American taxes are at a 30-year low!

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Don’t tell the Tea Party, but taxes in America are at a 30-year low thanks to President Obama. Looking at the latest numbers from the Congressional Budget Office – which are from 2009 – the average federal tax rate for all household in the nation is just 17.4%. It should be noted that quarter-billionaire Mitt Romney pays less than that average.

Still – the 17.4% rate is well below the 30-year average of 21% - and well-below what was paid under George W. Bush in 2003, which was 19.4%. Over the next four months until the election, Republicans will lie and say the President has raised taxes. That’s clearly not true. But these numbers do prove that with taxes at a 30-year low, then the very wealthy among us can afford to pay their fair share again.

Thom Hartmann Administrator's picture
Thom Hartmann A...
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How can they say Obama raised taxes? What taxes?

chilidog
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Jul. 31, 2007 4:01 pm
Quote Thom Hartmann Administrator:

Don’t tell the Tea Party, but taxes in America are at a 30-year low thanks to President Obama. Looking at the latest numbers from the Congressional Budget Office – which are from 2009 – the average federal tax rate for all household in the nation is just 17.4%. It should be noted that quarter-billionaire Mitt Romney pays less than that average.

Still – the 17.4% rate is well below the 30-year average of 21% - and well-below what was paid under George W. Bush in 2003, which was 19.4%. Over the next four months until the election, Republicans will lie and say the President has raised taxes. That’s clearly not true. But these numbers do prove that with taxes at a 30-year low, then the very wealthy among us can afford to pay their fair share again.

Spending is the TRUE level of taxation in the economy. If the government spends 3.6 Trillion, it has to take 3.6 Trillion out of the private economy. It's either taxed, borrowed or inflated. Borrowed money is just a delayed tax increase because the money has to be paid back through taxes or inflation later. Inflation is the worst tax because it hurts the poor. In fact, it is a wealth transfer from the poor to certain rich people. But you don't hear progressives calling for an end to this insidious tax.

Think about it this way. If the budget was 4 Trillion and the government levied zero taxes and borrowed 4 Trillion, would it really be honest to say that the American people weren't being taxed.

This tax shell game is one played by the Left and the Right.

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LysanderSpooner
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Jul. 31, 2007 4:01 pm

Yes it's true, taxes are at a 30-year low. Why? I think you might be leaving out part of the story. Part of the reason for the current 30-year low you reference, is that President Obama cut taxes as part of the stimulus plan in an effort to spur the economy. Now, this leaves us all in a very difficult position. Did the Obama stimulus work? For those of you who believe it did, it would seem reasonable to believe that tax cuts help to spur the economy. If that's true, why in the world would we raise taxes now? Unless, of course, you believe that we are completely back on stable economic ground. And for those of you eager to say that tax cuts are not a boost to the economy (there are multiple posts on these message boards), well then, I would have to believe that you feel the stimulus failed or was at least contained by the tax cuts. So which is it? Do tax cuts help or hurt the economy? Perhaps the President doesn't have a great command of economics and made a mistake with the stimulus and the cuts. Or maybe, just maybe, the tax cuts actually helped. And, again, why would you raise them now?

Conservative_Th...
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Jun. 15, 2012 12:01 pm

Honesty should make you say that Congress screwed up Obama's stimulus and made a lot of tax cuts be part of the package. Obama did not propose it on his own, and what he had to accept in the process of compromise deserves to have its own sourcing in your argument.

Tax cuts that put more money in the pockets of average folk did have a stimulus effect in the immediate. The crap given away to the rich because of the ankle-biting GOPimps neither helped the economy nor reduced the revenue deficit. Who is the problem here?

The Payroll tax cuts were middle class, but at the expense of Social Security funding. Obama had to deal to get something, so he is not the author of what the GOPimps loaded onto the stimulus.

If you want to criticize the believers in tax cuts, you will not find any over here on the Left. We appreciate how taxation works and why economies need to have money circulate throughout "the body" to be healthy. LS is right about spending being the true indicator of what we will owe no matter how much revenue the taxes are producing. It is why the "deficit ceiling" fandango was such a farce. But, producing the revenue to have a functional and productive democracy and investing in the real common good and welfare means having an adequate level of taxation.

The idea of progressive taxes is based in the good investments we make as a society. Those with the money have to cough it up adequately because it makes no sense to make those with little have nothing when the rich are just giving up pocket change. We cannot afford the poverty and ignornance the Right would give us with their Estate Billionaire America. "Smaller government" loses its charm when it means few schools and hospitals and pave it yourself roads.

drc2
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Apr. 26, 2012 12:15 pm
Quote LysanderSpooner:

Spending is the TRUE level of taxation in the economy.

This tax shell game is one played by the Left and the Right.

You're absolutely correct on the first point, and intellectually dishonest on the second point.

The Right always always always complains that the Democrats "raise taxes" when the Democrats raise tax rates.

The Right always trumpets that Republicans "lower taxes" when the Republicans lower tax rates.

The Right of late has been shuffling their feet and mumbling stuff like Reagan spent too much, Poppy Bush spent too much, Little Boots spent too much, Schwarzenegger spent too much, Hastert spent too much... but they weren't REAL conservatives, they weren't the white buffalo we saw in our dream, THIS guy is the one...

chilidog
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Jul. 31, 2007 4:01 pm
Quote drc2:

Honesty should make you say that Congress screwed up Obama's stimulus and made a lot of tax cuts be part of the package. Obama did not propose it on his own, and what he had to accept in the process of compromise deserves to have its own sourcing in your argument.

So are saying that the original post is misleading by touting Obama as having provided the lowest taxes in 30 years? The credit for the tax cuts then goes to the Republicans that forced Obama to compromise?

Quote drc2:

Tax cuts that put more money in the pockets of average folk did have a stimulus effect in the immediate. The crap given away to the rich because of the ankle-biting GOPimps neither helped the economy nor reduced the revenue deficit. Who is the problem here?

By your own admission then, tax cuts do provide a stimulus effect in the short-term. On this we can agree. Now for the tricky part..at what level does one become rich and no longer do we benefit from providing a tax cut? For everyone that line is someplace different. For a family of four making $40,000, the guy making $80,000 is doing pretty well. The family living in an expensive city like SF or NY making $100,000 is barely getting by while $100,000 family in rural Iowa is doing just fine. Who gets to decide that? The last country to try central planning was a miserable failure.

As I have said over and over on these boards, the problem is not Right or Left, Dem or Rep, or taxes. The problem is spending. Duplicate programs and wasteful spending. Programs that start with the best of intentions, when filtered through the government become wasteful and ineffective. Look at any governement program and you can find ridiculous waste from the infamous $1000 pentagon toilet seat, the green stimulus money intended for electric cars that somehow ended up paying for golf carts. This is where I believe the misunderstanding between the left and the majority of the right lies. Many of us on the right want many of the sames things that you do. We want to feed the poor, provide safe housing, even pay for healthcare, we just don't want the federal government to do it. Let them do only what they have to because it's too risky or too big for any other entity to handle. As for the rest, don't let them near it. Give the money to the states and let them handle it or better yet, let local government handle it.

You mentioned schools, so I'll mention this. There is federal funding available for the construction of new schools but only for new construction. My district doesn't need a new school they need to remodel the existing school. The funding for remodeling is inadequate, so they are currently contemplating building a new one at substantially higher cost because they can fund it and meet the new government mandates. It's like having a house that's nearly paid off, but it needs a new porch. You can't get a loan for a new porch, but you can get a mortgage for a new house. So tear down the house and build a new house with a new porch. No sane, average citizen would ever do this.

Conservative_Th...
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Jun. 15, 2012 12:01 pm

Deficit spending is the only way to grow the economy. Not only in difficult times but ALWAYS.
I am repeating this blog.

1. (Federal Deficits = Net Private Savings+ net imports), applies to USA and other nations that have their own currencies. For numerical proof see figure 4 of
http://pragcap.com/resources/understanding-modern-monetary-system

If all deficits are added, the above equation leads to
(cumulative total govt_deficit) = (total national private wealth) = 60 Trillion, approx.

This is proved in
http://pshakkottai.wordpress.com/2012/02/27/national-debt-and-national-wealth-compared/

In short, (govt debt) is (peoples' anti-debt) and (govt surplus) is (peoples anti-surplus)! (Govt_debt / GDP) is exactly the same as (peoples' wealth/ GDP) and can be any number not limited to 100%. People own the money and collect interest. They DON'T have to pay any debt back. The govt is in debt to itself (the federal reserve and treasury are both arms of the govt even though the fed is privately owned and takes a cut in profits) and has to do NOTHING.

The household balance is
2. (taxes = spending - debt) ,
which applies to individuals, states, businesses but NOT to USA. a money creator.

Confusing the balances 1. and 2. is THE BIG LIE.

The US deficit clock is also the world's dollar savings clock- to the penny!

Unfortunately, the congress still operates in the pre-1971 gold standard days for no reason and all the mainstream economics continue with the charade.

Actual data on deficits and GDP is shown in

http://pshakkottai.wordpress.com/2012/05/25/188/

and an interpretation offered in

FIG 6 : This is a plot of yearly GDP and yearly deficits in unadjusted dollars starting from 1960 ending in 2010. The deficit is increasing slowly from 1960 to 1972 during the days of gold standard. From 1972 to 2000 GDP increases as the deficit is decreasing with a slope equal to 4000billion in 500 billion or 8. For 1 dollar of deficit GDP changes by $8. After this deficits increase again and the GDP rises more slowly. GDP changes by 1000 billion for a deficit change of 300 billion, a slope of 3. In the region of falling deficits the slope is larger, near 8. Most recent data shows deficits increasing a lot and the GDP falling. This is the region of Wall street gambling, mortgage crisis, trillion dollar wars etc. which have done nothing good to the economy.

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pshakkottai
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Jul. 11, 2011 11:27 am

What a coincidence. Wages are at a 30 year low for the majority of Americans. The employment rate is at a 30 year low. Confidence in both parties is at a 30 year low. My sex life is at a 30 year low. Must be something in the water.

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Bush_Wacker
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Jun. 25, 2011 7:53 am

Could be something in the water, could be the women who's eyes you are under have developed better tastes.

Phaedrus76's picture
Phaedrus76
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Sep. 14, 2010 8:21 pm

In 1992 Poppy Bush was arguing against increasing tax rates, and was promoting a cut in capital gains tax rate as pretty much his sole remedy to improve the economy. He had raised income tax rates from 28% to... 31%... The top tax rate had been 31% or lower for 6 years, and the economy had been lousy for over 2 years before the 1992 election.

Clinton raised the top income tax rate from 31% to effectively 42% (counting the elimination of the cap on compensation taxable for Medicare) and the economy didn't collapse, as the GOP squawked would happen.

chilidog
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Jul. 31, 2007 4:01 pm
Quote chilidog:

How can they say Obama raised taxes? What taxes?

Conservatives are not restrained by reality.

The tea party was protesting higher taxes 2 months after Obama LOWERED their taxes.

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Babyspittle.com
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Jul. 12, 2012 9:18 pm
Quote LysanderSpooner:...Spending is the TRUE level of taxation in the economy.

No, you might argue that spending is the 'true' level of cost to the economy. But it is not the true level of taxation in the economy. You can't just define words anyway you please.

Quote LysanderSpooner:...If the government spends 3.6 Trillion, it has to take 3.6 Trillion out of the private economy...

I know you were only giving an example, but you are wrong for here too. If the government 'spends' 3.6 trillion on transfers, then that amount is put back into the economy. Then the only 'cost' would be for the beauracrats to push the money around, and the changed behaviors of the people who are taxes and those who are renumerated. But it is not 3.6 trillion. It's probably an order of magnitude smaller.

Quote LysanderSpooner:...But you don't hear progressives calling for an end to this insidious tax.

You have been on this for quite some time. It is bankers who lend out money at too small of an interest rate that gets burned by inflation. If we had a competitive market for labor (which is what you guys believe), labor wouldn't get burned at all. In your free fantasy market, employers pay what the employee is worth. If employees are worth more, they would be paid more.

Dr. Econ's picture
Dr. Econ
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Jul. 31, 2007 4:01 pm
Quote Phaedrus76:

Could be something in the water, could be the women who's eyes you are under have developed better tastes.

Thanks for the vote of confidence! LOL

Actually it's from a bad case of 30 years of marriage. I meant that in the most positive way. A great 30 years and counting.

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Bush_Wacker
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Jun. 25, 2011 7:53 am
Quote Conservative_Thom_Fan:

.. President Obama cut taxes as part of the stimulus plan in an effort to spur the economy. Now, this leaves us all in a very difficult position. Did the Obama stimulus work? For those of you who believe it did, it would seem reasonable to believe that tax cuts help to spur the economy. If that's true, why in the world would we raise taxes now? ...And for those of you eager to say that tax cuts are not a boost to the economy - ...well then, I would have to believe that you feel the stimulus failed or was at least contained by the tax cuts. So which is it? Do tax cuts help or hurt the economy?

Well, your question is great, and I think I can answer it. Liberals want to increase taxes on the rich simply to fend off conservatives who want to cut spending. It's really a political issue. Liberals want to save their liberal programs and fear retards who want to cut spending when the economy is still in the doldrums. So, I am for a tax increase on the wealthy -- for political rather than economic reasons.

But liberals should not think that the act of raising taxes on the rich will help spur the economy in the short run. That is not why I support it. I support it to keep away idiots like Ryan from gutting medicare or food stamp, or Bohner from not raising the debt limit. These things really do cause economic havoc and misery.

So what are liberal beliefs about tax cuts and stimulus?

A standard textbook model says that tax cuts and deficit spending help the economy when there is a recession. But in a severe recession people like Paul Krugman or Keynes would argue that people will save the tax cut and not spend it, so tax cuts in this climate are ineffective. The fact that we have had continual tax cutting since 1980 I think shows that there is little to be gained by it. Perhaps it helped in the 60's and 80's because the recessions were not as severe.

What about the stimulus? Well, we know from experience in WWII that huge increases in government spending can lead to huge increases in GDP. And I think we saw some of this while the Obama's stimulus was going on. The economy seemed to be rebounding. Then, two things happened. State and local governments began cutting budgets and employment. And the stimulus stopped. Now we have an anti-stimulus - government spending and employment are flat or falling. And the economy seems unable to snap back - despite the long amount of time involved.

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Dr. Econ
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