So you think US corporate taxes are too high? It’s holding back the economy? Here is what poor General Electric has had to pay.
What’s that right most graph? “Effective Tax Rate”: aren’t those numbers negative? What, US taxpayers paid them money? They most have declared heavy losses. What, they made billions of dollars every year for the past seven years except for 1 year!
Corporate welfare at it’s best!
From Paul Krugman is this interesting chart about the upper tax rate. I don’t think (and I doubt anyone else does) that high taxes/high regulation cause growth but it is clear that low taxes/low regulation are not the be-all/end-all of economic policies.
The blue line, left scale, shows median family income in 2008 dollars; the red line, right scale, shows the top marginal tax rate, a rough indicator of the overall stance of policy. Basically, US postwar economic history falls into two parts: an era of high taxes on the rich and extensive regulation, during which living standards experienced extraordinary growth; and an era of low taxes on the rich and deregulation, during which living standards for most Americans rose fitfully at best.
Americans are famous for overestimating our international aid. One study found that the average American estimates that a quarter of the budget — more than Social Security, or Defense — goes to aid abroad.
Here’s the original data plus an added column “Estimate” that gives the weighted average (the percent of people times the size of the estimate with “Not Sure” ignored):
And for those of you more visually oriented, here’s the actual size of the different budget areas:
And now let’s see where the differences are greatest. The blue line is the actual values:
So money spent on Assistance to low-income families, Medicare & Medicaid, and Social Security match expectations. People think we spend more than we do on everything else. Of course, International Aid is still a ridiculous difference.
The Congressional Budget Office (CBO) has a report on Federal Estate and Gift Taxes. One of the interesting things is only 0.7% or 17,400 of estates are actually affected by the estate tax.
In 2000, before EGTRRA was enacted, 51,200 estates were taxable, representing 2.2 percent of adult deaths in that year. EGTRRA reduced the percentage of estates that were taxable. For example, 17,400 taxable estate tax returns were filed in 2007; most were for deaths in 2006, when the effective exemption amount was $2 million, representing about 0.7 percent of adult deaths in that year.
Another concern is how the estate tax affects family farms and small businesses. The report says about 1,100 farms are affected. In 2000, when the exemption was only $675,000 vs the $4 million today, only 138 of farmer’s estates didn’t have enough liquid assets (cash) to pay the estate tax. Liquid assets include trusts which could be used to pay the taxes. Additionally, there are many provisions such as 15 year, low interest rates loans to help minimize the burden.
From Conor Clarke is this chart plotting the effective federal tax rate of the upper 1%.
First off, never trust a chart that doesn’t start at 0 but anyway. What’s interesting is that this is the effective rate being paid (not the marginal rate).
Here’s some related information that shows how income has grown for the wealthy. This is also the chart that makes a great argument that income inequality isn’t representative of an educational gap. Presumably, the top 10% have all received comparable educations — yet the top 1%’s income has grown even more.
And in the most recent past, the very highest earners did very well indeed, capturing almost three-quarters of total income growth in the economic expansion of 2002 to 2006, while the remaining 99 percent of the U.S. population split among themselves the final 25 percent of the increase.
There’s a certain beginner’s level of this. Here, when progressive tax policy has been in place during a period of growth, and that growth has led to a budget surplus, you argue not that it’s smart to balance the budget over the course of the business cycle, but rather that the surplus reflects the government “overcharging” in taxes that should be returned to those who pay the most taxes; which is to say to those who have the most money; which is to say to the rich. That’s a 1999 argument. Then if the economy falls into recession wiping out the surpluses, you argue that a tax cut for the rich is needed as economic stimulus. That’s a 2001 argument. And if the economy is growing during a period of conservative tax policy, you argue that the low taxes produced the growth so need to be kept in place forever. That’s a 2005 argument. And then if the economy falls into recession again, you argue that additional permanent tax cuts for the wealthy are the only solution.