Some tax facts from the Tax Foundation [pdf]to ponder while you work toward paying off the government’s first claim on your paycheck today.
Fact 1: Not everyone is doing that.
Today, 46 million tax filers have no income tax liability after taking advantage of all of the credits and deductions in the tax code—one-third of all tax filers. Obama’s tax polices, such as the “Making Work Pay” tax credit, will increase the number of non-payers to more than 63 million.
Or 63 million won’t , as Scott Hodge of the Tax Foundation says, have any “skin in the game”. Why should they care about tax policy or how tax money is spent?
Fact 2: Not all tax cuts/credits are good.
[T]he most politically popular tax cuts actually give the government more control over the economy rather than less. Even the credits enacted with the best of intentions—such as the $1,000 child credit, hybrid vehicle credit, or adoption credit—are bad tax policy because they attempt to induce people to make choices politicians think are right while rewarding select industries at the expense of others.
Or said another way, we again have government picking winners and losers, which few people would accept as something it should be doing. Politicians use their first claim on what you earn to reward you by not taking it if you do what they want. Is that your idea of the function of government?
Fact 3: High corporate taxes punish workers.
As the new study explains, there is a growing body of evidence that a large share of corporate taxes is really borne by workers—most of whom are not wealthy. Using statistical methods, the new study found that for every $1 rise in state and local corporate tax collections, real wages in that area fell by $2.50 five years later. The reverse is also true: wages rose by $2.50 for every $1 reduction in state and local corporate income taxes.
If wages are depressed in your particular state or locality, check out the corporate tax rate – as we’ve pointed out for years, corporations don’t pay taxes, they pass them on.
Fact 4: US corporate taxes are high.
Average OECD top corporate tax rate: 26.29 percent. Average U.S. top rate: 39.1 percent.
And of course after spending time demonizing corporations as rich and greedy, the present administration and Congress want to raise these taxes even higher. Then they’ll have another job summit and wonder why unemployment continues to get worse and wages are stagnant.
Fact 5: The rich actually pay more than their “fair share”.
Share of federal income tax paid by top 1 percent: 40.4 percent. Share paid by bottom 95 percent: 39.4 percent.
In fact, the rich pay more than 95% of the taxpayers out there – and the plan is to tap them for even more. Because, of course, they’re rich, and that automatically makes them “greedy”. Not in the plan is how the government will make up the revenue it plans on collecting with this new tax when the rich do what is necessary to protect what is theirs from the increased government looting.
Fact 6: Tax increases cost nearly twice the revenue raised.
“With every dollar of revenue, the proposed tax hikes cost the economy an extra 86 cents.”
Called “deadweight loss” high taxes distort the economy by artificially affecting decisions, such as:
…how much people choose to work by decreasing the financial reward to labor. High tax rates also may discourage savings, affect investment choices, and change the way households spend their money. For these reasons, economists recommend low tax rates and broad tax bases.
But that’s not at all what we now have – 63 million projected to be paying no taxes at all, corporate taxes higher than the OECD average and going higher and 1% of the population paying more in taxes than 95%?
If you can’t see what’s wrong with this picture and where it portends to leave us as we try to “recover” from the recession, then you’re being willfully blind. And, if some of this isn’t addressed and changed in the upcoming jobs summit, nothing is going to change to improve the employment situation. We have a tax structure that is anti-growth, anti-business and anti-liberty. The unfortunate thing is the present administration and Congress are working on legislation right now which will actually increase the tax burden exponentially and have projected trillion dollar budget deficits for the next 10 years.
How, given the above and the inevitable result of their unconscionable planned government spending spree (and taxes to support it) are we going to “grow” our way out of this?
If you were wondering what it would take in terms of tax rates, to “erase the deficit”, the Tax Foundation [pdf] provides a couple of handy, dandy charts for you:
Note – this only “erases the deficit” – it does not even make a small dent in the debt which stands somewhere in the 11 trillion dollar area.
So when you hear that all this new spending, which will indeed raise the deficit, won’t raise your taxes by a single “dime”, you can believe it if you wish. But that doesn’t mean it is true. And it certainly doesn’t mean Democrats can keep that promise. Because if they do, they’re simply kicking the same can down the road that Republicans have for years (and no, I’m not advocating massive tax increases, I’m just providing a little reality check to counter the nonsense the politicians continue to spout). The alternative to the tax rates above is to cut spending – drastically. If you see that on the horizon you’re the only one because Congress just raised the debt ceiling – again.
[HT: Tax Prof]