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Tuesday, January 31, 2012

AMERICANS ARE PAYING THE LOWEST TAX RATES SINCE 1951

Every so often I get inexcusably pedantic.  Today, I will attempt to show you why we should not worry about our high debt and argue that we need to get rid of all Tea Party types so that we can increase our taxes.  No, this is not sarcasm...I'm serious.

Republicans, especially the Tea Party, are focused on cutting your taxes.  When President Barack Obama began his presidency in January of 2009, the nation and world were on the brink of another great depression.  In their wisdom, the White House and Congress decided to increase our national debt instead of taxing us to pay for the bailouts.  First, I'm not concerned about this scary national debt.  Read my Huffington Post article on this subject.

I am, though, concerned about the taxes we pay, for like Warren Buffett, I don't think we are paying enough.  DO YOU REALIZE AMERICANS ARE PAYING AT THE LOWEST RATE (AS A % OF OUR GROSS NATIONAL PRODUCT) SINCE 1951?

Here are some facts about the taxes you pay:



Facts at a Glance
  • By the end of 2011, the federal government is projected to receive in revenues $2.3 trillion, or 15.3 percent of the economy– well below the historical average of 18 percent of GDP.
  • 1913 – First year the United States government collected federal income taxes (from all eligible citizens earning $3,000 or higher annually)
  • $1.3 trillion – Cost of tax expenditures in the United States in 2011.
  • 18 percent of Americans will not owe payroll or income taxes this year
  • The average American taxpayer pays 18 percent of income in federal taxes


Historically, the taxes we now pay, as a % of GDP, are the lowest in 60 years:
That uptick you see from 2013 into the future is only if those Bush tax cuts of 2003 and 2005 expire.  The yellow line represents why we are in greater debt.  We are outlaying a lot, but that was to save the world (and our) economy.

Further, compared to major economies, Americans pay a lot less in taxes:


One disquieting development, though, is the income share of the top 1%:


Note that the last time this figure neared 25% was just before the stock market crash of 1929.  The rich might have too much money and are taking high risks.

So what is the simple solution?  As long as we can keep interest rates low, don't fret the debt problem.  The Chinese, or anyone, can't just take their money out, for they are investing in America for periods up to ten years.  When the interest rate does go up, we use the low percentage loan we are paying them (around 3%) and become a lending nation.  Let the Bush tax cuts expire in 2013 and reduce the debt over time.  America is in great shape!

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The Dow Jones Industrials slipped 21 to 12,633, while world markets were mostly up.    Gold increased $4/toz to $1736, while the WTI crude is at $98/barrel and Brent Spot at $111/barrel.

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I had dinner on my roof with this sunset:


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1 comment:

Anonymous said...

The railroad that America seems to be on is the unfit he'd revolution dictated by pre-FDR policies of free traders who wondered what would happen if there were no wage and price controls to worry about, and few regulations.

The premise of this view, however, is that the concept is deeply flawed, seeking to live well off of the labor investment of millions. It is slave mentality without having to support the plantation's slaves, the benefits without the obligations. It is the theft of the resources of others - the hallmark and premise of the Gatsby era.