Wednesday, April 4, 2012

Conservatives Are Wacky. America's Tax Rate and Revenue Stream Is Too Low

Federal Income Taxes on Middle-Income Families Remain Near Historic Lows

Federal taxes on middle-income Americans are near historic lows,[1] according to the latest available data.  That’s true both for federal income taxes and total federal taxes.[2]

    Income taxes:  A family of four in the exact middle of the income spectrum will pay only 5.6 percent of its 2011 income in federal income taxes, according to a new analysis by the Urban Institute-Brookings Institution Tax Policy Center. [3]  Average income tax rates for these typical families have been lower during the Bush and Obama Administrations than at any time since the 1950s, as Figure 1 shows.  (As discussed below, 2009 and 2010 were particularly low because of the temporary Making Work Pay Tax Credit.)

    Overall federal taxes:  Overall federal taxes — which include income as well as payroll and excise taxes — on middle-income households are near their lowest levels in decades, according to the latest data from the Congressional Budget Office (CBO).

Federal Income Taxes Have Declined Significantly in Recent Decades

Federal income taxes on middle-income families have declined significantly in recent decades.  In 2000, the year before the 2001 tax cut enacted by President Bush and Congress, the median-income family of four paid 8.0 percent of its income in individual income taxes, according to Tax Policy Center estimates — a smaller share than in any year since 1967 (except for 1998 and 1999).[4] 

The Bush tax cuts further reduced middle-income tax obligations.  This year (i.e., when people pay income tax on 2011 income) the Tax Policy Center estimates that the median-income family of four will pay 5.6 percent of its income in federal income taxes.

The 5.6 percent rate (as well as the other rates discussed here for both 2011 and other years) is the effective tax rate, or the percentage of its income that a family pays in taxes.  It is well below the 15 percent marginal tax rate — the rate paid on a filer’s next dollar of income — that a family of four in the exact middle of the income spectrum faces.  A family’s effective tax rate typically is significantly lower than its marginal tax rate, because the family takes the standard deduction (or, in some cases, itemized deductions), personal exemptions, and tax credits such as the child tax credit, and because a portion of the family’s taxable income is taxed at lower rates.  (For the median-income family, some of its income is not taxed, some is taxed at a 10 percent rate, and some is taxed at a 15 percent rate.)
Despite what the "lame stream media" says the US does not have a deficit problem, we have a revenue problem. We have millionaires who have every, and take every advantage of our infrastructure to make money, but are not paying their fair share of maintaining that infrastructure. Only in the USA have or values been so corrupted as to think the worse plague on society are the working poor. It is the tax welafre recipients at the top we should be concerned about.

Conservatives are complaining about President Obama's assertion that conservative judges are engaging in judicial activism. Over the years conservatives have not only complained they have threatened and attacked judges.