In an earlier political posting I pointed out that the top federal income tax rate – for earned income – has seldom been lower than it is right now.. and the rate that Mitt Romney pays on dividends is half of that. Federal taxes, in general, are at one of the lowest points since 1912… suggesting that our current national argument about taxes ought to at least feature commensurately lower rates ofanger. Sure, let’s negotiate how to simplify the system and make it more fair. But can we tone down the rage a little?
“We are at a revenue level that is almost the lowest in 60 years as a share of national income, too low to fund the things that are required,” Mr. Conrad said.
In 2011, federal tax revenue as a percentage of the gross domestic product stood at 15.4 percent, the Congressional Budget Office said in January. That is up slightly from the previous two years, but otherwise is the lowest percentage since 1950. Federal spending last year, at 24.1 percent of gross domestic product, was on a par with 2009, but to see such levels before the recentrecession, you have to go back to 1946 and the winding-down of World War II.
…and this, from later in the article:
“The Bush tax cuts, which totaled nearly $2 trillion over their first decade, remain highly controversial. Tax cuts in 2001 lowered income tax rates at all levels, to 35 percent from 39.6 percent for the highest income earners, and to 10 percent from 15 percent for the lowest bracket. They also doubled the size of the child tax credit and made it refundable for the working poor, while phasing out the tax on inherited estates and allowing affluent taxpayers to take more deductions and credits. Even Mr. Hubbard acknowledges that in some ways the cuts made the tax code more complex.
Another round of tax cuts in 2003 reduced most capital gains tax rates to 15 percent from 20 percent, while also taxing dividends at 15 percent. Before, dividends were taxed as ordinary income, meaning a 39.6 percent rate for affluent investors.
Mr. Conrad calls the tax cuts “a profound mistake for the country on almost every level.” Still, 2001 started as a heady year, with the Congressional Budget Office projecting a federal budgetsurplus for the coming decade totaling $5.6 trillion. Alan Greenspan, then the chairman of the Federal Reserve, worried that the federal debt would be eliminated too quickly, leaving the world with nothing to benchmark interest rates against because Treasury bonds would cease to exist.”
Really? How charmingly naive and quaint. And dismally stupid and an utter repudiation that such people should ever again be listened-to or allowed anywhere near power.
Read the article… and the suggested “reforms” that are being discussed. I am seriously unimpressed with most of them. See my own suggestion on how the tax code can inarguably be simplified while avoiding the usual political wrangling. My “no losers” approach separates simplification from tax “policy” or who should pay more! If we did this first, we’d have a sleek, sensible system in no time, and could then make policy adjustments that made sense.
Oh… but it gets worse, way worse. See these charts revealing the “knee-capping of the U.S. middle class.” And yes, this will be the issue, for the rest of 2012. Above all, as I suggested last time, use all this as a basis for making real-money wagers with your tea party uncles. But get them to write it down, first.