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Posts Tagged ‘tax rates’

Texas and Kansas are the homes of low taxes, low wages and fewer regulations. California is the state of high taxes (especially on the rich), high wages and more regulations. According to conservative economic gospel, Kansas and Texas should be outperforming California.

However, the reality is the opposite. California easily outperforms Kansas and Texas and any other states that are low tax, low wage, and fewer regulations. Robert Reich explains why in the video above.

On the other hand, Minnesota is a higher tax state than Wisconsin. Guess which one is performing the best. You bet. It’s Minnesota.

Forbes magazine listed Minnesota No. 9 in its 2014 ranking of best states for business, even though it had a higher tax rate than Wisconsin. In this same ranking, Wisconsin rated number 32.

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US Senator Elizabeth Warren is, of course, is describing a government corrupt to the marrow.

The corruption of the US government goes way back, but a relatively small wave held in check by the New Deal turned into a tidal wave of corruption beginning with the tax cuts for the rich of President Ronald Reagan. That money was used by the 1 percent to stimulate corruption at all levels, and which in turn purchased legislation that redistributes income from the 99 to the 1 percent. That’s why we have inequality and its growing.

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The rich hardly pay any taxes. That’s why there’s a federal deficit, at least in part. Let’s get something straight; corporations are rich people, just ask Mitt Romney. Okay Mitt is an idiot. Always has been. We all know corporations are not people. But they are tools of the rich that enable them to redistribute income from the 99 to the 1 percent.

Corporations have bought off tons of politicians of both political parties with their tax breaks, such as Wall Street Fetch Boy Ron Wyden, supposedly a senator from Oregon, but on matters of income redistribution, the senator always sides with the Wall Street one-percenters.

Corporate profits are currently at an all-time high (while worker wages as a percentage of the economy have plummeted to record lows–Thank you Senator Wyden). Guess what? Corporate income tax revenue is going to be about 1.5 percent of GDP this year, below the recent average and far below the amount raised by the tax just a few decades ago. Just look at the chart below, back in the early 1950s, corporate profits were taxed high enough that they were about 35 percent of federal tax revenues.

So Mitt? Why aren’t these people taxed at a higher rate? The answer is simple. Wall Street is a Ponzi scheme. If corporate profits don’t always go up in the long-term, they would either stay stagnate or go down. In which case, Wall Street would go down with corporate share prices. The Ponzi scam would self-destruct.

As income has been redistributed for the last 30 years, the demand for goods and services has shrunk. That means corporations have to boost income in other ways than selling more of their stuff. So they ship jobs overseas and pay legislators big bucks to pass legislation allowing them to reduce their tax burden. That’s what has occurred over the last thirty years. That means more money flows to the 1 percent via higher profits, dividends and share prices. The rest of us pay the price, such as reduced government services, lower paychecks, rotting schools and more lumpy streets. That you Senator Wyden.

We’ve got idiots like Wyden talking about cutting Medicare, Medicaid and Social Security benefits for the aged and the infirmed. That’s crazy. Especially since the Social Security Trust Fund has a $2.5 trillion surplus that earns about $118 billion a year in interest.

Let’s solve the problem easily. Tax corporations more, like in the good old days, and watch the Wall Street Ponzi Scam collapse. We’d be saving our livelihoods, our economy and a lot more.

As the Century Foundation noted in the chart below, the corporate income tax, as a share of total government revenue, used to track reasonably well with corporate profits. But in the last decade, the two have become decoupled:

CEO's are getting record salaries and bonuess, the 1 percent are using their corporate machines to jack up share prices and dividends

Corporate profits are up, dividends are up, share prices are up, and corporate tax payments are down, down, down. Anybody see a relationship here?

By the way, the video below is when Mitt the Twit said corporations are people. But Dumb Dumb never figured out in what hospital any of them were given birth.

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FACT CHECK: Recession Is Culprit in High US Debt
By THE ASSOCIATED PRESS
Published: August 20, 2011 at 3:33 AM ET

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WASHINGTON (AP) — It’s the loud and clear consensus of Republicans in Congress and on the presidential campaign trail: Runaway government spending is the problem, not taxes.

But the math isn’t so simple.

The number at the heart of the battle cry of the Republicans and their tea party allies — that federal spending has risen to an alarming 25 percent of the economy — is skewed by recession dynamics.

In recessions, federal spending always goes up and tax revenues go down. And the economy contracts in recessions, shrinking the gross domestic product, which is the total output of goods and services and the broadest measure of the economy’s health.

Republicans are calling for sweeping spending cuts and want to hold the line on taxes, even as the U.S. struggles through one of its slowest recoveries since the Great Depression. The jobless rate has been stuck for months at more than 9 percent. With the economy slowing again, the odds of a new recession seem to be increasing.

While spending’s share of the GDP might be at a post-World War II high, tax revenues have fallen to 14.4 percent of the index, the lowest since 1950.

This disparity between what comes in and what goes out plays into the Republican argument about runaway spending.

But it also reflects the mathematical reality that during recessions, tax revenues go down sharply because people and companies make less money and so pay less in taxes. Federal spending goes up, even before stimulus programs, with an increasing demand for government help from food stamps and unemployment compensation and other safety-net programs.

At the same time, the negative economic growth associated with recessions lowers the GDP number on the bottom of the equation, further boosting the ratio of spending to GDP.

Since 1970, federal spending has averaged just over 21 percent of GDP while tax revenues have averaged over 19 percent.

The last time since World War II that federal spending exceeded 23 percent of GDP was in 1982 and 1983, when it rose to 23.1 percent and 23.5 percent, respectively, during what was then called the worst recession since the Great Depression. A Republican, Ronald Reagan, was president, and he was hardly anyone’s idea of a tax-and-spend liberal.

Federal spending is even higher now as a percentage of GDP, but not by much — just between 1 and 2 percentage points. That reflects the fact that the most recent recession was far deeper than the 1981-82 downturn, which lasted 16 months.

Much of the present large gap between tax revenues and federal spending comes not from political decisions but from what happens to a nation’s finances during any deep recession, economists suggest.

But you wouldn’t know it from some of the recent campaign rhetoric. The Republican candidates all want to shrink government’s role by slashing spending and taxes, and repealing or suspending regulations.

—Former Massachusetts Gov. Mitt Romney asserted that, because of the rise of the ratio of government spending to GDP on President Barack Obama’s watch, “We’re inches away from no longer having a free economy.”

—Former Pennsylvania Sen. Rick Santorum: “We’re now at almost 25 percent (of GDP) … the problem is spending, not taxes.”

—Reps. Ron Paul of Texas and Michele Bachmann of Minnesota insisted they would never vote to raise the U.S. debt limit and they decried the rise in federal spending. The recent bipartisan debt deal, which includes a big spending-cut component, won the support of many tea party-aligned lawmakers, however.

—Texas Gov. Rick Perry said that Federal Reserve Chairman Ben Bernanke would commit a “treasonous” act if he “prints more money” before next November’s elections. “We would treat him pretty ugly down in Texas,” Perry told an Iowa audience. Economists generally credit Bernanke with helping save the nation’s financial system by stimulating it with a flood of new money.

Economist Bruce Bartlett, who worked in the administrations of both Reagan and President George H.W. Bush, said some of the statements by Republicans make him cringe. “And what sometimes makes me cringe more is the silence from their competitors.”

Bartlett includes the solid opposition to any tax increases from the entire GOP field, citing the recent debate when not a single Republican participant would agree to accept even a mix of $1 in new taxes for every $10 in spending cuts.

“It’s the cowardice of people who know they’re wrong when they say these things that disturbs me more than the fact that some people say crazy things,” Bartlett said. He said the Republicans were clearly playing to the party’s conservative base for the primary elections “but when you repeat these things, they tend to get solidified.”

He added, “The same is true in both parties. It’s just that there’s no primary race on the Democratic side.”

The intense focus by Republicans and some conservative Democrats on cutting spending to reduce the national debt, now at nearly $14.5 trillion, helped put deficit reduction high on the priority list for both parties.

But polls continue to show that people are more concerned about the lack of jobs than they are the deficit. Nearly 15 million are jobless in the U.S.

Obama, now on vacation, plans a major speech on the economy after Congress returns in September, trying to emphasize jobs and help the poor and middle class, aides said. The plan is expected to contain a mix of tax cuts, construction projects and steps to help the long-term unemployed.

Even though the pace of recovery is painfully slow, any improvements in the jobs situation will help spur stronger economic growth, leading to more tax revenues and lower federal spending.

“If the economy starts to get better, then everything gets better,” said Democratic strategist Mark Mellman.

But it will be a slog.

As the recession that began in December 2007 intensified, federal spending increased from 20.7 percent of GDP in 2008 to 25.0 percent in 2009, according to figures compiled by the White House budget office. And while the recession was officially declared over in early summer 2009, overall federal spending was 23.8 percent of GDP last year and is projected to come in at 25.3 percent for 2011 amid fears of a new, or “double dip,” recession.

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