Tag Archives: Limited government

Taxes paid keeps rising, despite the media’s claims to the opposite

Headline: “Tax bills in 2009 at lowest level since 1950

The reality according to the very same article:

“Federal, state and local income taxes consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.”

Notice that this is only talking about income taxes. As if income taxes are the only means of collecting taxes. In fact, look at what has been happening in Arizona. The legislature has been dropping income tax rates here, but at the same time they and the people through ballot initiatives have been raising the sales tax rate. Looking at only income taxes is looking at about a third of the total.

I decided to collect the data from http://www.usgovernmentspending.com/ and http://www.usgovernmentrevenue.com and create some simple charts.

Yes, taxes paid have declined recently and hit their lowest level as a percentage of GDP since 1959 (not 1950). However, as you can see, tax revenue is 2010 was back up to the same level as 1971 and 2011’s are expected to be the same as 1973’s. In fact, 2011’s tax revenue is expected to be just a point less than that of 2003’s. Big deal! Yet, look at that outstanding increase in taxes between 1910 and 2000.

But that only tells part of the story. As government’s share of GDP grows, the shrinking private sector has to pay for all that new government. So let’s look at taxes as a percentage of the private economy:

The decline in taxes is now much less pronounced. Taxes paid as a percentage of the private economy hovers around 50%. Looking at taxes against the private is much better because it is the private economy tax actually produces. Let’s look at it another way. If taxes were 60% of GDP but 100% of GDP, everybody in the private economy would stop working and government would get no revenue and would be forced to close down. So the private economy is the determining factor in tax revenues, not the total economy.

So the average person working in the private sector as an employer or employees pays, on average, a tax rate of 50%. This includes income taxes, sales taxes, property taxes, vehicle registration taxes, social security and Medicare taxes, corporate taxes, capital gains taxes, etc. FIFTY PERCENT!

And people have the nerve to complain that tax rates and tax revenues are falling.

Taxes need to fall much further. A decline to the 100-year average of 25% of GDP and 36% of private sector GDP would be a good start. In other words, to return to the average would mean a tax cut of $750 billion to $1300 billion. But with huge deficits, spending would have to decline by two to three trillion. But given the immense growth in government over the last 100 years, spending cuts like that would simply return us to the 100-year average.

Remember, USA today compared 2009 income tax revenue to the 50-year average. I am simply following their lead, but looking at all taxes and looking at a 100-year average.

Baseball analogy for tea party “victory”

To follow up on my post Has the Tea Party accomplished anything yet?

Over the last two years, the Democrats have scored a lot of runs. They hit a grand slam with health care reform. Another home run with stimulus spending. Another with financial reform. They racked up one run after another.

Finally, the tea party movement struck out the Democrats in spectacular fashion (the biggest electoral turnaround in 62 years) and the top half of the inning is over. Now, it is the tea party’s turn to try and score some runs. But the limited government side is trailing 37 to zero (government spending excluding defense is 37 percent of GDP).

The GOP now controls the House of Representative, but it does not yet have Senate or Presidency. So the tea party movement has a man on first base. But it’s in a deep hole, down by 37 runs, and has to start scoring runs in abundance.

I’m sure you can see why I am not too excited by the tea party “victory” of November 2. Yes, the tea party movement, which didn’t even exist two years ago, stopped the Democrats from scoring more runs, but to win you must score runs of your own. In this respect, the tea party has not accomplished anything.

Congrats GOP. Now what do we do?

Congratulations to the GOP. They accomplished a historic election victory. The largest change in government since 1948.

However, I continue to fear for this country. Not because of the politicians, but because of the people. Of the 40-50% of those eligible to vote who actually voted, how many voted for liberty and limited government? The GOP won about 54% of the total vote, so maybe 54%. Maybe more, maybe less. But considering the majority of people didn’t even bother to vote, you are looking at a very small portion of the population who understands and cares enough to vote in favor of liberty and limited government. The number is 30% of the population, at best. Probably closer to 25% or even lower.

That is a very disappointing figure. While we must be involved in the political system, that will only help us on the margin. If 25% of the population supports limited government, nominating attractive candidates may boost that to 26% or 27%. Enough to temporarily defeat the political opponent, but not enough to fundamentally change our country.

The only long-term solution is education. We need to further the ideas of liberty, limited government, and checks and balances.We need to read, we need to write, and we need to share. With Amazon.com and social media, we have the tools to spread the knowledge. All it takes it effort.

So, now that the election is over, we have three main jobs:

  1. Make sure that government officials from both parties work toward smaller government.
  2. Begin recruiting for the next election.
  3. Educate ourselves and the public as to the benefits of limited government and checks and balances as described by our Constitution and elaborated upon in the Federalist Papers.

As you know, I’ll be focusing on the third item. I’ve already written one book warning the people of the evils of big government and the democratic demand for free gifts from the government. Many of you already know that I am working on a second book, the topic of which has not yet been announced. I have many more books planned, each of which advances the cause of liberty.

But while I will concentrate on the education portion, I will not be ignoring the first two parts. I will remain active in the political arena to ensure our governments (federal, state, and local) limit their size and scope and to help choose future candidates for political office.

We have a lot of work ahead of us. It has taken 100 years for our government to go from a very minor portion of our society to the huge behemoth it is today. It may take 100 years to reverse what has been done and we may not be alive to see our success. But succeed we must for the fate of our country and the world depend on us.

Eleftheria i thanatos!