Liberal FUD Department Redux
This NYT Graphic keeps coming up repeatedly (it's been so widely reproduced, many don't even realize that the Times is the original source!) It's really emblematic of the mindless leftist FUD about economics. Just for starters, this thing represents the "Bush Tax Cuts" as a "cost". What they fail to understand is that tax rates and tax revenue are two different things.
Since the Eisenhower administration in the 1950's federal tax revenue as a percent of GDP has averaged about 18 percent. It didn't matter whether top tax rates were 92 percent (yes, they were that high!), or as low as 30 percent. Tax "rate" differences are not a "cost" item that you can just stick in some chart and say, "See! Bush cost us more money than Obama!".
Tax "Cuts" (or in reality "current tax rates", whatever they may be) are not really a cost at all. What we need to measure is revenue to determine if current tax policy is good or bad. These cuts were passed in response to a recession occurring as George W. Bush entered office.
reference: [New York Times] http://www.nytimes.com/2011/04/14/us/politics/14obama.html?_r=1
"The use of the phrase “tax expenditures” allows the administration to lump tax-related issues into the spending category."
reference: [Human Events] "Tax increases are spending cuts"http://www.humanevents.com/article.php?id=42921
"How do you cut a trillion bucks in spending from the tax code? The tax code is how the government takes in revenue. It doesn’t “spend” money."
Under Bush’s "tax cuts for the rich" the rich paid more in taxes in 2005 than any time in the prior 20 years. In fact, as the Wall Street Journal noted, thanks to Bush’s "tax cuts for the rich", the richest one percent went from paying 25% of all income taxes in 1990 to 39% in 2005. The richest 5% went from paying 44% of all income taxes in 1990 to paying 60% of all income taxes in 2005 -- all of this during the Bush administration. So if the Bush "tax cuts for the rich" are a cost, why did the rich end up paying far more in taxes? Simple: THEY MADE MORE MONEY. They employed more people. The lower tax rate structure encouraged job and wealth creation, and economic growth.
More importantly, after the 2001 initial tax cuts, the annual growth rate went from 0.3% in 2001 to 2.5% in 2002. By 2004, GDP growth was the highest in 20 years.
Likewise, after the 2003 tax cuts, the unemployment rate fell to the lowest level since World War II.
During the Bush years, despite the 2000 Recession, the attacks on 9-11, the stock market scandals, Hurricane Katrina, and wars in Iraq and Afghanistan, the Bush Administration was able to reduce the budget deficit from 412 billion dollars in 2004 to 162 billion dollars in 2007, a sixty percent drop. During the Bush years the average unemployment rate was 5.2 percent, the economy saw the strongest productivity growth in four decades and there was robust GDP growth.
So the next time some lefty liberal attempts to tell you that "tax cuts" are a cost, get the facts.
Don't believe this outrageous crap about the rich paying 37% of the taxes in America and the poor paying none. It's a trick. A spin on statistics to make it seem as if the rich are overtaxed. They aren't. But they damn well should be. We're in this mess because of them.
ReplyDeleteBe careful when you hear or read anything regarding the PERCENTAGE of OVERALL FEDERAL INCOME taxes paid by any particular group, it's a terribly misleading statistic. The rich pay a larger PERCENTAGE of OVERALL FEDERAL INCOME taxes now than 10 years ago because they have a larger PERCENTAGE of OVERALL INCOME in America now than 10 years ago. That statistic regarding 37% of Federal Income Taxes is one of the most misleading in the history of propaganda.
When you account for all FEDERAL, STATE, and LOCAL taxes and fees, the lowest quintile in America (20%) actually pays about the same rate (as a percentage of income) as the top quintile. The difference is within 5 percent.
When you account for all FEDERAL, STATE, and LOCAL taxes and fees, the middle class actually pay about the same rate (as a percentage of income) as the rich. The difference is within 5 percent. It shouldn't be that way. The rich should pay a MUCH higher rate simply because they are horribly over-paid. We aren't. They own 43% of all financial wealth in America. We share the rest. But it gets even more disgusting. The devil is in the details.
Corporate profits have been partially subsidized with federal, state, and local revenue. This benefit has been hoarded at the top. Business managers make up the largest group of one percent club pigs. Plus 1/2 of the market is owned by the top 1%. Their record territory dividends have been partially subsidized by federal, state, and local revenue. The benefits have not been shared proportionally with the little guy. The lopsided division of growth across quintiles proves it.
The highest percentile has grown more than 10 times faster than the middle percentile over the last 30 years. This is true EVEN AFTER taxes. When you account for inflation and the actual cost of living (tied to record high profits in energy, finance, and healthcare), the middle class have actually lost relative buying power while the top 1% have drastically increased their income and bottom line wealth.
In 1976 (when their taxes were much higher), the top one percent reaped 9 percent of all private income and held less than 20 percent of all private wealth in America. Now, they reap 24 percent of all private income and hold over 40 percent of all private wealth. Meanwhile, the lower majority (those who are still employed) are working more hours and have less to show for it.
Just to make it crystal clear: The rich do not pay 37% of all taxes. They never have. They pay roughly 37% of all FEDERAL INCOME TAXES which account for less than 1/2 of total government revenue. The rest is drawn from a number of sources and across income levels. The rich harp on this 'Federal Income Tax' statistic because it leads people to believe that they pay 37% of ALL taxes. They don't. Their share as a group represents just over their share of income. The difference is within 5 percent. In fact, the 2nd percentile actually pays a slightly higher rate on average than the top percentile.
If the rich want to pay a lower share of the taxes in America, then they should get themselves a lower share of the income in America. In other words, don't be so rich to begin with. After all, this obscene concentration of wealth actually CAUSES economic instability. It CAUSES poverty. It will CAUSE the next Great Depression.
No more excuses.
RAISE THOSE GOD DAMN TAXES ON THE RICH!
The most profitable industries in the world (energy, healthcare, finance) have been given billions in government handouts and tax breaks. Meanwhile, they keep raising charges causing hardship for millions. With all those massive handouts, tax breaks, and obscene charges, profits rise to record high levels. Millions in bonuses are paid to the executives. With record high profits, record high dividends are paid. 1/2 of all dividends in the United States are paid to the richest one percent. The bottom 95 percent of Americans share about 3 percent (that's three percent) of all dividends. The rest are paid to the top 5 percent and foreign investors. All of this causes a gradual concentration of wealth and income. This results in a net loss for the lower majority who find it more and more difficult to cover the record high cost of living, which again, is directly proportional to record high profits for the rich. As more and more people struggle to make ends meet, more and more financial aid becomes necessary. Most of which goes right back to the health care industry through Medicare, Medicaid, and a very expensive prescription drug plan. This increases government spending. This has been happening for 30 years now. During the same time, tax rates have been lowered drastically for the richest one percent. Especially those who profit from investments. These people pay only 15 percent on capital gains income. As even more wealth concentrates, the lower majority find it more difficult to sustain there share of the consumer driven economy. Demand drops as more and more people go broke. Layoffs results. Unemployment rises. This results in less revenue and more government debt.
ReplyDeleteMassive subsidies and tax breaks for Wall Street, massive tax breaks for the super rich, heavy concentration of wealth, record high charges along with record high profits and record high cost of living, more hardship for the lower majority, more government spending in the form of financial aid to compensate, more concentration of wealth, less demand, layoffs and unemployment. All of this results in slower economy and less tax revenue. At the same time more and more financial aid becomes necessary. It's a horrible downward cycle which gradually pushes the national debt higher and higher.
The other big factors are the wars in the Middle East.
This post is not intended to excuse those who sit on the couch collecting welfare, make no attempt to find work, or squease out kids they can't provide for.
@anonymous
ReplyDeleteYou, sir, are completely wrong. The figures come from the IRS, the Bureau of Labor Statistics, and the Congressional Budget Office.
Even when you add in all taxes - payroll, state and local, the figures change little. Go look up some real statistics before you make your "holier than thou" pronouncements.
You are right that tax cuts don't belong to that graph.
ReplyDeleteBut even if you remove tax cuts - Bush's spending are still bigger.
The nice thing about Obama's presidency is that he now functions in government gridlock and would not have a good chance to spend too much.
That's what would allow the US economy to thrive in the coming years.
There's a lot more than tax cuts that are wrong with the graph, if you take the time to study it. The Bush "tax cuts" (which shouldn't even be in there as a "cost") occur every year - so they need to be in the right hand Obama column too. So does the cost of the wars in Iraq and Afghanistan. Shall I go on? I think you get the picture.
ReplyDelete