Actually, as a share of the nation's economy, Uncle Sam's take this year will be the lowest since 1950, when the Korean War was just getting under way.As TaxProf points out, however, there is a little something left out of the AP story, namely, that the same CBO report demonstrates that under the current tax structure tax revenues will soar to an all time high as a percentage of GDP once the economy picks up (chart via TaxProf):
And for the third straight year, American families and businesses will pay less in federal taxes than they did under former President George W. Bush, thanks to a weak economy and a growing number of tax breaks for the wealthy and poor alike.
Income tax payments this year will be nearly 13 percent lower than they were in 2008, the last full year of the Bush presidency. Corporate taxes will be lower by a third, according to projections by the nonpartisan Congressional Budget Office.
In addition to leaving out the context of the "lower" taxes, the AP also misuses the term "lower taxes." What it means is "lower tax revenues" which is not the same thing.
But who reads or fact checks the details anyway? Certainly not AP.
Update: Not surprisingly, Steve Benen citing to the Center for American Progress (which runs Think Progress) repeats the headline message uncritically:
As Michael Ettlinger, head of economic policy at the Center for American Progress, said at the time, "The idea that taxes are high right now is pretty much nuts."--------------------------------------------
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Great news!!!: Homeless people save big on utility bills.
ReplyDelete"In addition to leaving out the context of the 'lower' taxes, the AP also misuses the term 'lower taxes.' What it means is 'lower tax revenues' which is not the same thing."
ReplyDeleteThat is what I saw immediately when I reviewed this chart and read the headline. The chart shows that revenues are at their lowest ever, which lines up with the unemployment rates, jobs lost, and businesses going bankrupt - all resulting in the inability for tax dollars to be collected. AP="All Propaganda" 24/7.
The cashier at my local grocer routinely inspects the authenticity of any twenty dollar bill; holding it up against the store's light. There's a lot of fake money in circulation, she tells me.
ReplyDeleteIf you handed her AP's headline, she'll call the cops on you. Because the invisible ink on AP's headline actually says "By our own estimate, Tea Party types and their supporters do not have a legitimate cause against the Government's imperial entitlements to your money"
My paycheck says otherwise.
"Center for American Progress (which runs Think Progress) repeats the headline message uncritically:"
ReplyDeleteThey lie.
They lie by commission.
They lie by omission.
They lie.
Even if taxes were lower, this would be mostly irrelevant.
ReplyDeleteThe cost of government is what it spends, not what it taxes. If it spends more than it collects in taxes, then it borrows from the same people who might otherwise invest their capital in PRODUCTIVE projects.
"As TaxProf points out, however, there is a little something left out of the AP story, namely, that the same CBO report demonstrates that under the current tax structure tax revenues will soar to an all time high as a percentage of GDP once the economy picks up (chart via TaxProf)"
ReplyDeleteMighty BIG ASSUMPTION that the economy is going to pick up...
@sailingbum said.. "Mighty BIG ASSUMPTION that the economy is going to pick up...
ReplyDeleteAs I watch to CNBC every day, investment manager after investment manager keeps telling us that the economy IS picking up. It's an "animal spirits" thing where feelings and wishes trump facts.
We keep investing in foreign job creation and somehow our equity markets are supposed to be a predictor of the US economy. Just because American corporations are profitable, it doesn't mean Americans are benefiting. Domestic jobs require domestic investment but then, our government seems to think that will happen in a rapacious domestic tax and policy environment.
My taxes were incredibly low in 2009. Of course I didn't have a job ... ... ...
ReplyDeleteI saw a similar discussion over on American Catholic blog - http://the-american-catholic.com/2011/01/28/rewinding-taxes-to-the-good-old-days/
ReplyDeleteI replied:
"I am curious – do the differences between the 1955 and 2010 tables also reflect other payroll deductions, such as FICA (SS and Medicare – 7.6% of paycheck up to $108,000, if my research is correct)?
It seems to me that one would have to take into account sales tax and spending habits as well in order to make a true comparison of this (in addition to FICA deductions, etc.). Indiana, for instance, levied its first state sales tax of 2% in 1963."
To which the original poster replied:
"Ah, that’s a really good point about social security. (And Medicare, which didn’t even exist in 1955.)
According to this table, it looks like the difference is pretty big.
In 1955 the rate for employees was a total of 2% (just SS, there was no Medicare) while in 2010 the total rate is 7.65%
It’s far worse for the self employed. In 1955 they paid only 3% total, now they pay 15.3%.
Since the entitlement taxes are not progressive at all, that pretty much evens up the field on tax progressiveness between 1955 and 2010."
MONDAY
ReplyDeleteObama Pledges to Work With Business in Chamber Speech
US News
TUESDAY
"President Barack Obama's budget proposal is expected to give states a way to collect more payroll taxes from businesses, in an effort to replenish the unemployment-insurance program."
"To avoid (hurting Obama's re-election chances) hitting businesses with a tax increase during the economic recovery, the proposal would delay the new rules until 2014."
WSJ
Bzzt. Try reading the actual report. The increase in tax is due to the lapsing of current tax law and return to 2001 law. So it's not "under the current structure" and the impact of the economy is marginal.
ReplyDelete