The good news: Tax rates are the lowest they've been in 60 years.
Federal, state and local taxes — including income, property, sales and other taxes — consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.
As Jon observes, the sheer cognitive dissonance is going to make the Tea Partiers even more insane. This is a pretty stark reality for them to come around. For all the squawking about taxation and the like, they (and the rest of us) actually have a lower tax bite than we've had in decades. On the other hand, it is also true that part of the reason for that lower tax bite is the current state of the economy, which leads to the bad news.
The bad news: There's no way they're going to stay that way.
You'd think it would go without saying that there's no way to wage two wars, fight back a recession, deal with high unemployment and health care without a tax increase. There will be a tax increase. It's inevitable. And in my opinion, anyway, it's right.
The most obvious tax increase is the one most painless to pass: Expiration of the Bush tax cuts for high wage earners. Those are set to expire this year and despite the inevitable wails of Republicans in Congress, they will not be extended nor should they be.
Of course, Republicans are already looking to make this an election year talking point. They will claim that Obama represents the classic "tax and spend" Democrat while ignoring the very real benefits they've enjoyed while we climb out of an economic abyss no one has seen in 80 years.
Because most of those costs won’t be paid for, Republicans plan to use those bills and the Democrats’ budget blueprint to highlight massive deficits ahead of the congressional midterm election. Republicans have recently been pointing to Greece’s dismal fiscal situation as a warning, claiming that the U.S. will be headed for a similar fate unless the deficits are curtailed.
“Washington Democrats’ out-of-control spending spree is scaring the hell out of the American people,” said Michael Steel, a spokesman for House Minority Leader John Boehner (R-Ohio). “It has to stop.”
In Republican-land, the credit card had no limit and now they want to blame the ones cleaning it up. Let's hope there are some people with enough sense to figure that out.
“After bringing our nation into war and our economy to the brink of collapse, Republicans now do not want to pay for their poor decisions,” said Regan LaChapelle, a spokeswoman for Reid. “Democrats are committed to supporting our troops while they are abroad, while working to safely bring them home. And we will continue to support out-of-work Americans by creating jobs and providing the assistance that they need to pay their bills.”
Lather. Rinse. Repeat.
(Bonus: Conservative writer Kevin Williamson agrees. And says so.)
