10/5/2011 5:05 PM ET|
Today's taxes lowest in 60 years
Yes, while we demand tax cuts, we're actually paying less, as a percentage of income, than ever before. And we're doing it while soldiers are fighting.
As Republicans and Democrats continue to bicker over who should be taxed and how much, one fact rarely gets mentioned: Most Americans today pay less in federal income taxes than they have in 60 years, and far less than they have during other wars.
This is particularly true for the wealthy: By 2007, the richest 400 Americans paid an average of 16.6% in income taxes, thanks to exemptions and low capital-gains taxes, far less than the same group had paid decades ago and well below the 26.4% that group had been taxed only 15 years earlier.
Add the hit of economic turmoil, and in the past two years the federal government has collected less of the nation's income than at any time since 1950: 14.9% of gross domestic product in taxes, compared with a post-World War II average of about 18%. One percentage point today equates to about $140 billion.
"Overall, taxes are very low right now," said Chuck Marr, the director of federal tax policy at the Center on Budget and Policy Priorities, a nonpartisan Washington, D.C., research group. In addition, "you have this tremendous shift (of wealth) in the United States to high-income people."
Meanwhile, with taxes low, the nation's public debt has soared to $10 trillion. But perhaps the most dramatic departure for U.S. taxpayers is not today's swollen debt load -- we've been there before -- but that never before have taxpayers been asked to give so little in wartime.
"This is the first time that we actually cut taxes and went to war," said John O. Fox, a tax-policy scholar and professor at Mount Holyoke College in Amherst, Mass. "There's less of a sense that we're all in it together."
How we got here
For most of America's history, federal spending and tax revenue charted a more-or-less parallel course, with the government approaching annual deficits of 10% of GDP -- the current level -- only during war or economic depression, then quickly leveling out.
By 1981, the country had racked up a paltry $789 billion in public debt, a mere 25.5% of the value of what the nation produced that year. And that was after a civil war, two world wars and many other foreign military conflicts, the Great Depression, the New Deal, the Great Society and much of the Cold War.
By contrast, today's public debt -- the total of two centuries of annual deficits minus any annual surpluses -- is approaching 70% of GDP. (Public debt is the amount the federal government owes others, and it's what economists use to gauge a nation's finances. Gross debt, now at $14.7 trillion, provides a larger number but includes money the government has borrowed from its own surpluses, such as from the Social Security trust.)
For decades, two things had kept the national debt under control: a generally robust post-WWII economy and relatively high tax rates.
In 1954, as President Dwight Eisenhower rejected fellow Republicans' efforts to reduce income taxes, then at 91% for top earners and 20% for low-income workers, he told the nation, "Every real American is proud to carry his share of that national burden."
He added, "Some think it is good politics to promise more and more government spending and, at the same time, more and more tax cuts for all." But, Eisenhower warned, "this is one kind of chicken that always comes home to roost."
At the time, just after the Korean War, the federal public debt stood at $230.9 billion ($1.94 trillion in 2011 dollars), or 60.7% of GDP.
By 1961, the year Eisenhower left office, the debt had been reduced to a post-WWII low of 44.6% of GDP even with expansion of highways and higher-education funding.
"You want to have taxes at a level so that in booms you're taking in probably more than you need and in recessions you're taking in less, but over time it averages out," said John Irons, the research and policy director at the Economic Policy Institute, a nonpartisan think tank that focuses on low- and middle-income Americans. "The problem is, the last 10 years we've been on a path of running deficits in both booms and recessions."
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"In 1954, as President Dwight Eisenhower rejected fellow Republicans' efforts to reduce income taxes, then at 91% for top earners and 20% for low-income workers, he told the nation, "Every real American is proud to carry his share of that national burden."
How different Americans are today. Cheap, tight, resentful of their fellow citizens. Devoid of empathy for the unemployed who have had their jobs outsourced overseas. Unwilling to pay the dues required of living in a fine country. I don't know how people got so cold here. As long as we refuse to take care of each other then we deserve to keep going down, down, down.
Great point in the article. Since '79, the average persons' income has gone up about $10K. This while their pension plans have disappeared, their time off reduced, and they're asked to contribute to their health plan premiums if they're lucky enough to be able to afford it or even have it offered.
Meanwhile, the wealthiest among us have seen their income more than triple. Where did the money come from? Read the above. They didn't earn it. They're not working any harder than the wealthy did back in '79. It has been taken out of the average worker's pocket, yet people will complain about taxing these people!
It's simple math. If the people with 84% of the money in the country pay a higher rate, the deficit will come down. And unlike the poor and the dwindling middle class, it will have little if any effect on their quality of life.
And let's be clear. Everyone pays taxes, even the poorest. They just may not pay federal.
The other new game is where you take an earlier time, when the tax code was different than it is now, and apply a single rate factor against today's average (which is based on different rules).
You don't find much talk of double taxation either -- where you pay taxes on earned income, and then pay taxes on investment income.
This article is nothing more than a orchestrated campaign of propaganda coming out of Washington.
How can you tell? It is full of class warfare, and unsubstantiated statistics about those evil rich people. Folks, under Democratic leadership, the rich Democrats are RAKING IT IN LIKE NEVER BEFORE.
Notice how nothing in this article mentions the actual problem which is that the government is spending far more than it takes in... and most of us understand that much of that spending is pure waste, or payoffs to constituents (known as BRIBES in most places), and that most of us see no reason to give corrupt politicians more of our money to waste.
In the last three weeks this is about the 10th article I've read that lays out the same case, certainly not a coincidence, and all the proof I need to see how the press is being manipulated, especially NBC which really ought to be ashamed of themselves.
Liars figure and figures lie. The "average" tax rate is so low becaues so many pay nothing! Everyone needs some skin in the game; no new taxes until we get everyone on board and pulling together, paying at least a nominal amount.
You've heard it before: when the majority figures out that they can vote for candidates who will take from others to give to them, guess how they're going to vote.
But, let's make sense in our thinking! The taxpayers do not make the tax laws. The US government makes the tax laws.
People are going to complain about excessive taxes until: they pay no taxes; the country has no debt; but the still get support from the federal government. This is a known and a great campaign pledge.
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