Wednesday, February 8, 2012

Tax Rates Too High?

Tax rates are too high. This is bedrock truth for Republicans. The thing is, this well-know 'fact' is false.

Only those blinded by parochial American Exceptionalism could fail to see that compared to other developed countries, tax rates in the U.S. are exceptionally low. Look way down near the bottom of the chart. In 2009 taxes as a percent of GDP were lower in the U.S. than all but two other developed nations.

The fiction that we can have all the services we demand from our government and not pay for them was born under President Ronald Reagan. That budget-busting meme is a pander to low-information rubes. The 'cut taxes first, ask questions later' political and economic strategy is called Starve the Beast. Its real purpose is to shrink government at all costs leaving corporations and the rich unencumbered by reasonable regulations and fair tax rates.

In The Legacy of Reaganomics Panderbear noted that when tax rates were slashed during President Reagan's first term the benefits went mainly to the already wealthy leading to a bifurcation in income growth and a still increasing and destabilizing wealth gap. Republicans are fond of saying, "We don't have a revenue problem, we have a spending problem." Saying the hole is in the other end of the boat is pure pander. The proof that raising taxes must be part of any U.S. deficit reducing policy is in the chart, near the bottom.

Taxes as Percent of GDP

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