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
and then for the most recent four years:
2008 -3.2 percent
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.
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.