The United States is a low-tax nation, at least for the rich and big corporations.
Bruce Bartlett makes that point clearly—and you can’t have much more conservative credibility than Bartlett (who served as a domestic policy adviser to President Ronald Reagan and was a Treasury official under President George H.W. Bush.)
by the broadest measure of the tax rate, the current level is unusually low and has been for some time. Revenues were 14.9 percent of G.D.P. in both 2009 and 2010.
Yet if one listens to Republicans, one would think that taxes have never been higher, that an excessive tax burden is the most important constraint holding back economic growth and that a big tax cut is exactly what the economy needs to get growing again. . .
The truth of the matter is that federal taxes in the United States are very low. There is no reason to believe that reducing them further will do anything to raise growth or reduce unemployment.
That’s it. End of story. As I have argued many times on this blog, the only reason there’s a fiscal deficit in the United States is because taxes on wealthy individuals and corporations have fallen to historically low levels, while their incomes and profits have risen to record highs. It’s not, as the right-wing argues, because social programs are too generous; or, as liberals argue, because health-care costs are out of control. It’s because those who can pay don’t.
Let’s look more closely at the 400 richest households in America, based on the latest Internal Revenue Service data. In 2008, they paid an average federal tax rate of 18.11 percent, as against 26.38 percent in 1992. In the meantime, their average income (in 1990 dollars) rose from $43.6 million to $164.2 million.
Moreover, as against those who argue wealthy individuals now earn a large percentage of their income by working hard (and thus through salaries and wages), the numbers tell a different story: in 2008, salaries and wages represented 8 percent of their adjusted gross income (compared to 26 percent in 1992) while net capital gains represented 57 percent (compared to 36 percent in 1992).
And what about the effective tax rates on the richest 400 households? 7.5 percent had an average tax rate of less than 10 percent, 25 percent paid between 10 and 15 percent, and 28 percent paid between 15 and 20 percent. Just as with corporations, the effective tax rate is much lower than the much-ballyhooed statutory rate.
The fact is, the United States has become a giant tax haven for wealthy individuals and giant corporations. If they paid their fair share of taxes, there would be no fiscal crisis and no need to cut social programs.