Posted on 02/25/2013 12:01:36 PM PST by LucianOfSamasota
Tax revenue as a percent of GDP is historically been in the 19-21% range regardless of how high the marginal federal tax rates have been. This has been the case from 1950 to the present (see Hauser’s Law). Of course the enlightened ones in Washington spend 25% of GDP, hence the deficit.
As for your quoted rate of 27% of GDP and how is anyone paying over half in income taxes, did you just ignore the 47-50% who pay NO income taxes at all? Further, the point made about taxes was not just federal income taxes but all taxes. Just add up all the far ranging taxes paid. Some examples include SS, Medicare, property, state/local, gas, and sales taxes. At least everyone has to pay some of these as well but high income productive types certainly pay more in dollar amounts and yes it does approach 50%+.
So, if you accept that tax revenue is going to be around 20% of GDP the way to increase revenue is to increase GDP with economic growth.
The 27% number I found was inclusive of all levels of taxation.
No one has to struggle to pay less than 50% of their income in taxes. It’s just a demagogic talking point with no basis in reality.
Not really.
The graph peaks in 1999 or so, stays steady until 2001, then drops for three years or so until 2004.
Again, the graph levels out until the end of 2008, then nosedives at twice the previous rate, dropping 2 1/2 percentage points in three years as opposed to the 1% observed form 2001 - 2004.
In fact, if you run the chart all the way back to the beginning (1948), this is the most remarkable, startling and precipitous drop in employment since records have been kept.
To restate: There has never been a drop like this in our lifetime, certainly not since WWII.
And THAT is a pretty good reason to stop at Obama.
Here’s the math behind that depressing calculation. Today’s top federal income tax rate is 35%. Almost all Democrats in Washington want to repeal the Bush tax cuts on those who make more than $250,000 and phase out certain deductions, so the effective income tax rate would rise to about 41.5%. The 3% millionaire surtax raises that rate to 44.5%.
But payroll taxes, which are income taxes on wages and salaries, must also be included in the equation. So we have to add about 2.5 percentage points for the payroll tax .... employers are responsible for collecting this tax, it is ultimately borne by the employee. That brings the tax rate to 47%
http://online.wsj.com/article/SB10001424052702304066504576343611464445594.html
Flashback: “Obama pledges to veto effort to undo automatic spending cuts”
“Already some in Congress are trying to undo these automatic spending cuts. My message to them is simple: No,” Mr. Obama said from the White House briefing room Monday evening. “I will veto any effort to get rid of those automatic spending cuts to domestic and defense spending.” November 21, 2011
“The President will urge Congress to come together and act to ensure these devastating cuts to defense and job-creating programs don’t take effect.” - White House statement, February 5, 2013
Do you understand the concept of marginal tax rates? I'm not trying to be snarky this is a real question because from your statement above it appears you don't.
But payroll taxes, which are income taxes on wages and salaries, must also be included in the equation. So we have to add about 2.5 percentage points for the payroll tax .... employers are responsible for collecting this tax, it is ultimately borne by the employee. That brings the tax rate to 47%
By payroll taxes I'm assuming you mean social security and medicare? The 6.2% for social security only applies to the first $113,700, or so, of wages. The 1.45% for medicare doesn't have a wage base limit so this one would apply to all wage income.
This still brings us nowhere near someone having to pay over 50% of their income, as originally argued upthread, in taxes.
Then you have to take into consideration the capital gains tax which is well below the top marginal rate. The top earners also earn much of their income from capital gains so you have take this into account and that would also put downward pressure on the amount of yearly income having to be paid out in taxes.
All this goes to show is that while "I have to struggle to keep half my income!!!!11!1 :doom:" makes a good soundbite it's nowhere close to being true.
I will donate $10 to Free Republic if you can show me one person that pays more than 50% of his income in taxes. Real evidence mind you not just some anecdotal comments.
Your WSJ article is pretty outdated and the tax increase he used to make his calculations haven't materialized.
“how is anyone paying half of their income in taxes?” ........ property tax, gasoline tax, liquor tax, tobacco tax, sales tax, capitol gains tax, etc., etc., etc., ad nauseum, ad infinitum.
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