A realistic picture of taxes and the economy

I just ran across some blog posts from tax professor David Cay Johnston. He has a couple posts in particular that I find interesting because they highlight the disparity between perception and reality when it comes to taxes and the economy.

I find it odd that so many people believe that taxes are unusually high in this country.* From a global perspective, the US government takes in less revenue, as a percentage of total income, than nearly any other developed nation. From an historical perspective, the US government collected a smaller share of total income in 2009 than it has in 60 years. In fact, for 30 years now tax rates have been in fairly steady decline. As a tax professional who looks at tax numbers all the time, this isn’t at all surprising. But it’s amazing that people who aren’t informed about the reality have a very strong perception that things are exactly the opposite of the way they really are.

Anyway, here are a couple of articles I found very interesting…although I’ll warn you that if you’re dead set on believing the government has us on a steady path to socialism then you’ll probably just be really angered:

United in Our Delusion

US Tax Rates: A Bargain Hunter’s Dream?

*In the case of upper-middle income earners making about $80k-106k, I’ll concede they’re probably right to believe taxes are unusually high in this country. If you fall in this income category, you’d probably pay lower taxes overall moving to Canada or Western Europe (plus you’d get free health care thrown into the deal as well). The income tax, when combined with employment taxes that are very regressive, result in a tax code that hits these upper-middle-class earners harder than anybody, and then rates get dramatically lower for higher earners.


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