The answer is both. This is one of the best articles that I’ve read that spells that out. Fiscal+FactCheck.
This whole issue keeps sickening me. Some people do not seem to get this. If anyone of us got into a significant debt crisis (i.e. credit card bills, buying a car that we could not afford etc etc), what do we do??? Stop spending. And if it is not enough to just stop spending (of course we have to spend something to keep ourselves alive), we find ways to increase our income (i.e. work extra jobs etc, (increase taxes)). We do not borrow more money if we are responsible. Once we get back on track we can stop the extra jobs (lower taxes, of course we know once taxes are higher and we are used to it, they will not go doan again.), learn from past msitakes, and avoid excessive spending.
The obvious problem limiting the resolution of this immediate crisis is the partisan politics and schoolyard antics that goes on from BOTH sides of the table. Politics is ridiculous. Just watch the media. Put on CNN on TV and you are like wow, democrats are right, republicans suck! Then move two channels up to FoxNews and you are now a rebublican. Somewhere in the middle is the liberals. Amazing how they can all talk about the same thing but spin it completely different to brainwash the American People…OK, I am ranting.
Final point, all the people on the side of just cutting spending and not increases taxes are in for a rude awakening if/when that passes. OK, the FEDERAL government will not increase FEDERAL taxes and cut FEDERAL spending. One area that will be cut is funding to the STATE for police, fire, shools, etc etc. Where will that money come from??? The state will raise STATE and MUNICIPAL taxes. Taxes will continue to rise and more money will come out of your pocket and salaries will not be going up as quickly but yes, the Federal government can boast that “they” did not raise taxes….
By the way, all those big companies and CEO’s getting tax breaks? I believe they rely on the same police, fire, and other public services that we do. But hey, with all the billions they are making, they can afford their own and send their kids to private schools. You would think they could perhaps agree to pay a little more to help offset this problem for a while. After all, they need middle class America aroung to put money in the economy.
The problem with our country: GREED.
At Wednesday’s Twitter Town Hall, Lane from Alabama asked President Barack Obama: “What changes to the tax system do you think are necessary to help solve the deficit problem and for the system to be fair?” Obama first reminded Lane that his stimulus plan actually cut some taxes, which is true, but then he said: “We actually now have the lowest tax rates since the 1950s. Our tax rates are lower now than they were under Ronald Reagan. They’re lower than they were under George Bush — senior or George Bush, junior. They’re lower than they were under Bill Clinton.”
This is just plain false as any quick visit to the Tax Foundation’s Federal Individual Income Tax Rates History table will show you. In 2011, the top marginal tax rate is 35 percent. Scrolling back to 1992 we discover that the top marginal rate under President George H.W. Bush was 31 percent, which is 4 points lower than today’s 35 percent. The top marginal rate was even lower under President Ronald in 1988 at 28 percent, which is 7 points lower than today’s 35 percent. How on earth could the President of The United States make such utterly false statement?
Obama’s mistake can probably be traced back to this widely linked February 7th Associated Press article reporting, “As a share of the nation’s economy, Uncle Sam’s take this year will be the lowest since 1950, when the Korean War was just getting under way … In the current budget year, federal tax receipts will be equal to 14.8 percent of the Gross Domestic Product, or GDP, the lowest level since Harry Truman was president.”
And it is true, as a percentage of GDP tax revenues are at historic lows. But as that same AP article later explains, the low revenues have nothing to do with low tax rates and everything to do with the recession: “The poor economy is largely to blame, with corporate profits down and unemployment up.” Not reported by the AP, however, is the fact that even if the 2001 and 2003 tax rates are made permanent, and the Alternative Minimum Tax is fixed, revenues are project to rise above their post-WWII average of 18 percent of GDP by 2013. And if Obama gets all the tax hikes he wants, tax revenues will blow past their historic high, 20.6 percent of GDP, by 2020.
The reality is that fewer and fewer Americans are paying any income taxes at all. A full 51 percent of all Americans either paid no federal income taxes, or they received a net tax benefit. About 10 percent of Americans even received more cash from the Internal Revenue Service then they paid in federal income and payroll taxes combined. Meanwhile, the top 10 percent of income earners are paying almost 70% of all income taxes while earning just above 50% of all income.
Gary, part of the reason that so many pay little to no taxes is they don’t have too per the current tax code because they make next to nothing. The tax code, flawed as it is, protects those that are on the lowest end of the wage scale. If you compare the skyrocketing cost of living to the stagnant wages in this country the math becomes really simple, more people fall below the minimum income levels so they pay less taxes. Couple that with unemployment rates that have held steady over 9% for a few years and again, you have a lot more people paying little to no taxes.
As for the 70% argument, it’s a statistical mirage. People use that all the time without being honest. Yes, 10% of income earners by roughly 70% of taxes but, again simple math needs to be applied. The top 10% of earners are taxed at relatively the same rate as I am, 35%. They also benefit from a lot more exemptions and can claim a lot more deductions then I do but even with that they pay more than I do, and they should. Their income level exceeds $1MM per year. Mine is nowhere near that. For argument’s sake, let’s say my total household income is $150K. My tax burden is $52,500. After I file I’ll probably get about $6500 of that back leaving me with taxes paid of $46,000. The $1MM man gets taxed at the same rate, 35%. His tax bill is $350,000. After his deductions he probably ends up paying an even $300K.
Now, let’s assume that he and I are the only ones paying any taxes. The total tax collected is $346K. The $1MM man paid 86% of the taxes, which seems patently unfair but it’s not. It’s just math. The more you make, they more you pay and when you add up what the millionaires pay the number looks humongous. But when you compare to as a percentage of their income it’s relatively the same as what you and I pay.
I find it so disturbing that people are arguing that millionaires are paying too much in income tax and middle class people are fighting to reduce THEIR tax burden. It’s really quite astonishing that they’ve been able to get people to do that. Astonishing.
Hard to argue with facts and that link does a great job at explaining the deficit without pointing fingers. The most astonishing thing is, some will read that entire article and still not get that we need to increase revenue (raise taxes) AND reduce spending. Lower spending will not balance the budget all by itself, regardless of what Rand Paul, Eric Cantor or Michelle Bachmann insist we believe.
Thanks for the link Derek.
Derek, nice link. I’ve been in the camp all along that ALL of the Bush era tax cuts should have been allowed to expire after the 10 years. I’m saddened that Republicans refuse to even allow the matter to be discussed and astonished that when the Senate, House and WH were all run by democrats that another 2 year extension was passed.
I think that Republican leadership is starting to look like somewhat illogical on this issue.
It’s fricking July 28th and they’re still trying to get a deal done.
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