest taxes in recent memory. Next year, with the expiration of the Bush tax cuts, taxes will go back up. That will ease the deficit some.

My brother was bitching about the Obama tax increases at a family gathering the other day. I told him taxes are down, and he said prove it. I pointed out the middle class tax cuts included in the stimulus package. He sneared that they aren't really tax cuts. My neice, a tax attorney, overhearing our conversation, commented that they aren't real to him because they are targeted at people making less than $150,000, a group to which he doesn't belong. Her snark was "poor baby."

My brother has an excuse. He isn't benefitting from the Obama tax cuts, but most tea partiers make less than $150,000. What is there excuse.

My neice did make one comment that surprised me. The Bush tax cuts expire next year. We would expect that Democrats would be opposed to extending them, but my neice tells me Republicans aren't fighting very hard to extend them. I guess everybody realizes that in 2011 we are going to have to increase taxes to fight the deficit. Allowing the Bush tax cuts to quietly die is a nice way for politicians to raise taxes without actually casting a vote.

Posted by: Ron Byers on May 11, 2010 at 12:15 PM | PERMALINK

chrenson is correct that the deficit should scare us. But I thought the stimulus was about giving people money to stimulate the economy?

My personal example is that for both 2008 and 2009 our income was about the same, therefore FICA and self employment taxes were roughly equal (and higher than our income tax in both years). But our income tax went down $2200 from 08 to 09 due to the make work pay credit and additional college tuition credit (and we had overpaid that money). We're spending part of the refund on a vacation to DC. Ironic, isn't it? Especially as my R Congresscritter voted against the stimulus.

Posted by: West Coaster on May 11, 2010 at 12:27 PM | PERMALINK

Of course the above calculation would also involve the total value of the assets (including income) of all those people.

Posted by: Ron Byers on May 11, 2010 at 12:29 PM | PERMALINK

Including Social Security in any tax % calculation skews it because for income over $106,800 S.S. tax is not paid. (Medicare has no income limit.) Plus each state has their own taxes: income, sales, property, gas, etc. It would be difficult to come up with some sort of blanket assessment for the whole country, though of course it's possible. But we need to determine the basis for the numbers we're presented with so to compare apples to apples.

Ron, I like your niece... :-) (Perhaps your brother would like to change places with my family, whose income has been about the same for the past 12 years while expenses have grown enormously.)

Posted by: Hmmmmm on May 11, 2010 at 12:40 PM | PERMALINK

just wanted to add....from the article: "The Bureau of Economic Analysis classifies Social Security taxes as insurance payments and excludes them from the tax calculation."

Posted by: dj spellchecka on May 11, 2010 at 1:19 PM | PERMALINK

That’s because FICA contributions are not a tax and do not go to general revenues and can only be spent on Social Security.

Posted by: Joe Friday on May 11, 2010 at 2:07 PM | PERMALINK

J wrote:
The problem isn't that tax rates are down. The problem is the govt is spendig too damn much money it doesn't have. And I don't see either party addressing that.

I hear you on that! Just you like, I was against the Iraq War, which has now cost us over $700 billion. Uh, you were against that idiotic, unfunded boondoggle, weren't you? (FYI: buying a ribbon sticker for the back of your vehicle does not constitute funding the war.)

Posted by: josef on May 11, 2010 at 3:41 PM | PERMALINK

Thanks to dj spellchecka and Joe Friday for, respectively, actually reading the article, and correcting folks on what SS "taxes" are in reality.

The simple fact: Americans, on average, pay less tax now than in years past.

The big problem: Any savings we may have realized have gone to the insanely-increased costs of things like energy, health care, food, housing, education, etc.

Add in the fact that wages for those in the bottom 95% that have pretty much stagnated (or even declined) when factored for inflation, plus huge amounts of personal debt, and you get 95% of wage earners in a worse financial position now than they were 50 years ago.

The government hasn't done much to rectify this, and the GOP has actively worked to create this very situation through their asinine tax policies and reckless spending on useless shit.

I say: Reset, over the course of a decade or so, the top marginal rates to where they were prior to Reagan, trash the bullshit tax havens for businesses (e.g., Exxon Mobil paid ZERO taxes on their $40+billion in 2009 net income. ZERO. Nothing. Nada. Zip. Zilch.), and eliminate the max-income limit for SS tax to shore that up for decades.

Mix in some LONG, LONG overdue controls on spending (especially with procurement and contracts), savings on medical care costs through a REAL single-payer system, and those savings + the increased tax revenue could go a long way toward getting the debt under control.

But no one in Congress asked me, so ...

Posted by: Mark D on May 11, 2010 at 3:59 PM | PERMALINK

"Uh, you were against that idiotic, unfunded boondoggle, weren't you? (FYI: buying a ribbon sticker for the back of your vehicle does not constitute funding the war.)"

First of all, it doesn't matter whether ANYONE was against it or not. The soldiers & civilians have been injured and died, the Iraqis are in constant instability & fear, the terrorists are still there and the money's been spent. So whether I was against the war or not isn't germane to this discussion.

Conservatives may not be right about much, but they are right about overspending and the debt. And it isn't just the military budget.

Posted by: J on May 12, 2010 at 7:45 AM | PERMALINK




 

 

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