Nice quick piece, compiled from recent blogs at The Week.com and a linked article by Greg Mankiw of Harvard. Always irks me that politician’s rhetoric flies so far from the truth, but if you’re willing to do a bit of digging, you can usually put things in perspective:
Republicans are vowing to stand firm against a push by President Obama and Democrats to hike income-tax rates on the wealthiest Americans as part of any deficit-reduction deal to avoid the fiscal cliff, a potentially devastating combination of tax hikes and spending cuts scheduled to hit at year’s end. Many Americans, especially Tea Party activists, share GOP lawmakers’ conviction that their tax burden is already rising to finance social spending and ever-bigger government. But the truth is, say Binyamin Appelbaum and Robert Gebeloff at The New York Times, “most Americans in 2010 paid far less in total taxes — federal, state and local — than they would have paid” in 1980, when the election of Ronald Reagan as president ushered in an era of tax cutting. And even when you take Reagan’s tax cuts into consideration (he was sworn in in January 1981), “tax rates at most income levels were lower in 2010 than at any point during the 1980s.” Does that mean Reagan taxed Americans more heavily than Obama?
Reagan really did tax most Americans more: Tea Partiers love to call Obama a socialist, says Ed Kilgore at Washington Monthly. But in reality, Americans who made less than $200,000 paid more in taxes in “the Golden Era of Reagan” than they have under Obama. One reason is that the share from “relatively progressive income levies” has declined compared to that “from highly regressive payroll taxes.” Even those earning over $350,000 in 1982 paid nearly what they do now in income tax.
Using the Times online interactive graphic, you can compare the average tax rates between any two years. Here, by income level, is how the average tax rate changed from 1988, Reagan’s last year in office, to 2010, the most recent year available.
0 to 25K, fell by 4 percentage points
25 to 50K, fell by 3 percentage points
50 to 75K, fell by 2 percentage points
75 to 100K, fell by 2 percentage point
100 to 125K, fell by 1 percentage point
125 to 150K, fell by 1 percentage point
150 to 200K, unchanged
200 to 350K, rose by 2 percentage point
350K+, rose by 1 percentage point
That is, according to the Times numbers, since Reagan left office, tax rates have risen at the top and fallen for the middle class and especially the poor.
The important thing to remember is just that taxes are low: Republicans are right about one thing — spending needs to be reined in, says Henry Blodget at Business Insider. The Times analysis proves, though, “that today’s tax rates are low compared with tax rates in the early 1980s,” no matter who you believe presided over the lighter tax burden. Clearly, “taxes are going to have to go up,” even with spending cuts, but that still won’t make the U.S. a high-tax country.
“Ben White: The Republicans have lost, taxes are going up”