Mike Kole posted a Reuters chart that ties into my recent post about Social Security not being the problem.
Mike had a different point to make about how we should cut spending; but I think this graph says a lot about how funding of government expenditures has changed over the past 50 years. Note the sharp decrease in the share of federal revenues represented by corporate and estate taxes. Income taxes have dropped some but not in the same proportion as corporate and estate taxes. And those payroll taxes (social security and comparable taxes) have really been asked to pick up the slack. Given that those taxes are only on the first $107,000 or so of income, if there is class warfare in this country, it’s reasonably clear who has been winning in post-World War II America.
Also, keep this post in mind the next time someone uses payment of federal income tax as a sort of stand-in for a person’s overall tax burden while advancing the argument that the rich are over taxed and the non-rich aren’t doing their fair share.
The graph does not make your point. What is unsaid is that the BUDGET ITSELF consists of the entitlements that these payroll taxes are earmarked for. Social Security and Medicare are a much higher percentage of the budget than they used to be.
Call me crazy, but your complaint about the system is exactly how it was set up, and probably seems fair to the vast majority of voters. We want OUR payroll taxes to pay for OUR benefits. To do otherwise is to turn the system into welfare.
Now, it doesn’t work exactly that way since it is a pay as you go system, but that is how it is sold to voters.
The corporate and estate taxes are trivial taxes in the grand scheme of things. The generate very little revenue, and create far more economic unintended consequences than they are worth. I’m not even sure that eliminating the corporate income tax would cost any revenue, it would just be collected as either dividends (individual income taxes) and/ or capital gains. Eliminating the estate tax could do the same if the heirs had to pay capital gains taxes on the inheritance when/ if it is ever sold.
Buzzcut +1.
Also, let’s not forget that the only country with higer corporate taxes than the U.S. is Japan. Has anyone seen that country’s stock performance over the last decade? Japan has realized that thier corporate tax level is too high. Hopefully, so do we.
While I am not crazy about the “Fair Tax”, we need a VAT. This type of system has been succesfully utilized by many nations that are far more liberal than us, and I know this suggestion has been suggested domestically by the Republican party (Huckabee’s Fair Tax and Forbes’ suggestions are just two). Let’s make the switch already. This would also be a good thing for the Democrat Party, as it would mean that Republicans would have less ammunition in their attack on taxes.