Thursday, June 16, 2011

Singin' a different tune?


Bruce Bartlett, former economic adviser in the White House, the Treasury Department and Congress, apparently the same guy who wrote "Starve the Beast", writes in the New York Times:

May 31, 2011, 6:00 am

Are Taxes in the U.S. High or Low?

By BRUCE BARTLETT

Historically, the term “tax rate” has meant the average or effective tax rate — that is, taxes as a share of income. The broadest measure of the tax rate is total federal revenues divided by the gross domestic product.

By this measure, federal taxes are at their lowest level in more than 60 years. The Congressional Budget Office estimated that federal taxes would consume just 14.8 percent of G.D.P. this year. The last year in which revenues were lower was 1950...

...

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.

Just last week, House Republicans released a new plan to reduce unemployment. Its principal provision would reduce the top statutory income tax rate on businesses and individuals to 25 percent from 35 percent. No evidence was offered for the Republican argument that cutting taxes for the well-to-do and big corporations would reduce unemployment; it was simply asserted as self-evident.

...

If taxes are low historically and in comparison with our global competitors, how are Republicans able to maintain that taxes are excessively high? They do so by ignoring the effective tax rate and concentrating solely on the statutory tax rate, which is often manipulated to make it appear that rates are much higher than they really are.

...

The economic importance of statutory tax rates is blown far out of proportion by Republicans looking for ways to make taxes look high when they are quite low. And they almost never note that the statutory tax rate applies only to the last dollar earned or that the effective tax rate is substantially lower even for the richest taxpayers and largest corporations because of tax exclusions, deductions, credits and the 15 percent top rate on dividends and capital gains.

The many adjustments to income permitted by the tax code, plus alternative tax rates on the largest sources of income of the wealthy, explain why the average federal income tax rate on the 400 richest people in America was 18.11 percent in 2008, according to the Internal Revenue Service, down from 26.38 percent when these data were first calculated in 1992. Among the top 400, 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.

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.

Highlighting added

Well, ya never know. Maybe he's running for President.

4 comments:

Jazzbumpa said...

Art -

Not on the immediate topic, but you will find this interesting.

At Beckworth's, Commenter Philip points us to his blog. At the post, the internal link is broken. I tracked down the reference here, via his archives.

I read through, and am not sure I get it, or would agree if I did. He's not at all shy about making his own set of unproven assumptions.

It's pretty cheeky to assert that Keynes, Friedman, and von Mises all got it wrong. If nothing else, I admire the chutzpah.

Cheers!
JzB

Jazzbumpa said...

BTW, I was Brucie on O'Donnell's show the other night. He still stands behind the early Reagan era tax cuts, but says it was different then.

It puts the modern Rethugs in perspective when one of the architects of voodoo thinks they are nuts.

Cheers!
JzB

Jazzbumpa said...

Actually I never WAS Brucie. However, I SAW Brucie, who is undoubtedly better a both typing and proofreading than I.

Cheers!
JzB

The Arthurian said...

MAYbe better at typing and proofreading, but certainly not funnier than you are, Brucie...

Hey I checked out the Philip thing. I really like that he has an argument of his own. I liked the Riddle of Money one, until my brain got full. I quit about half way thru. Parts of it require lots of rumination. Couple things I raised an eyebrow at.

But -- as Philip does not have a way for people to comment, I'm gonna go make a short post here, now.

Good link.