19 February 2011

Taxes At Lowest Since 1950

Reposted from Jobsanger

A lot of right-wingers are whining about taxes and how high they are. They make it sound like President Obama has crushed Americans with a huge tax burden after years of low taxes under President Bush. Of course, that completely ridiculous. The truth is that taxes are lower under President Obama than they were under President Bush (or any other president since World War II).

According to the Congressional Budget Office (which is nonpartisan), the amount of taxes collected is also very low. Taxes this year will be 13% lower than in the last year of Bush's presidency, and actually lower as a share of the economy than any time since 1950 (14% of GDP as compared to 17.5% of GDP under Bush). So why do people feel like their tax burden is so high? Part of it is because more taxes (of all kinds) have been dumped on the middle and working classes, while the rich and the corporations pay less than ever (sometimes even nothing, while making record profits).

One of the best explanations I've read on why the tax burden seems larger even though the total taxes are lower is offered by Badtux, the Snarky Penguin. Here is his excellent explanation:

Taxes for 2010 are the lowest they've been, as a percentage of national income, since 1950. This is true whether you're looking at just federal taxes, or you're looking at combined local, state, and federal taxes.

So why, then, do many people seem to believe that they're overtaxed? My thought: It's because taxes today are fundamentally different from taxes in 1950. In 1950, taxes on ordinary working class and middle class individuals were fairly low -- sales taxes were around 1% in those few states that had sales taxes (vs. average of around 8.5% today), payroll taxes were 1.5% (vs. 7.65% today), and residential property taxes (vs. commercial property) accounted for around 1/3rd of all property tax receipts here in California vs. 2/3rds today. Corporate income taxes accounted for around 30% of income taxes collected in 1950, whereas they account for only around 7% of income tax collections today.
In short: People believe they're overtaxed because they are overtaxed -- but not because overall taxes have risen, but, rather, because taxes have been shifted from the rich and corporations to ordinary people.

It's all a part of the failed Republican trickle-down economics. They started in the 1980's letting the rich off the hook while shifting the tax burden to ordinary Americans, and it has been disastrous to the economy. Sadly, the people don't seem to realize the fraud being perpetrated on them by the Republicans on behalf of the corporations. And this economy won't get better until they get wise and demand new policies -- policies that make the rich pay their fair share of taxes and stop hogging the wealth of the country.

The Republicans tried these same policies in the 1920s and it led to the Great Depression. They are now in the process of turning this recession into another depression. When is America going to wake up and realize that unrestrained capitalism didn't work in the past and won't work now?

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