Common sense on taxing corporations and millionaires continues to come from surprising places, such as an article on the New York Times Economix blog by Bruce Bartlett, who had economic policy roles in the administrations of Ronald Reagan and George H.W. Bush and who now writes for, of all places, the Peter G. Peterson Foundation website The Fiscal Times. The conclusion of his column: “The truth of the matter is that federal taxes in the United States are very low. There is no reason to believe that reducing them further will do anything to raise growth or reduce unemployment.”
In fact, Bartlett writes, “federal taxes are at their lowest level in more than 60 years” as a share of gross domestic product, and they consume a lower share of gross domestic product in the U.S. than they do in every Organization for Economic Cooperation and Development-member country: 10.1 percent in 2008, compared to the 20.4 percent OECD average. Only Japan is lower.
The numbers are even more stark if you only look at corporate taxes. As Bartlett notes in his column, U.S. corporations have the lowest tax burden in the OECD relative to the size of the economy. Their tax burden is only 1.8 percent of GDP, again about half the OECD average of 3.5 percent.
(The OECD has a statistics page where you can compare these numbers yourself. Look for “comparative tables” under “Public Sector, Taxation and Market Regulation.”)
This is what happens when you look at the facts rather than overheated rhetoric. All of a sudden, those speeches by conservative politicians and pundits about how overtaxed U.S. corporations are when compared to the rest of the world are exposed as fraudulent, and those “Taxed Enough Already” signs by tea-bag-wearing demonstrators look very silly.
Bartlett goes on to make a point we’ve made repeatedly, that when conservatives talk about taxes, they talk about the theoretical world of tax rates instead of the real world of exemptions and gamesmanship that is par for the course in the tax world of the rich.
The many adjustments to income permitted by the tax code, plus alternative tax rates on the largest sources of income of the wealthy, explain why the average federal income tax rate on the 400 richest people in America was 18.11 percent in 2008, according to the Internal Revenue Service, down from 26.38 percent when these data were first calculated in 1992. Among the top 400, 7.5 percent had an average tax rate of less than 10 percent, 25 percent paid between 10 and 15 percent, and 28 percent paid between 15 and 20 percent.
In this context, a bill (H.R. 1124) by Rep. Jan Schakowsky that would impose a surtax on millionaires and billionaires of between 45 and 49 percent is far from radical legislation. (Radical would be raising the top tax rate on these people to 91 percent — which is where it was for people earning more than $1.4 million in today’s dollars when John F. Kennedy took office. The Tax Foundation offers this look at how tax rates have changed over the years.)
What the Schakowsky bill would do is bring taxes paid by those earning more than $1 million more in line with the percentage of income working people pay, making the tax system more progressive, and in line with the historical average as a share of GDP. And it would mean that those at the top of the income scale would be contributing to the effort to reduce the federal deficit, rather than the conservative approach of only asking middle-class and low-income people to sacrifice benefits important to their well-being.
Right now the Schakowsky bill has 20 cosponsors. Given the public support for asking millionaires to share more of the burden of funding essential government services while reducing the deficit, as well as the case against the conservative rhetoric on even more tax cuts for the wealthy—which is increasingly being made even by such former Reagan acolytes as Bartlett—there’s no reason the Schakowsky bill shouldn’t have the support of the overwhelming majority of House Democrats.
If your member of Congress is not among the 20 cosponsors of the Schakowsky tax fairness bill, urge that member to reject the right-wing falsehoods about the wealthy being overtaxed and sign on to that bill.