New graph highlights fact that people making lots of money have it pretty easy.
Take a look at this gorgeous, patriotic graph showing the relative U.S. income tax burden since 1913:
Each line represents a year, changing color across the horizontal axis, which is Taxable Income. As people at each salary level have to pay a higher or lower share of their income, the line becomes more red or more blue at their section: red means you’re paying a bigger share of your money than the average taxpayer of theirs; blue means you’re paying less.
Two things jump out at the casual class warrior. First, people at the lower end of the wealth spectrum see their lines get a lot more red than people in the upper echelon ever do. Somehow, that holds true even in the 1940s, when the top federal income tax rate was hovering around a not-so-modest 90%. How someone making $1,000 annually could pay a greater share of their income than someone making $10 million and getting taxed at a nine-tenths rate is beyond me. It probably speaks to the fact that having lots of money makes it really easy to avoid giving any to the government.
Second, where is the bottom of this graph? After the 1990s, the lines become more pale than a Republican presidential nominee. The only ones blushing are those people making between about $10,000 and $150,000 per year, and their share of the line is medium rare at best.
If we’re to believe this graph, it sure looks like nobody is paying taxes these days. Relative to history, that’s sort of true.
One of my favorite statistics in the periphery of our recession and budget crisis is Individual Income Tax Receipts—a.k.a. tax revenue. Look at this table of government receipts by source since 1934. If you look at the left-most column, you’ll see that from about 1950 to 2000, individual income tax receipts, unadjusted for inflation, roughly doubled every decade.
Then, look at what happens after 2000. Tax revenue tanks. It actually goes down by more than $200 billion at its nadir; we still close out the decade almost $100 billion shorter in revenue than when it started, effectively reversing a half-century-long trend. And the decline starts pre-recession.
It also starts pre-war. One of the last things President George W. Bush did before starting two expensive and protracted international conflicts was cut taxes and slow government receipts.
As a matter of fact, taxes haven’t gone up for anybody in nearly 20 years; the last time was when Clinton stratified the top income bracket and raised the highest marginal rate from 31% to 39% in 1993, crippling the wealthy and ushering in a new era of Bolshevism (j/k).
The disturbing whitewash at the bottom of this graph doesn’t just tell us something about who’s paying for the government. It’s also one explanation for why soon, the government may not be paying for you.
I’m referring to the budget battle that’s currently got Republicans and Democrats telling each other to “suck it.” So many expenditures and so few receipts have put us in a deep hole. Now, Republicans want to see $61 billion trimmed from President Obama’s budget for the current fiscal year, which clocks in at a whopping $3.7 trillion. In other words, Republicans want to solve the debt crisis by cutting 1.6% of the federal budget. Read that sentence again.
Dems don’t want to give in to the GOP’s demands, which would essentially defund Planned Parenthood, public broadcasting, the EPA, and a host of other government agencies and programs that fall under the umbrella of “discretionary spending.” House Democrats offered $4 billion in cuts over a two-week span, just to keep the government running for that amount of time. Republicans agreed; now, two weeks later, the compromise’s life span is up, the government is out of money again, and Congress needs to either pass a budget or another continuing resolution by Friday. Obama’s team has offered another $6 billion in cuts. Republicans are saying it’s still not enough.
But neither is $61 billion, by deficit reduction standards. The fact is, defense spending, Medicaid, Medicare, Social Security and debt interest payments account for about 60% of the federal budget. Check it out: you could cut every other government service, eviscerate every single one—unemployment insurance, aid for veterans, even federal employees themselves—and that would only save $1.5 trillion. That doesn’t even get us into the black when trying to cover a $1.7 trillion gap.
And yet, the federal government refuses to raise taxes because they will “kill jobs,” even though careers have been lining up like lemmings since 2007. By holding the line on taxes, refusing to let any of the Bush-era cuts expire last December, Republicans have been able to focus their energy entirely on “debt reduction” rather than revenue raising. The only option, they say, is to spend less.
Make no mistake: the budget debate on Capitol Hill is not about money. It’s an ideological battle; just look at the programs that are on the chopping block. If the GOP were serious about getting debt under control without raising taxes, they’d come forward with a bold proposal to restructure our entitlement programs, which are the biggest drivers of cost—pretty much what Obama tried to do with the national health care system. Think they’ll come through? I’m not holding my breath.
Meanwhile, December’s news that the federal government would keep everyone’s taxes low should have provided the perfect chance for states to raise their rates as part of a deficit-closing scheme without imposing overly severe austerity measures. Did that happen? Ask Wisconsin.
