Yup. Notice the similar spike around World War I. Also notice that the spike went back down fairly soon after World War I, but after World War II they pretty much stayed at the increased level; rather than decreasing spending and taxes back to pre-war levels, the government just found other ways to spend it and continue growing.
"rather than decreasing spending and taxes back to pre-war levels, the government just found other ways to spend it and continue growing."
Well golly, let's not let facts get in the way of a good story. The federal government had a huge debt to pay down after the war. The debt as a fraction of GDP spiked to an all-time high after WWII, and steadily declined until the late 70s. The higher taxes were going toward that debt.
Then we dramatically cut taxes in the late 70s, and the debt started climbing again.
That may be true--I'd like to know what specific tax cuts you're referring to. It also looks like it was the 80's when the debt really started growing, according to the numbers in that article. It's true that government spending (as % of GDP) never went back to pre-war levels, and has continued to increase: http://en.wikipedia.org/wiki/Government_spending#United_Stat...
I'm referrig to the massive drop in all tax rates starting around 1979(which are clearly visible in the chart on the page that this comment thread is discussing.)
> The federal government had a huge debt to pay down after the war.
Granted, but if spending had otherwise returned to the previous levels then that debt would have gone away entirely and then the new taxes along with it. That rather obviously didn't happen. :)
Sad to think that people feel taking a fifth of a persons productive output is low. Throw in city and state taxes and burdens can be pretty abysmal. Throw in on top of that all the embedded taxes in nearly every item you buy today and I wonder where our true tax load is.
The US does not have a taxing problem, it has a spending problem. Even if the President got his wishes his tax increase on the "rich" would not net more that the US deficit spends in ONE month. If you tax 400K+ it only returns a possible 70 billion more PER YEAR!.
Worse, instead of using these taxes to reduce the deficit they already have new spending lined up.
So, sorry I feel that even twenty percent is pretty bad. It means for over a fifth of the year I am not working for myself. Since my effective is near thirty percent I spend an incredible amount of time working for someone else.
> Throw in city and state taxes and burdens can be pretty abysmal.
Ah, see, that's the problem.
First, you pay federal income tax. Second, you pay state income tax. Third, you pay payroll taxes/fees. Fourth, you pay property taxes for your residence. Fifth, you pay state/county sales taxes on whatever you decide to buy.
Oh, did I mention that widget you bought that came from China probably had some tariffs on it?
Made in the USA? No worries. You paid for some of the federal/state payroll taxes/fees the manufacturer was responsible for.
The self employment tax is no less fair than the employer side of social security taxes.
The only difference is it doesn't use silly accounting to hide the tax from the employee.
It does seem to be the case that the chart omits the ~15% tax that goes to social security and medicare (well, 15% for people earning under the limit). So even the federal taxes on $100,000 are quite some more than 21%.
I've lived/worked in several countries, including the US, and my impression is that the US has some of the highest wages and lowest taxes in the world. So compared to the rest of the world I don't think the burdens are 'abysmal'.
Does anyone have links to articles that review this in more depth? A quick Google search didn't yield anything relevant.
Yes. However, each state has its own income taxes and sales taxes. The marginal rate at 100k (the tax rate for each additional dollar earned) is higher (28% according to this article). In my city, in California: 7.75% sales tax, 10.3% state income tax... Oh, social security, Medicare... These add more. My point being that at 100k a California resident (for example) pays much more than 21.5% effective rate, and much more than 28% on each additional dollar earned.
Don't forget state income tax, sales tax and various other embedded tax. Realistically, taxes are around 40% - 50%.
Also keep in mind that we get very little benefits for those tax dollars compared to Europe for example. Our healthcare costs and higher education are not covered by that tax the same way most European countries are. The only thing we do get for that money is perpetual war and bank/industry bailouts. Kind of a raw deal.
Preferably, I'd love to see a mixed system. A VAT tax, a flat income tax and capital gains tax. Something like 13/13/13 across the board (or maybe less if the US could get unnecessary spending down - not likely). This has worked brilliantly for several eastern European countries ever since they implemented them.
Also keep in mind that we get very little benefits
for those tax dollars compared to Europe for example.
I'd always assumed that US taxes were lower than European taxes due to this (no national health service for example) but from what you and others have pointed out that seems not to be the case. Using the example provided by mikiem of California I would be paying more tax in the US than I do in England (according to this calculator: http://www.paycheckcity.com/calculator/netpay/us/california/...).
Yeah, I was actually surprised to find how low UK taxes seem to be (or how high US taxes are) when I was investigating it for work several months ago. US spending levels are just outrageous. It would be interesting to compare the national budgets of the US, UK, and a few other countries, perhaps over time.
UK taxes are low but that is because public infrastructure and healthcare there are comparatively cheap and shoddy. It is not really a European country in that sense.
Don't forget the hidden NI contribution from your employer, council tax, massive fuel tax, tax on alcohol, etc. That said, I always see California and Europe as the same tax wise.
California is pretty much dollar for dollar equivalent to Australian taxes (which, funnily enough, the IRS classifies as a "high tax country") too.
And you get much more for your money in Australia.
That's why a lot of US-ians are anti-tax. I think it has a lot to do with not seeing any benefits to paying it -- so they'd rather keep their money and fund private institutions. Of course, that's lose-lose and the country has almost no new infrastructure, terrible health care and no safety net and 8% unemployment. So there's that.
But most of these people choose to ignore the elephant in the room, which is military spending. But I presume you can't just say "divert all military spending to Euro-style 'socialist' paradise spending" because then a lot of people would no longer have jobs in the military-industrial complex.
Low? Anything above $0 is high because it is forced. No one has the moral right to forcibly take from the life of one person to give to another, no matter how great the need of that other person may happen to be. Every person has the moral right to live for his own sake, as far as he can go through voluntary trade with others.
A government based on individual rights is small enough (i.e., just police, military, courts) that it can be funded through voluntary donations.
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[ 4.4 ms ] story [ 78.6 ms ] threadWell golly, let's not let facts get in the way of a good story. The federal government had a huge debt to pay down after the war. The debt as a fraction of GDP spiked to an all-time high after WWII, and steadily declined until the late 70s. The higher taxes were going toward that debt.
Then we dramatically cut taxes in the late 70s, and the debt started climbing again.
http://en.wikipedia.org/wiki/United_States_public_debt
Granted, but if spending had otherwise returned to the previous levels then that debt would have gone away entirely and then the new taxes along with it. That rather obviously didn't happen. :)
A now-deleted sibling comment linked to the corresponding spending levels, which confirm the continued spending (note that this graph doesn't even include the debt): https://upload.wikimedia.org/wikipedia/en/0/05/Us_gov_spendi...
The US does not have a taxing problem, it has a spending problem. Even if the President got his wishes his tax increase on the "rich" would not net more that the US deficit spends in ONE month. If you tax 400K+ it only returns a possible 70 billion more PER YEAR!.
Worse, instead of using these taxes to reduce the deficit they already have new spending lined up.
So, sorry I feel that even twenty percent is pretty bad. It means for over a fifth of the year I am not working for myself. Since my effective is near thirty percent I spend an incredible amount of time working for someone else.
Ah, see, that's the problem.
First, you pay federal income tax. Second, you pay state income tax. Third, you pay payroll taxes/fees. Fourth, you pay property taxes for your residence. Fifth, you pay state/county sales taxes on whatever you decide to buy.
Oh, did I mention that widget you bought that came from China probably had some tariffs on it?
Made in the USA? No worries. You paid for some of the federal/state payroll taxes/fees the manufacturer was responsible for.
http://www.nyc.gov/html/dof/html/services/business_tax_nys_i...
The only difference is it doesn't use silly accounting to hide the tax from the employee.
It does seem to be the case that the chart omits the ~15% tax that goes to social security and medicare (well, 15% for people earning under the limit). So even the federal taxes on $100,000 are quite some more than 21%.
Does anyone have links to articles that review this in more depth? A quick Google search didn't yield anything relevant.
Don't forget state income tax, sales tax and various other embedded tax. Realistically, taxes are around 40% - 50%.
Also keep in mind that we get very little benefits for those tax dollars compared to Europe for example. Our healthcare costs and higher education are not covered by that tax the same way most European countries are. The only thing we do get for that money is perpetual war and bank/industry bailouts. Kind of a raw deal.
Preferably, I'd love to see a mixed system. A VAT tax, a flat income tax and capital gains tax. Something like 13/13/13 across the board (or maybe less if the US could get unnecessary spending down - not likely). This has worked brilliantly for several eastern European countries ever since they implemented them.
And you get much more for your money in Australia.
That's why a lot of US-ians are anti-tax. I think it has a lot to do with not seeing any benefits to paying it -- so they'd rather keep their money and fund private institutions. Of course, that's lose-lose and the country has almost no new infrastructure, terrible health care and no safety net and 8% unemployment. So there's that.
But most of these people choose to ignore the elephant in the room, which is military spending. But I presume you can't just say "divert all military spending to Euro-style 'socialist' paradise spending" because then a lot of people would no longer have jobs in the military-industrial complex.
TL:DR: nothing is going to change.
Flat tax is never going to happen.
Property taxes are 3% of my income.
Throw in sales taxes paid throughout the year.
I pay 40% in taxes out of $65,000 - not counting indirect effects of taxes raising the cost of everything I buy.
A government based on individual rights is small enough (i.e., just police, military, courts) that it can be funded through voluntary donations.