The current occupant of the White House exposed the Liberal Playbook today at a “news” conference. He urged Congress to end tax breaks for millionaires and billionaires. He said it was a “struggle between the interests of hedge fund managers and corporate jet owners against those of the elderly and college students.” Of course he also called out Oil Companies to contribute to this “shared sacrifice.”
There is nothing “shared” about the distribution of tax payments by Americans. The top 1% of taxpayers already pay 38% of income taxes. If income tax rates are raised, history tells us that the Top 1% will pay less going forward. I’m sure the response would be that the top 1% need to pay their fair share. If 38% is not fair, what is?
The history of tax rates suggests that changes in tax rates does not have an impact on tax receipts as a percentage of GDP. The desire of Democrats to raise taxes is to curry favor with their base. However, it does nothing to advance their goal of raising more revenue. Democrats claim that our tax system needs to be more “Progressive,” where the “millionaires and billionaires” pay their fair share. I think you will be surprised about the progressive nature of the current tax system.
The top 10% of American Taxpayers pay a higher share of taxes relative to their share of income compared to Canada, the U.K., France, Germany and Japan. The Organization of Economic Cooperation and Development found that “Taxation is most progressively distributed in the United States.”
Conservatives claim that “we don’t have a revenue problem, we have a spending problem.” This is a true statement, in my opinion. When compared to long-term (1960-2009) averages, spending is significantly above average while revenue is actually above average. The current occupant of the White House want’s to spin our predicament as a revenue problem because the alternative, and accurate answer is we spend too much. America will no longer accept the “Blame Bush” strategy that the current occupant of the White House has employed since his inauguration.
As to ending tax breaks for Oil companies, it’s pure politics. If the current occupant of the White House had done his homework, He would know that U.S. Corporations are at a significant disadvantage vs. their foreign competitors. In 2010, Exxon Mobil incurred a $21.5 billion tax expense. This amounted to a 41% tax rate, above the U.S. Corporate Average and much higher than foreign companies. Note that Exxon Mobile makes 8 cents of profit for every dollar they generate in revenue. Making villains of Oil Companies is interesting as recent polls indicate that 49% of voters say when given a chance, that increasing the supply of oil by finding new sources is better energy policy than reducing demand by cutting gas and oil consumption. Do you think raising taxes on oil companies is going have an impact on exploration spending?
We need to be serious about cutting spending. The longer we wait the more painful the solution will be. Just ask the Greeks.