Taxes in US are very low

[mcbrett]

Now, a third way to demonstrate that taxes are very low, and are not hindering the economy nor job creation.

Economix

Secondly, there is the tax rate, and then there is the effective tax rate- which is taxes after tax breaks/incentives/subsidies are accounted for- which again, show the US is nowhere near the top or the middle.

 

[NEWDOC2002]

An obvious biased piece and a blog in the NYT to boot. Now bias doesn't automatically invalidate a view point but are we supposed to take this seriously? Or do you just throw it out there and expect opposing view points to do all the homework?

 

[Texas007]

so basically no matter what the rate is you know that your receipts for the last 90 years will be between 6 and 8% of GDP. Seems like revenues are constant, but spending is not so......is this really that hard to figure out? we don't have a revenue problem for those who can't understand the simple economics of it. Revenues are going to be constant as a percentage of GDP. We have a serious, massive spending problem. What you ail to realize is that if you attempt to take more revenue out of the economy to fund your utopian, people will take their money elsewhere thus depleted the tax base. Yes, i know you will say that the rates used to be 90%, yes, but you also used to have a ton of deductions that have been eliminated. How else do you think you get the same revenues as a percentage of GDP over 90 years with varying rates? COme on people, this is easy to understand. You cannot tax yourself to prosperity. There is not a single example in world history where it has happened. Ever.

 

[Horn6721]

007Truth to power! This needs to be repeated
"You cannot tax yourself to prosperity. There is not a single example in world history where it has happened. Ever"

 

[general35]

Now, a third way to demonstrate that taxes are very low, and are not hindering the economy nor job creation.
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What is particularly worrisome about this trend is the deterioration of the U.S. tax position relative to the rest of our economic rivals. In 1990, the highest individual income tax rate of our major economic trading partners was 51%, while the U.S. was much lower at 33%. It's no wonder that during the 1980s and '90s the U.S. created more than twice as many new jobs as Japan and Western Europe combined.

It's true that the economy was able to absorb the Bush 41 and Clinton tax hikes and still grow at a very rapid pace. But what the soak-the-rich lobby ignores is how different the world is today versus the early 1990s. According to the Organization for Economic Cooperation and Development, over the past two decades the average highest tax rate among the 20 major industrial nations has fallen to about 45%. Yet the highest U.S. tax rate would rise to more than 48% under the Obama/Democratic tax hikes. To make matters worse, if we include the average personal income tax rates of developing countries like India and China, the average tax rate around the world is closer to 30%, according to a new study by KPMG.

What all this means is that in the late 1980s, the U.S. was nearly the lowest taxed nation in the world, and a quarter century later we're nearly the highest.

Despite all of this, the refrain from Treasury Secretary Tim Geithner and most of the Democrats in Congress is our fiscal mess is a result of "tax cuts for the rich." When? Where? Who? The Tax Foundation recently noted that in 2009 the U.S. collected a higher share of income and payroll taxes (45%) from the richest 10% of tax filers than any other nation, including such socialist welfare states as Sweden (27%), France (28%) and Germany (31%). And this was before the rate hikes that Democrats are now endorsing.
The Link

 

[mcbrett]

1) Government spending does not necessarily affect the well being of a business other than a devaluation of the dollar- IF that business has significant international purchases

2) I didn't know a chart or table with numbers could have a political bias.

 

[gecko]

Do you really think that taxes as a share of GDP is a good benchmark?

 

[mcbrett]

Absolutely- it demonstrates the productivity of the economy relative to the percentage of taxes levied.

It's a no-brainer if you are discussing whether or not taxes are hindering an economy and job creation.

 

[general35]

the article is completely distorted and biased. it doesnt take into account state and local taxes and all of the other taxes we pay. i like how he mentioned the article i posed but completely disregarded all the other state and local taxes "because they are already in existence." who ares, the taxes still influence profit margin. in europe, people are actually taxed a lot less. They pay one federal tax and everyone pays. they pay nothing else other than a sales tax. Our middle class pays next to nothing in taxes. everyone contributes in the rest of the world.

 

[YoLaDu]

By historical standards: taxes are very low. By historical standards: spending is very high.

I am in favor of reversing those two 30 year trends back to a more normal historical standard.

 

[mcbrett]

I am not necessarily referencing the commentary in the article- just giving a source for the chart and table. Doesn't it mock one's point if you look at a table with numbers and claim a political bias or whatever bias claim is being made?

Agree with Yo completely- am in favor of reducing spending, as I say repeatedly on other threads (SS, medicare, defense), am in favor of some unions reducing their benefits packages, and also am in favor of reversing the Bush tax cuts.

I don't think this is about States in this thread- unless you want to have 50 separate discussions which is a little challenging, logistics wise.

 

[UTChE96]

Wow! Our tax rate is nearly as high as GB, France, and Italy! That is ridiculous. I often travel overseas and there are European (esp Brits) expats everywhere because they are avoiding their ridiculously high taxation rate. Unfortunately the US is not so generous in their tax relief to expats.

May I suggest actually asking the job creators (i.e. business owners) in the US about job creation? I suspect they feel our taxation rate is too high, but thats just me.

 

[UTChE96]

The other point that needs to be made is the inequitable tax burden on the middle and upper middle classes. The lower middle and below classes pay hardly any taxes - sometimes actually getting net money back from the federal government.

 

[Michtex]

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[UTChE96]

Fair point Mich, but its all tied together.

I suspect more people would go to the barber if they had extra disposable income or in many cases a job. Going to the barber is probably one of the first luxuries most folks would cut out of their budget when their disposable income declines.

 

[Michtex]

UTChE96,

But that's just it.. it seems that those on the right argue that taxes should be cut for those at the top and taxes for the masses are either ok where they are or need to be increased (read: Some (many?) on the right complain about 51% of HH not paying taxes). How much can those at the top buy to stimulate the economy. Don't you need the masses to be out there buying to stimulate a consumer-driven economy?

 

[UTChE96]

I only speak for myself but I support cutting taxes for everyone who pays taxes and especially for small businesses. I am confident that the economy will recover as folks have more disposable income and business owners feel confident to expand.

I know its much more complicated than that but its a step in the right direction. We also need to make sure business have access to credit lines and loans which has been an issue for the past few years.

 

[general35]

Taxes in the United States are very low if you are middle class. If you make more than that and dont have deductions, you easily pay over 40% of your income in taxes (this is all taxes as in property, ss, unemployment, sales, car, any tax...look at the taxes in a cell phone or cable bill)). that is pretty steep. it's not about being able to afford it. it is about what is reasonable. is 50% reasonable? i would really like to know. in an income tax state, its easily over 50% already.

 

[Oilfield]

Agree that GE should pay more taxes.

 

[huisache]

Bruce Bartlett, who worked for Reagan, makes the same argument about taxes being lower here and being historically low. And that we need a combination of tax increases and spending cuts; neither one alone will get the job done.

I favor a head tax on everybody and graduated rates for most of us; that is, everybody, even the dirt poor, has to pay a tax, however small, so they know where the government money comes from. The bulk of the taxes will be borne by those of us who make a lot more.

And one reason why large companies don't pay a "fair share," whatever that means, is because they are international and no framework for properly taxing such entities has been devised. Sort of like the rancher who owns a ranch that is in two counties. Half of his 500 beeves are taxed in one county and the other half are taxed in the other. Leaving three hundred beeves that are not in either county when they are counted.

 

[mcbrett]

The annoying thing to me is- people who see these numbers, who understand what an unbiased table or chart can communicate- will tell us in a post that taxes are obnoxiously high and that they need to be lowered in order for us to create jobs or stop treating group XYZ unfairly.

 

[HornHuskerDad]

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[Sangre Naranjada]

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[mcbrett]

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[dheiman]

Everyone knows that 87.3% of all statistics are made up. Despite Bruce Almighty's research, there are other views with vastly different conclusions:

KPMG - Corp & Indirect Tax Report 2010

CATO Institute - Tax & Budget Bulletin

If you don't want to read the rather lengthy KPMG, I'll bottom line it for you. The US effective corporate tax rate is 40%, the Global average is 25%.

 

[mcbrett]

dheiman,

I guess you are one of those guys who believes industry publications meant for lobbying purposes.

Here's Bloomberg to explain to you the difference between a tax rate and effective tax rate in the US.

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[dheiman]

I guess I'm just not smart enough to understand.

Did you read your own link?

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[mcbrett]

Perhaps dheiman. Yeah that article was about google, and oh, 2,000 other US companies. When you're given one example- it isn't implied that this is how all the others lower their effective tax rate.

There are plenty of other tricks other than relocating income to other countries, whether it be disguising compensation as expenses, accelerating depreciation, "reinvesting income" into the business as research and development- and plenty of other tricks that many fortune 500 firms apply. Whatever, they are allowed to- it is technically legal, and that is why there is a large difference between stated tax rates and effective tax rates.

Hope this helps

 

[dheiman]

I'm sure we can agree that small businesses do not, generally speaking, take advantage of the same credits, subsidies and loop holes.

I think we could also agree that the tax code is so ridiculously cumbersome that we would all benefit from a simplified fair tax system. . . well maybe not google, GE and your other 2,000 companies. I just think everyone should PAY their taxes before we worry about raising the rates.

 

[mcbrett]

No actually we can't agree on small businesses- and I can thank my father for that who owned a furniture store in Central Texas for 35 years. He paid next to nothing in taxes the entire time- and its probably a good thing as he was lucky to break $40k/yr in compensation ever. Yet, I'm sure his store did generate plenty in sales taxes for the local govts. I am not exactly willing to disclose his tricks (he is now retired, store is long closed.) And trust me- he did nothing novel, and his tax avoidance strategies are well known and used in the small business communities.

And no one here is suggesting to raise corporate taxes- you just thought we were. I started this thread in large part because I despise the mistruths some here spread that our only problem is spending, when in fact it is half of the problem. Better collections, reduction of some subsidies and loopholes, as well as reduced waste and reduction of entitlement spending is the smart, bi-partisan suggestion widely used. There are some politicians and posters here who think the only thing you ever do to help the economy is to lower personal and corporate taxes. In short- no, that strategy doesn't work- and it's been tried several times. And, as the data shows, our effective tax rates are definitely not high. See first post for that data.