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Tilting at Windmills

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February 7, 2011

THE SMALLEST TAX BURDEN IN GENERATIONS.... If I had to guess, I'd say most Americans think the government collects too much money in taxes. Indeed, despite an enormous deficit they claim to care deeply about, congressional Republicans are nearly unanimous in their belief that raising any taxes on anyone by any amount is entirely unacceptable -- because Americans are "taxed enough already."

With that in mind, today's AP report on tax burdens probably won't be well received on the right, but that doesn't make it wrong. (thanks to reader R.S. for the tip)

Taxes too high?

Actually, as a share of the nation's economy, Uncle Sam's take this year will be the lowest since 1950, when the Korean War was just getting under way.

And for the third straight year, American families and businesses will pay less in federal taxes than they did under former President George W. Bush, thanks to a weak economy and a growing number of tax breaks for the wealthy and poor alike.

Income tax payments this year will be nearly 13 percent lower than they were in 2008, the last full year of the Bush presidency. Corporate taxes will be lower by a third, according to projections by the nonpartisan Congressional Budget Office.

There are multiple factors that contribute to this, including the weak economy that holds down income. But it's also the result of very low tax rates, coupled with, as the AP noted, "a tax code that grows each year with new deductions, credits and exemptions."

The result is an economy with federal tax receipts equal to just 14.8% of the economy -- the lowest level since the Truman era.

Of course, this is only looking at federal taxes, and doesn't reflect state and local taxes, but a USA Today analysis found last year that if we include everything -- federal, state, and local taxes, including income, property, sales, and other taxes -- the percentage of personal income that's paid in taxes is still at its lowest level since 1950.

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

Steve Benen 3:15 PM Permalink | Trackbacks | Comments (18)

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I'm trying to commission the city of San Jose to fix the road (at the intersection of Race St. and West San Carlos). I'll let you know how it goes and how much it costs.. Americans are completely retarded and want something for nothing; any sacrifice for the collective is too much! Ours is a lazy, good for nothing society. Sucks to be US.

Posted by: Trollop on February 7, 2011 at 3:22 PM | PERMALINK

Life's canards:

I work harder than the next guy.

I'm not paid enough (Although this is probably true for many of us).

My taxes are too high.

Posted by: Bob on February 7, 2011 at 3:29 PM | PERMALINK

The tax crazies will respond to this by saying that almost half (47%? -- I don't recall the exact figure) of the population pays *no* federal income tax. They will conveniently ignore payroll taxes and that these people are taking advantage of the same credits that they (the Galtians) claim. More importantly, they will ignore the appalling implication that so many of their fellow Americans are doing worse and worse that they are falling below minimum thresholds for paying federal taxes.
In other words, income concentration at the top . . .

Posted by: Ian A on February 7, 2011 at 3:39 PM | PERMALINK

As Michael Ettlinger, head of economic policy at the Center for American Progress, said at the time, ‘The idea that taxes are high right now is pretty much nuts’.

Which pretty much sums up the American RightWing.

Posted by: Joe Friday on February 7, 2011 at 3:43 PM | PERMALINK

My income hasn't changed much in the past 10 years, but I vividly remember my taxes dramatically dipping with the GW Bush tax cuts. Why don't other people remember this too? My guess is this:

If your income goes up, so do your taxes!

If your income goes down, your taxes go down, but your take-home pay decreases too.

So some people are noticing increasing taxes (in dollars, if not percentage), while others are noticing decreasing income and conflating that with taxes.

Posted by: Dave Munger on February 7, 2011 at 3:54 PM | PERMALINK

Also, I wonder if people are noticing take-home pay decreasing for another reason: More of it is going to cover health care. So even though their tax rate has gone down, they don't see it in their paycheck, and blame Obama. Ironically, Obama is the one who has actually lowered working-class taxes and is doing something to control health care costs.

Posted by: Dave Munger on February 7, 2011 at 4:00 PM | PERMALINK

As a dyed in the wool Progressive, I fondly remember Ike's top tax rate of 90%. I wish I was in it. . .

Posted by: DAY on February 7, 2011 at 4:01 PM | PERMALINK

Yeah, no surprises there! Remember under the Clinton tax legislation we prospered until Good Ol'George let loose the tax hatchet in 2001 and 2003. Now, any attempt to put us back to prudence has been met with cries of Marxism, Kenyanism, Birtherism, Socialism, and Granny's gonna die-ism!

What was the difference that made for all this Tea Partying talk of "taking back our nation"? Oh, about 4%!

Trollop's got it right, though I don't agree with him when it comes to his attitude about the good ol'USA. His point about wanting something for nothing is about as American as apple pie (I hope my piece is free)! -Kevo

Posted by: kevo on February 7, 2011 at 4:03 PM | PERMALINK

$78,000 gross-gross-gross, married filing jointly, two kids in college, mortgage, nothing else special.

Federal income tax bite -- less than 6%.

FICA (SS for her and Medicare for both), and my state pension contributions combined were more than our pre-tax-credit federal income tax liability, never mind after the relevant tax credits.

If someone's income is overtaxed by the feds, it's not me.

Now if the refund wasn't going straight to the heating oil dealer...

Posted by: Davis X. Machina on February 7, 2011 at 4:12 PM | PERMALINK

When did the idea take hold that taxes must NEVER go up? I think it's some combination of Laffer plus Norquist. Or good old stupidhead thinking. At the state level, since taxes can't go up, the legislature will raise fees (not a tax!!), reduce state employee pay (a tax on state employees only) or lay off state employees (a 100% tax on that benighted group). Of course, a modest increase in taxes could easily cover the shortfall--but that's no longer the mindset of our legislators.

Posted by: Bob on February 7, 2011 at 4:14 PM | PERMALINK

This past year, my tax bill was 4.35%. That includes one child, some write offs for student loan interest, and I'm a head of household. I don't have a mortgage.

I made about $40K, and I can afford higher taxes. Why can't those who make more than me? I guess they aren't as smart with their money.

Posted by: jon on February 7, 2011 at 4:19 PM | PERMALINK

My income hasn't changed much in the past 10 years, but I vividly remember my taxes dramatically dipping with the GW Bush tax cuts. Why don't other people remember this too?

I think that most people have no idea how much they actually pay in taxes, and how much (or little) it changes when tax cuts or tax reform are enacted. They just hate paying anything, and are all too willing to believe it when their tribe says "we cut your taxes" or "the other guys raised them."

If I were president, I would propose raising taxes and raising withholding more, with the individual able to opt out of the increased withholding. Most people would get a big refund and would think their taxes had gone down, and the people who were actually smart enough to understand it would opt out.

Posted by: Redshift on February 7, 2011 at 4:36 PM | PERMALINK

People who say they're worried that taxes are high are actually worried that some other guy's taxes are too low. Some Other Guy is making out like a bandit! It's not so much "my taxes are too high" on an absolute scale, it's "I don't want my taxes to pay for Some Other Guy, who's probably a lazy bastard." That's why anti-tax hysteria gets so inflamed under Democrats. Democrats, the thinking goes, want to take stuff from you, who play by the rules and give 110%, and give it instead to ungrateful lazy bastards. How to balance the budget? Stop giving Some Other Guy so many goodies. This is how they think.

Posted by: FlipYrWhig on February 7, 2011 at 5:06 PM | PERMALINK

I would propose raising taxes and raising withholding more

Or you could give everyone a "rebate" (GWB) and then pass "tax simplification" (Reagan) to raise taxes. Then in 10 years Fox News will praise you as a "tax-cutter."

Posted by: Dave Munger on February 7, 2011 at 5:10 PM | PERMALINK

I'll give in to the right-wing frame here and point out that the US Budget is spending almost 50% more than it's taking in, so "federal revenue = 1950" isn't too meaningful.

Posted by: anonymouss on February 7, 2011 at 5:15 PM | PERMALINK

P.S. For all the right-wing trolls who say if I think taxes are too low, I should volunteer to pay more:

I object to the current tax structure that imposes a greater proportional burden on those making a lower income than those who would be subject to a return to Clinton-era top marginal rates, so my volunteering to pay more taxes is helping the imbalance how?

Posted by: anonymouss on February 7, 2011 at 5:24 PM | PERMALINK

The main difference between now and 1950 is that taxes in 1950 were paid by a different class of people. The payroll tax (paid by workers, not by the monied class) was 1.5% then, now it's 7.65%. The sales tax (which takes a larger percentage of workers' income, as vs. the monied class's income) averaged 1.5% then, and averages 8.5% now. Residential property taxes accounted for about 1/3rd of property tax collections here in California then, and account for 2/3rds of property tax collections in California today. Corporate income taxes were 30% of income tax collections then, and around 7% of income tax collections today -- i.e., the average individual is now paying 23% higher income taxes than in 1950, because corporations have offshored their profits to avoid paying their fair share. So the taxes that most directly affect the majority of people *have* gone up, even as tax collections in general have gone down.

So when people say, "I'm paying too much in taxes", they have a point -- because the tax burden has been shifted from corporations and the non-working investor class to, err, THEM. And the fact that this started with the Presidency of Ronald Reagan and 30 years of Republican domination of the discourse on taxes in America is, I'm sure, entirely a coincidence. And if you believe that, I have a bridge in Brooklyn for sale, second hand, slightly used, but cheap...

Posted by: Badtux on February 8, 2011 at 3:47 PM | PERMALINK

Your post (and Michael Ettlinger, who you quoted favorably to make your "point") have either inadvertently or intentionally, confused taxes and tax rates, with revenues.

Should the American economy recover, in spite of the confiscatory policies and spending spree mentality of the current Administration (still a big IF), then revenues will indeed increase dramatically as a percentage of GDP, and your point will evaporate.

Why do I doubt, however, that you would then return to the topic to correct your error?

My guess is that any such development would only lead you to call for even higher taxes and more borrowing to yet further damage the productive potential of our American economy.

Posted by: Trochilus on February 9, 2011 at 1:16 PM | PERMALINK



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