Taxes made simple: We’re gettin’ screwed


From Badtux the Snarky Penguin comes the most elegantly concise explanation of why most average folk feel that they’re burdened by too many taxes, even though overall taxes as a percentage of gross national income are at the lowest percentage nationally since before the Korean War:

Taxes for 2010 are the lowest they’ve been, as a percentage of national income, since 1950. This is true whether you’re looking at just federal taxes, or you’re looking at combined local, state, and federal taxes.

So why, then, do many people seem to believe that they’re overtaxed? My thought: It’s because taxes today are fundamentally different from taxes in 1950. In 1950, taxes on ordinary working class and middle class individuals were fairly low — sales taxes were around 1% in those few states that had sales taxes (vs. average of around 8.5% today), payroll taxes were 1.5% (vs. 7.65% today), and residential property taxes (vs. commercial property) accounted for around 1/3rd of all property tax receipts here in California vs. 2/3rds today. Corporate income taxes accounted for around 30% of income taxes collected in 1950, whereas they account for only around 7% of income tax collections today.

In short: People believe they’re overtaxed because they are overtaxed — but not because overall taxes have risen, but, rather, because taxes have been shifted from the rich and corporations to ordinary people. And if you think this result, which occurred only with the domination of Republican tax policies starting in around 1980, is coincidence, I got a bridge in Brooklyn for sale cheap to the lowest bidder…

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