We can have our cake and eat it too. Despite an explosion of services and federal spending, individual taxpayers are paying the lower level of taxes as % of income since 1958. Combined with corporate taxes that are at the lowest level as a % of GDP in generations, it's good times in America. I will be very interested if the 2% payroll tax holiday instituted at the end of 20101 will be allowed to vaporize Dec 31st, or if we throw this one under the barrel of "can't raise taxes in this environment!" as well.
Americans are paying the smallest share of their income for taxes since 1958, a reflection of tax cuts and a weak economy, a USA TODAY analysis finds. The total tax burden — for all federal, state and local taxes — dropped to 23.6% of income in the first quarter, according to Bureau of Economic Analysis data.
By contrast, individuals spent roughly 27% of income on taxes in the 1970s, 1980s and the 1990s — a rate that would mean $500 billion of extra taxes annually today, one-third of the estimated $1.5 trillion federal deficit this year.
The latest dip in the tax burden came from a Social Security tax cut included in a December budget deal between Democrats and Republicans. It will reduce taxes $100 billion this year.
"We have a 1950s level of taxation and a 21st-century-sized government," says Robert Bixby, executive director of the Concord Coalition, a deficit-reduction advocacy group.