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Sunday, April 12, 2009

Bartlett: Tax Tea Parties Misstate U.S. Tax Burden

Forbes: Tax Tea Party Time?, by Bruce Bartlett:

To protest the allegedly high level of taxation in the United States, various right-wing groups are organizing tea parties around the country [for April 15] in the spirit of the Boston Tea Party of 1773.

The irony of these protests is that federal revenues as a share of the gross domestic product will be lower this year than any year since 1950. According to the Congressional Budget Office, the federal government will take only 15.5% of GDP in taxes this year, compared to 17.7% last year, 18.8% in 2007 and 20.9% in 2000.

The truth is that the U.S. is a relatively low-tax country no matter how you slice the data. The following tables illustrate this fact by comparing the U.S. to other members of the Organization for Economic Cooperation and Development, a Paris-based research organization.

As Table 1 shows, total taxation (federal, state and local) amounted to 28% of the GDP in the U.S. in 2006. Only four of the 30 OECD countries had a lower tax ratio. Taxes averaged 35.9% for the OECD as a whole and 38% in Europe. Citizens of Denmark and Sweden paid very close to 50% of their total income in taxes.

Table 1: Total Taxes as a Share of GDP, 2006

Denmark

49.1

U.K.

37.1

Ireland

31.9

Sweden

49.1

Hungary

37.1

Greece

31.3

Belgium

44.5

Czech Rep.

36.9

Australia

30.6

France

44.2

N.Z.

36.7

Slovak Rep.

29.8

Norway

43.9

Spain

36.6

Switzerland

29.6

Finland

43.5

Luxembourg

35.9

U.S.

28.0

Italy

42.1

Portugal

35.7

Japan

27.9

Austria

41.7

Germany

35.6

Korea

26.8

Iceland

41.5

Poland

33.5

Turkey

24.5

Netherlands

39.3

Canada

33.3

Mexico

20.6

     

http://taxprof.typepad.com/taxprof_blog/2009/04/bartlett-time-to-tea-bag-the-tea-parties.html

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Comments

There is nothing ironic at all about these protests. At the time of the Boston Tea Party, the tax burden on the colonists was not particularly high either. Taxation approaching 30% of GDP (and soon to be rising much higher) is only "relatively low-tax" when compared with Europe.


Posted by: WilmotProviso | Apr 12, 2009 6:46:00 AM

Two quick notes:

1. The federal tax bite is lower than 1950 but it doesn't say the overall bite is lower. I'm guessing that it's not.

2. Is 28 percent of overall GDP--almost certain to increase under Obama--really that low, or is it merely not as high as some European countries? Wouldn't you also need to consider the economic performance of the countries with higher tax rates, as well?

In other words, isn't Bartlett being just as selective about the evidence as the "right-wing" groups?

It appears so.

Posted by: mike livingston | Apr 12, 2009 1:22:48 PM

It's obvious that Bartlett doesn't understand the tax protests and is selective in picking statistics that have nothing to do with them. Frankly, I couldn't care less what taxes are paid in socialist countries and other nations or that government may be playing games with projections.

Tax protestors are concerned about "spreading the wealth," which is giving tax "refunds" to people who never paid taxes by taking from others who do. You have to stand against that plan and for principle, because the thresholds for higher taxes will change, and soon any families making over $75,000 will be "rich."

Also, the irresponsible deficit spending will have to be made up by someone, and that "someone" is going to seriously impact my kids. Aren't liberals concerned about "the children?"

People who want to make fun of the tax protestors are poor historians and have liberal biases.

Also, when protestors demand their wants for more government spending, you don't see journalists identifying them as "left-wing groups." Bartlett should leave off his labels.

Posted by: Woody | Apr 12, 2009 6:38:52 PM

A pack of cigarettes cost about $3 in Ohio less than two years ago. Prices were around $4.20 in January and are now in the range of $5.10 to $5.75. I've read that only 2% of cigarettes are bought by those earning $250,000+. Once again, the Liberal Democrat Congress has succeeded in sucking a few more dollars a week from the working class and poor while they walk the correct walk to satisfy their wealthy, Liberal benefactors.

I will PRAY for any Republican candidate who will vow to repeal as much of this strangling taxation regimen as he/she can accomplish. Will a Republican Presidential candidate be cognizant enough to make this the issue in the 2010 Congressional election and then build on it for 2012? I haven't seen that person come forward.

RonT

Posted by: RonT | Apr 12, 2009 8:52:28 PM

Does that chart count Social Security and Medicare? If not it is a lie and you should be ashamed to post it.

The tea parties are about the future when this will certainly collapse on our children's or grand children's heads. But they are also about the level of taxation right now. It is high regardless of what your made up chart says. We know what we earn and we know what we have after taxes, and I don't care what the Europeans pay. Spare me your comparisons. We know what things cost and government our government)costs too much.

Posted by: Ralph | Apr 12, 2009 8:57:26 PM

As someone who just wrote a f***ing $16,000 check to the government, money I could really, really use at home, where we work unbelievable hours to squeeze by in the black every month, Bruce can go to hell by rocket-sled. Just because some other even more screwed-up polity sees fit to rob its productive citizens even more is supposed to make it OK? So legalized rape is OK if some other country practises legalized sodomy and sadomasochism? Where did this fellow learn (or fail to learn) his moral code? "As long as someone else does worse, we're off the hook?" Blech.

I could maybe see it if the government actually did something useful with my money. But aside from that small portion that goes to our men under arms, it's used either pointlessly or cynically -- ooh! let's bail out Goldman Sach's debtors (AIG) because a whole lot of Democratic Party money comes from them. That's the reason I and my family needs to be squeezed? It would make a cynic nauseous.

Posted by: Carl Pham | Apr 12, 2009 9:14:45 PM

"Tax revenue as a percent of GDP" is a strange number. It seems that it does not count money borrowed and spent by the government, only the cash actually collected from the populace. By this measure, the current huge US deficit spending isn't regarded as an increase in taxes.

Bartlett gives two links to support his figures. The link to the Congressional Budget Office is in fact a link to a collection of Forbes articles referring to the CBO. Great. He wants his readers to find the reference that he barely remembers from the past, somewhere in the pile of prior articles.

The second link is to www.oecd.org/dataoecd/48/27/41498733.pdf, a minimalist extract of some paper, just three bare pages of numbers. There are a few fascinating and cryptic footnotes, but no serious explanation.

Since when are high taxes a sign of sophistication and wealth? For example, I don't see high grocery prices or high gas prices as signs of wealth and progress. Efficiency means lower taxes, unless you see the government as inherently good and efficient. In that case, why don't we give all of our money to the collective and bask in the riches that they would wisely allocate? They claim to get a 1.5 multiplier out of their spending along the way.

It seems that people around the world have gotten it wrong. High taxes make them feel better. Taxes aren't the yoke of oppression, they are the path to personal riches. The populace is merely blind to the truth, because they are unnaturally attached to the money that they earn. (sarcasm warning)

The Real Tax Burden

The amount of tax that a government imposes is the amount it spends. The timing and amount of tax collections is merely finance.

Econ 201: The Myth of the Economic Multiplier

Government spending doesn't multiply anything. It takes resources from taxpayers and applies them to government projects. You get a bridge or some paperwork, that is it.

Posted by: Andrew_M_Garland | Apr 12, 2009 9:14:47 PM

"People who want to make fun of the tax protestors are poor historians and have liberal biases."

I don't agree. I have a problem with these protests, and it is precisely BECAUSE I know something about history.

The problem with these protests is that they are too cutesy and too easily dismissed. Insult a Muslim group, they issue a death threat. Sometimes they even carry it out. THEY get noticed.

When the tea-party types want to get serious, they will stop spending their time making up slogans, and start doing things that could actually get them arrested. Bottom line - when THEY take it truly seriously, the media will also.

That red in the flag? It's for blood. That's an historical fact. Think about it.

Posted by: Mister Snitch | Apr 12, 2009 9:16:14 PM

I think Bartlett should be using "spending" instead of revenues, especially when the feds are running huge deficits.

Also, when I hear the DC mayor wants to levy a $5 surcharge per month per household to pay for streetlights,I have to wonder if it is even possible to keep track of all these "taxes" when they get buried in your phone bill or in your electric bill.

FYI Mr. Bartlett - the Tea Parties favor small govt which makes for the best govt. It is simple as that.

Posted by: AJ Lynch | Apr 12, 2009 9:28:24 PM

Bruce Bartlett needs to compare the taxation rates with current demographic trends in the above-mentioned countries (particularly those in Europe). Doing this should be a very eye-opening exercise for him.

Posted by: MarkJ | Apr 12, 2009 9:39:21 PM

The tax burden has risen dramatically since it has been at 18% since 1950. Now it is rising to 28 by your own account. Gee I wonder why everyone is upset?

And we are spending that money on such terrific projects...like bailing out a bunch of folks who don't know how to run a business, bailing out a bunch of folks who don't know how to budget their income...yea sure nothing to get upset about. After all why should I get to spend my hard earned money when so many other Bankers, Car Makers, Politicians, House Flippers, credit card lovers know how to spend my money better than I do?

Yea I guess it is hard to figure out why we are gonna protest.

Posted by: Pierre | Apr 12, 2009 10:03:13 PM

If you go to www.usgovernmentspending.com
the govt spending as a % of GDP was 36% in 2006.

There are a lotta numbers out there and it is hard to know which is most accurate. Is it unfair to ask if Bartlett uses the numbers (receipts) that best fit his narrative?

Posted by: AJ Lynch | Apr 12, 2009 10:26:46 PM

"Even before the rise in top marginal rates promised by Mr Obama, the US income tax collects 45 per cent of its revenues from the highest-income decile. Compare that with Britain at 39 per cent, Canada at 36 per cent, France at 28 per cent, Sweden at 27 per cent and an OECD average of 32 per cent."

clive crook,

http://www.ft.com/cms/s/0/4ff28ff8-220b-11de-8380-00144feabdc0.html

Posted by: mark l. | Apr 12, 2009 10:27:55 PM

To paraphrase a figure of speech:

It's the spending, stupid.

The tea parties are certainly anti-tax, but it comes from what they see as the inevitable consequence of rampant spending.

Posted by: nino | Apr 12, 2009 11:00:10 PM

To add to Woody's comment above: another irritant to the protesters is the increasing knowledge (thanks, internet) of who benefits from the government's largess and the corruption of the process of handing out the boodle.

Posted by: Person of Choler | Apr 13, 2009 12:13:25 AM

28% of GDP? The relevance of that is debatable. For example, Obama wants the tax on the "rich" to revert to nearly 40% for federal tax alone. Combine that with state taxes, gas taxes, property taxes, sales tax to name a few and pretty soon job creators are giving the MAJORITY of their income up. Why risk capital and work your ass off for 10 years trying to build a business only to give away most of your income? These taxes will penalize the very engine of new job creation. The other side of the coin is spending, we know damn well huge deficits today lead to decreased growth and higher taxes later.

Posted by: Ken | Apr 13, 2009 12:16:21 AM

Hey, Bartlett, ever heard that old saw about an ounce of prevention? Thought not.

Posted by: SDN | Apr 13, 2009 2:39:02 AM

I notice that Barlett only uses Federal tax. He must have forgotten that we live in a country with a tired tax policy city, state and federal. Add all that up and it supasses those euorpean countries. Also revs are down this year because we are in a recession and there is just less wealth for the government to steal the % of tax taken is higher this year then in the past.

Posted by: unseen | Apr 13, 2009 4:03:44 AM

It's wrong to focus on federal tax receipts only. We KNOW that the fed govt wants to spend $4T including TARP, etc, and we KNOW that the GDP's about $14T this year. That's about 30% of GDP right there, and state and local would pump up to 40% or more. Is Bartless really arguing that taxes will NEVER have to reach those levels, to support current and future year total spending? There's the crux of his non-sequitur. And we the Tea Party protestors DON'T WANT 30% or 40% of GDP taken out of our paychecks and wallets in a progressive manner that punishes success. The system is becoming incredibly rigged against success -- from taxation to college costs to property taxes. This will seriously hurt future growth of our economy if it's not reversed. And not only will it not be reversed under Obama/Pelosi, it will seriously exacerbate, which spells huge TROUBLE for our economy. Period.

Posted by: steve bourg | Apr 13, 2009 4:11:31 AM

What about government spending as % of GDP...the tea party protests are about the expected future tax burden, I think.

Posted by: JasperPants | Apr 13, 2009 4:16:13 AM

So is Mr Bartlett implying the deficit spending matters not one whit? If so, why not lower the tax rate to merely cover the cost of ink and paper and just print money? Is he implying that all the cronyism, corruption, pay-for-play culture in our political system is off the topic agenda at these Tea Parties?
I guess since the deficit doesn't matter, increasing it doesn't matter and the children who can't vote on increasing it won't have to assume its burden afterall. What me worry?

Posted by: ReginaldL | Apr 13, 2009 5:26:29 AM

As several have noted in their comments to Barlett's column directly, the problem with his point is that these low tax rates are completely unsustainable because of the huge projected Obama budget deficit. Making the problem worse is that our deficit is about to explode because of new spending commitments and "tax cuts" to people who don't pay income taxes. These will not be one-time spends like the stimulus but long-term policy commitments that will demand new sources of revenue beyond the tax increases that Obama has already proposed. The definition of "rich" will be redefined lower and lower to accommodate new government spending.

All of this discussion about new taxes doesn't even touch on the looming Social Security crisis, which gets worse every day we don't do anything to change it. The American people know it's there but you can be sure Obama and the Democrats in Congress have no interest in addressing that problem.

The tea parties are about people who were expecting change finding out that the car headed towards the cliff now has a foot on the accelerator.

Posted by: PR | Apr 13, 2009 6:12:25 AM

Shout out to Bruce Bartlett ... it's not about the taxes. Dude, it's about the spending and the overall economic havoc and the growth in imperial government and ... oh never mind. You wouldn't understand any way.

Posted by: Paul A'Barge | Apr 13, 2009 6:30:48 AM

"Tax revenue as a percent of GDP" is a strange number. It seems that it does not count money borrowed and spent by the government, only the cash collected from the populace. By this measure, the current huge US deficit spending isn't regarded as an increase in taxes.

Bartlett gives two links to support his figures. The link to the Congressional Budget Office is in fact a link to a collection of Forbes articles referring to the CBO. He leaves it to the reader to find the reference that is appropriate.

The second link is to www.oecd.org/dataoecd/48/27/41498733.pdf, a minimalist extract of some paper, just three bare pages of numbers. There are a few fascinating and cryptic footnotes, but no serious explanation of methods and data series used to prepare the data.

Since when are high taxes a sign of sophistication and wealth? For example, I don't see high grocery prices or high gas prices as signs of wealth and progress. Efficiency means lower taxes, unless you see the government as inherently good and efficient. In that case, why don't we give all of our money to the collective and bask in the riches that they would wisely allocate? They claim to get a 1.5 multiplier out of their spending along the way.

It seems that people around the world have gotten it wrong. High taxes make them feel better. Taxes aren't the yoke of oppression, they are the path to personal riches. The populace is merely blind to the truth, because they are unnaturally attached to the money that they earn. (sarcasm warning)


The Real Tax Burden

The amount of tax that a government imposes is the amount it spends. The timing and amount of tax collections is merely finance.


Econ 201: The Myth of the Economic Multiplier

Government spending doesn't multiply anything. It takes resources from taxpayers and applies them to government projects. You get a bridge or some paperwork, that is it.

Posted by: Andrew_M_Garland | Apr 13, 2009 7:55:50 AM

Low tax country? The good professor overlooks the myriad of state, local and other taxes we pay here. My property taxes alone in CT are over $15,000 a year. Low tax? And the dem0crats in Hartford want to raise income taxes again. My next move will be out of the northeast completely. I already pay close to 55% of my income over in taxes. Enough is enough. I'll be at the April 15th Tea Party tax protest up in New Haven this Wed - with my three kids.

Posted by: H. Rearden | Apr 13, 2009 8:23:24 AM

Average tax rates and all are nice reading and maybe even useful for analysis but I think what has a lot of people in the tea parties upset is THEIR tax rate. A middle class couple, say a mid-level programmer and a nurse, easily fall into the 28% bracket which means that a sizable portion of their salaries are taxed at over 40% combined rate: 28% FICA, 6.5% SS (of course the real tax here is 13% but that is a discussion for another day), 1.5% Medicare, approximately 7% state and local income tax and then they pay 7% sales tax on most purchases (in Allegheny County, PA), plus property taxes, gasoline taxes, sewer taxes etc. If you have the temerity to buy an alcoholic beverage in Allegheny County there is a 10% surcharge over and above the sales tax to subsidize the public transportation that you don't use, not to mention the new tobacco taxes. All the while that couple is being told what morally inferior people they are because they actually work in a for profit business instead of earning 300k a year in a non-profit like Ms Obama!

The reason the average rate is lower because lots of people don't pay any federal income tax. And anyone with any financial sense knows that two earner families are getting the royal shaft when it comes to Social Security. Both people would qualify to draw benefits on their own but if they remain married they will only draw one annuity, and that will be taxed as well. If Mr. Bartlett expects me to be happy for being taken as a chump, then he is greatly mistaken.

Finally, it doesn't take a rocket scientist to know that all or most of these tax rates will have to go up to support all the massive new spending.

Posted by: Patrick Walsh | Apr 13, 2009 9:06:42 AM

Teabaggers keep forgetting the most important part of the original Tea party protest: No representation. Just because the election didn't go their way doesn't mean they aren't represented. It just means that most Americans don't agree with them and voted their guys (democratically) out of office.

Posted by: b.stroup | Apr 13, 2009 12:27:23 PM


I don't care about some artificial percentage paid by some mythical average person/society.

I care about my personal marginal rate, assuming I make some money and want to buy something with it.

15.3% FICA, 36% Federal, 4.5% state, plus Fed Unemployment, plus State Unemployment, plus 10.25% sales tax, plus, plus, plus, plus, plus, plus.

Pushing 70%. Absolute goddam thievery. And yet, I somehow don't "pay my fair share."

Why not just take it all, you sonsabitches?

When I quit working soon, I'll pay 0% and live off savings. I bet a lot of people are planning to join me.

Posted by: Chester White | Apr 13, 2009 2:23:54 PM

ONE TRILLION DOLLARS
EQUALS
50 MILLION WORKERS X $20,000.00 EACH, & EVERY SINGLE ONE. Anyone going to pay? {from www.justtalking.info} a US supreme court case
IN THE PAST YEAR, your employees of government have spent/ began to spend/ promised/ or plan to spend so far: 12 trillion dollars= $240,000.00 per each of 50 million workers OR every 4 workers represents nearly one million dollars in new debt. Created by both the Bush and Obama administrations.
WE ARE A NATION OF ABOUT 50 MILLION Actual WORKERS. People who make the nation survive.
Liars say; that you have now paid your federal tax burden for the year, as of April 12. Did you pay $20,000 each, for the new debt, they just created? Did you pay property taxes? Did you pay state taxes? Did you pay sales taxes? Did you pay a long list of “extra taxes”? Did you pay the debts from last year? Did you pay the debts piling up for decades [on January 15,2004: we owed $75.945 trillion dollars as a nation/ do you think this didn’t go up]? Did you pay foreign governments everything you owe? The correct answer is: you have been living on LIES, fantasy, and delusion for decades. CAN’T BELIEVE IT? You believe you lost money don’t you/ let truth decide
IN January 2004, the federal government accountants claimed $96.257 trillion dollars in assets. Divided by 300 million people “every face/ baby or not” that amount totals $320,856.66 per each citizen in 2004. Did you have your share/ someone claimed it, or the numbers are liars. If someone claimed it/ then they expect your work, and their luxury; think about it.
Science threatens us, at the National Ignition Facility: going to create fusion (same fire you see on the sun)/ but we cannot put it out/ we cannot contain it/ we cannot stop it: we can only die from it, because it is far more powerful than we are. Not to worry though, they don’t believe a fire once started in a place filled with fuel, will sustain itself? Too proud/ going to create a sun, right here on earth; now that’s power, right! Stop them or die/ too proud to be wrong, then kiss your life goodbye. Think about it/ willing to bet this world, they can’t be wrong THIS IS NOT A GAME.
Our option/ our only link to power is: bankruptcy, because it requires us all to return to “equals”/ and start over. Our authority, is held within the constitution/ the foundation of all law. Our rights are established as law, BECAUSE EVERYONE is subject to the law/ don’t matter who you are. Our nation, is subject to our control: by the terms of WE THE PEOPLE, as addressed in the first amendment legal right called “redress of grievances”; wherein the employees of OUR government, must account for themselves. THE RIGHT, to defend ourselves/ is necessary. Demand it.

Posted by: james osterbur | Apr 13, 2009 7:39:15 PM

The truth is that the U.S. is a relatively low-tax country no matter how you slice the data.

What does the tax rate in other countries have to do with anything?

If people in another country are content with their tax rate and what their government is spending the money on, good for them... but their contentment has ABSOLUTELY NOTHING to do with if Americans are content with the tax rate in the US and what our government is spending the money on.

...and saying "What are you complaining about, look how much the Danes are paying" just makes me think the speaker is completely clueless, and needs a swift kick to the posterior to dislodge their head.

Posted by: rosignol | Apr 14, 2009 7:46:03 AM

Where were you guys when Raygun was jacking the DEBT!!! The DEBT explode under Raygun & Bosch. Clinton had to find a way to pay for all that CHILDISH spending and in the end had a SURPLUS and was trying to pay down the DEBT. Then Bosch II gets in office and explodes the DEBT AGAIN!!! Now that a democrat is in office you want to complain about the DEBT created by YOUR GUYS!!! What a bunch of hippo-critical clueless sheeple you are!!! If Bosch II had been anything but a complete failure you guys would at least have a leg to stand on. Now Obama and the Democrats have you right where they want you. Screaming like idiots, cause you don't have ANY REAL SOLUTIONS, just the SAME OLD SH!T!!!

Posted by: AreYouKiddingMe!!! | Apr 14, 2009 3:45:33 PM

Now, AreYouKiddingMe!!! is typical calm and intelligent reasoning from a leftist. I apologize if a link that I provided sent him over here.

Posted by: Woody | Apr 16, 2009 10:32:52 AM

Geneen Garofalo went too far this time!!!
BOYCOTT NBC football!!!!! I will miss Sunday Night Football..but there is no reason for NFL fans to be subjected to this left wing nut “Keith Olbermann”

LET THEM KNOW ENOUGH IS ENOUGH!!!!!!!!!!!!!
http://www.nfl.com/contact-us
geneen garofalos rant calling us racist rednecks is the last straw!!!!
http://www.liveleak.com/view?i=08f_1240063939 <—-Here is the vid
PASS THE WORD TO EVERYONE YOU KNOW!!!!!!!!!!!!!!!

Posted by: Jay | Apr 18, 2009 10:20:26 AM