Monday, April 12, 2010

In Defense of Vital Government Services

It’s that time of the year again! This Thursday is Government Services Day! (Some call it tax day.)

A few rational facts to keep in mind…

1) Despite the complaints you may be hearing about “tax-and-spend liberals” who are raising your taxes, Americans still pay the THIRD-LOWEST taxes amongst industrial nations. Got that? We pay some of the lowest taxes in the world. And we have some of the best public services. [1]

2) Federal income tax rates HAVE NOT INCREASED since President Obama took office. Let me re-state that: federal income tax rates HAVE NOT INCREASED since President Obama took office. In fact, one of his first acts as President was passing the ARRA (stimulus). It contained over $300 BILLION in tax cuts and credits for Americans. That was 42% of the spending contained in the bill. 95% of Americans got a tax cut. It contained at least a dozen tax cuts benefitting 100 million Americans.

3) STATE AND LOCAL TAXES, BOTH BUSINESS AND PERSONAL, HAVE DECREASED SINCE OBAMA TOOK OFFICE. That’s right. State and local personal and business taxes have gone DOWN under our new Democratic president. According to a study by the Council on State Taxation (COST) which is a non-partisan tax research foundation that is funded and directed by large corporations like Intel and Nike. [2]

Although many Americans complain about April 15, this my favorite time of the year to reflect on the amazing advances our society has made thanks to our taxation, our system of government which relies on those taxes to function and our hardworking people. And before you complain that I’m just a young whippersnapper and I don’t know what it’s like to be taxed, I’ll remind you that young, single, childless Americans pay a higher tax rate.

Without vital government services, which cost money in the form of taxes, we would not be the freest, smartest and richest industrialized nation in the world. Taxes helped create advanced space travel, weather technology, cellular phone networks, GPS, the Internet, and broadband technology. Taxes are funding our defense, two major wars and the proud warriors, past and present, who fight in them. Our taxes ensure every kid in American has an opportunity to receive a free public education and an affordable higher education to help them become successful.

Taxes ensure that someone will put out our fires, keep our communities safe, rush to our aid if we need medical attention, process, try and house our criminals. Taxes ensure that we have clean drinking water and a working sewer system. That potholes get filled. (Eventually.) Taxes helped create the world’s largest rail system that propelled our nation’s economy forward. Taxes have created the largest and fastest highway transportation system in the history of mankind. Taxes ensure that medicine and food is safe for consumption. Taxes allow taxpayers to enjoy large swathes of protected wilderness.

I could keep going, but you get the point. And yet, despite all of these vital government services without which, our country would suffer, we continue to hear that Americans are being crushed by oppressive taxation. Those who rail against taxes have shown a propensity to hold greatly exaggerated beliefs regarding current tax rates.

From Forbes Magazine, the “Tea Party crowd, however, thought that federal taxes were almost three times as high as they actually are. The average response was 42% of GDP and the median 40%. The highest figure recorded in all of American history was half those figures: 20.9% at the peak of World War II in 1944.” The actual amount, including Social Security and Medicare taxes? 14.8% of GDP in 2009. [3]

But what about individual rates, families still pay exorbitant amounts of federal taxes, right? Wrong. “According to calculations by the Joint Committee on Taxation, a congressional committee, tax filers with adjusted gross incomes between $40,000 and $50,000 have an average federal income tax burden of just 1.7%. Those with adjusted gross incomes between $50,000 and $75,000 have an average burden of 4.2%.” [4]

In fact, nearly half of Americans don't end up paying any federal taxes at all.

What about a state-by-state basis? Surely those who are complaining the loudest, who seem to come from traditionally Red states, who didn’t vote for Barack Obama in 2008, surely their complaints have merit? Not really.

The Tax Foundation just released its annual study of state and local tax burden, per capita from the year 2008. The top 18 states on the list with the highest overall state and local tax burdens voted for Barack Obama in 2008. Of the ten lowest state and local tax burdens in the nation, all but one comes from traditionally Red states who voted for John McCain in 2008. Their burdens per capita range from #40, Arizona at $3,244 to #50, Mississippi at $2,834. [5]

And then there’s the federal tax burden by state. The states with the top five highest federal tax burdens per capita? The people who pay the most federal taxes? All are blue, liberal states who voted for Obama. (DC, Conn., NJ, Mass., Maryland) The five states with the lowest federal tax burden per capita? Those who pay the least in federal taxes? You guessed it: all but one voted for John McCain. (Miss., Louisiana, WV, Ark., NM)

Okay, okay, so maybe red states don’t pay a lot in taxes. But, you know, they still pay for a lot of services that “other people” use. You know - wasteful government services that benefit people in other states.

Nope.

The rankings of federal tax dollars received per federal tax dollar paid, are quite telling. Of the top 20 states that receive more federal dollars than they pay, 15 are traditionally red states. Think about that: the states with the most-vocal anti-tax zealots, those who complain the most about how much they pay and how little they get: they get the most federal tax dollars and pay the least.

Their taxes are the lowest in the nation. And they mooch off of tax payers who live in liberal, blue states (the “spend-crazy liberals” they decry). Those offender states include Mississippi, Alaska, Louisiana, West Virginia, North Dakota, South Dakota, Alabama, Kentucky, Missouri, Tennessee, Montana, Idaho and many more. [6]

But Marcus, surely with a Socialist/Communist/Islamofacist/Muslim/Anti-Christ/Non-Citizen President who is bent on the government taking over the economy, surely HE has driven up business taxes?

Nope.

In FY2009, state and local non-business taxes fell by 4.7% and business taxes decreased by 3.5%. [7] The five states with the lowest business tax in 2009? Vermont, South Dakota, Montana, Idaho, North Dakota all brought in the least in business taxes in 2009. All but one voted for McCain.

Gas taxes? Guess what? Traditionally liberal states, far and away, pay more per gallon. The top ten highest gas taxes are blue states. Ranging from 44.6 cents per gallon in New York to 32.3 cents per gallon in Pennsylvania. Red states? They rock eight of the ten lowest gas taxes. [8]

Cigarettes? Well, you get the drift. The five lowest cigarette taxes are red, southern states.[9]

No one likes paying taxes, but ours are among the lowest in the industrialized world and we are the most-successful nation to-date. Those taxes have helped propel our greatness while keeping our markets and our society, free and open.

So this tax week, remember to thank teachers, firefighters, police officers, college professors, public works employees, garbage men, school lunch employees, prison guards, EMT's, meat inspectors, highway construction workers, state mental health workers, parks employees, and yes, even your local IRS employee.


[1] http://moneycentral.msn.com/content/taxes/p148855.asp
[2] http://www.cost.org/Page.aspx?id=69654
[3] http://www.forbes.com/2010/03/18/tea-party-ignorant-taxes-opinions-columnists-bruce-bartlett.html
[4] http://www.forbes.com/2010/03/18/tea-party-ignorant-taxes-opinions-columnists-bruce-bartlett.html
[5] http://www.taxfoundation.org/publications/show/2181.html
[6] http://www.visualeconomics.com/united-states-federal-tax-dollars/
[7] http://www.cost.org/Page.aspx?id=69654
[8] http://www.taxfoundation.org/files/state_gas_tax_rates-20100325.pdf
[9] http://www.taxfoundation.org/files/state_cgarette_excise_rates-20100325.pdf

1 comment:

  1. And hey, since we're indulging in a little "rational" tought, I'd also like to remind people that it's the conservative agenda of cutting taxes, increasing spending on the military and deregulating industry that has led to the problems we're in now...and in the late 80s/early 90s. It was NOT liberals or even moderates. No, the conservative agenda has consistently proven to generate economic problems for the nation...and that's a fact.

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