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The Republican Big Lies about Taxes and Government Spending

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According to the Republicans, America’s taxes are a crushing burden that are ruining our economy. But are our taxes too high? “No,” says a story in USA Today last year that apparently got little attention:

Federal, state and local income taxes consumed 9.2 percent 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 percent for the last half-century. The overall tax burden hit bottom in December at 8.8 percent of income before rising slightly in the first three months of 2010.

The Republicans insist our corporate tax rates are too high, and they’re absolutely right. They’re right, that is, as long as one looks only at the nominal rate and pays no attention whatsoever to deductions, loopholes, and tax breaks. Why? Because if we consider those deductions and loopholes, then the exact opposite is true. According to AlterNet.org:

As a share of GDP, the U.S. had the second lowest tax rate, behind only Iceland. This statistic flips on its head the often repeated Republican charge that America has the second highest corporate tax rate in the world (which is only true on paper). In 2009, U.S. corporate taxes had fallen to only 1.3 percent of GDP, from 4 percent in 1965.

The Center for American Progress has an interesting series of ten charts that show just how far our national tax burden has fallen in the past 50 years, and how low it is compared to nearly all other developed nations.

And then there’s the terrible, terrible federal deficit we have. To be sure, we’d all like to see it go away. In fact, we were on track to have the entire national debt paid off by 2012 if only George W. Bush had been willing to maintain the surpluses that he was handed by Bill Clinton. But how bad, exactly, is the deficit? Here’s a list of the federal deficit as percentages of GDP compiled by data360.org, first for the budgets submitted by Ronald Reagan (the first one he actually submitted was for 1982, just as the first budget Obama actually submitted was for 2010):

1982 -3.9 percent
1983 -5.9 
1984 -4.7 
1985 -5.0 
1986 -5.0 
1987 -3.2 
1988 -3.0 
1989 -2.8 
1990 -3.8 

and then for the most recent four years:

2008 -3.2 percent
2009 -10.0 
2010 -8.8 
2011 -3.3 

The highest deficit-to-GDP ratio was not under an Obama budget, but under a Bush 43 budget. The most recent year is estimated to be below that of over half the budgets under Reagan! So is Obama really bankrupting America, as the Republicans would have us believe?

Yes, we do have a bad deficit. But the problem isn’t government spending.  It can’t be, because as is shown above, the government’s taking in far less tax revenue than it has for a long, long time. Increase the revenue, and the deficit goes away just as it did under Bill Clinton after his predecessor George H.W. Bush raised taxes. The tax rates as they presently stand are simply too low.

Even Warren Buffet has stated repeatedly that tax rates for the wealthy are too low, that he’s paying a lower effective tax rate than his secretary. Here’s what he had to say last year:

We’re going to have to get more [tax] money from somebody. The question is, do we get more money from the person that’s going to serve me lunch today, or do we get it from me? I think we should get it from me. I have a lower tax rate, counting payroll taxes, than anybody in my office. And I don’t have a tax shelter, I just take the form and fill out the numbers. I think that’s very wrong, and I think that if we’re going to get money — and we’re going to need money; we are not taking in enough money at the federal government level…it shouldn’t be [from] the bottom 98 percent. It should be more from people at the top.

And again:

If you get $100 billion more of taxes…from people like me at the top, it means you borrow $100 billion less out of the economy. Somebody has to come up with that $100 billion…you’re taking the money from the economy either way. The only question is whether you take it by borrowing or by taxes. And I see no problem in taxing people at the very high levels significantly more than they’re being taxed now. And I might very well cut taxes even further for the people at lower levels.

Taxes are too low for the wealthy and for corporations. Anyone who thinks otherwise has been duped by the Republican Big Lies.

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About Glenn Contrarian

White. Male. Raised in the deepest of the Deep South. Retired Navy. Strong Christian. Proud Liberal. Thus, Contrarian!
  • Glenn Contrarian

    Hugo –

    The Republicans will howl at hearing this, but the higher taxes enable the higher quality of life. That’s why most of Europe and the British Commonwealth would never consider having the American health care ‘system’.

    The Democrats care more about quality of life for all Americans, and the Republicans care more about having a few more dollars in their pockets. It’s sad, really.

    But the real point of this article was to show that the Republicans’ complaint that taxes are too high is a complete and utter fabrication – and it is.

  • We still have to pay, whether through taxes or out of personal income. Everyone needs healthcare, education, security, roads and communication, savings or welfare for when they can’t work or are too old to work. In UK, we find it is more efficient to ask government to take tax and then pay for all of these on our behalf, with the benefits of bulk purchase (well, at the moment, anyway). In US, it seems you prefer to pay for each service that you use (except security when you are happy for taxes to be raised to spend over half of the world’s spend on military). But it’s a choice and the money still has to be spent.

    I’ve read elsewhere that Republicans are the big taxers whilst saying the opposite, and that Obama still hasn’t exposed his opponents’ lies, and you put this particularly clearly. But I have to ask – is tax % the real issue, or is it quality of life?

  • You guessed it. The farce become even more tragic in its consequences.

  • Glenn Contrarian

    “First a Tragedy, Then a Farce”…and if the author is right (and I suspect he is), the title should finish with “Then a Greater Tragedy”.

    In all honesty, Roger, I’m not real bullish on America’s prospects – Obama wasted his opportunity to educate the American people and to expose the outright lies of the Right, and we’re going to be paying for the willful ignorance of the Republicans for a long, long time. That’s one reason why I’m eager to move overseas. At least in the third-world Philippines where abortion is illegal, a 15 year-old girl won’t be prosecuted for murder for having a miscarriage – but that’s precisely what’s happening right now in Mississippi. Look it up on thinkprogress.org.

    Who was it that said that when tyranny comes to America, it will be wearing the flag and bearing a cross? Guess what – it’s here right now.

  • This is an honest disagreement, Glenn. To understand how it’s so, I refer you to a link posted in the in my next to last comment in “Mice and Man …,” First a Tragedy, Then a Farce. Pages 9 through 17 are of particular relevance and explain this paradox better than I possibly can.

    You should find it enlightening.

  • Glenn Contrarian

    Clavos –

    None of you have yet addressed the point – and I’m going to keep throwing it out there until y’all do.

    It is the height of hypocrisy that conservatives rant endlessly about how high taxes are and to use such as an excuse to slash education, to lay off teachers, to slash funding for basic research and NASA…while at the same time America has the LOWEST overall debt burden we’ve had in half a century!

    Do you not see how this destroys the conservatives’ argument about how low taxes help the economy? Do you not see how this blows away the argument that when taxes go down, government revenue goes up?

    Come on, Clavos!

    I’ve realize that to many, it’s not whether one is right or wrong, but whether one wins or loses. The conservatives are on the wrong side of the argument, though they’re sure it’s the winning side – all the while never realizing (or never caring) that if they have their way, we ALL lose.

    I refuse to play that game. I will be on the right side of the argument.

    How about you? Will you continue to stay on the wrong side of the argument just so conservatives can ‘win’ – or at least so the liberals can lose?

  • Clavos

    They are waiting for the memo to tell them what to say…

    Yeah, that’s it…

  • Glenn Contrarian

    Tommy –

    Actually, I’ve found that when faced with unassailable logic and fact that they cannot dispute, the conservatives will simply not assail it. They will instead ignore it. As a result, I expect this particular thread to die off without many comments.

    My first clue that this would not be a popular thread was that I’ve pointed out on other threads probably at least ten times how we’re paying less in taxes now than we have in the past fifty years – and not once, not even once did one of the BC conservatives step up to discuss the matter.

    Supposedly high taxes are one of their biggest ‘issues’ – and there’s a way to describe those who won’t even acknowledge (much less discuss) hard numbers that indicate anything contrary to their party dogma. But I won’t use that description because I feel that it is an insult.

  • They are waiting for the memo to tell them what to say, full of patriotic sentiment and anti-Obama slogan. Glenn.

  • Glenn Contrarian

    Clavos –

    I believe you. Just chalk up my earlier suspicion to my usual knee-jerk reaction to anything from The Other Side.

    But more importantly, I’d really like to hear from the other conservatives. I want to hear how they justify their claims in the face of the actual numbers.

  • Clavos

    Actually, not at all, Glenn. I wouldn’t do that publicly to any writer even if the piece were horrible.

    I do think it’s well-written over all.

  • Glenn Contrarian

    Clavos –

    Do I detect a wee bit of sarcasm? If so, I’m not offended – I see a few mistakes in style and presentation after the fact that I should have seen before I submitted the second draft to you.

  • Clavos

    Well written, too…

  • Your level, balanced and non-confrontational analysis is sure to draw the ire of conservatives enamored of anti-Obama talking points. It will not take them long to go completely off-point and attempt to change the subject [low taxes] into an indictment. Republicans hate the truth.

    You have laid out the basis for a case that the GOP has no policy except fear. The big lie works well for despots. Deliberate falsehood and malice are key ingredients of the talking points that are sure to follow. So let’s endeavor not to react to the forthcoming ignorant assertions. They will surely try to refute the truth and we know it. So do voters, despite what the loudmouths yell.

    Outstanding work.