I’ve just watched a year-old video clip of The Young Turks, where Cenk Uygur interviewed Peter Schiff about US taxation.
“Interview”, in this case, turned out to be a loose term. After continually trying to drown out Schiff’s answers to his own questions, Uygur finally decided to simply cut the mic off. How classy!
Cenk’s position was that the “US taxes” have been steadily coming down and are now at an all-time low, while Peter argued that they’ve been climbing overall, and are now at an all-time high, as an aggregate.
Both men were adamant they’re right and both claimed to have “proof”. Surely they couldn’t BOTH be right, could they?
I decided to do my own digging. I was aided by the fact that I have no axe to grind. I’m “fine” with either position, as long as it’s factual. I do, however, remember living in the States as a youngster and I clearly remember “the taxes” to be rather low, especially by contrast to Europe, where I’m originally from. So, I was inclined to believe Peter Schiff – but Cenk Uygur’s righteous anger told me there may well be something more to this.
Even a cursory fact check revealed that both men were talking past each other – each addressing a DIFFERENT aspect of taxation: Cenk focused on the Federal Income Tax, particularly the lower end of it, while Peter was addressing the bigger picture.
With that in mind, and without going into the complicating factors of different tax rates for different earning brackets, Cenk was indeed right – on HIS point. Historically, the average income tax rate has been coming down and currently is at an all-time low! (See http://www.businessinsider.com/history-of-tax-rates?op=1, http://en.wikipedia.org/wiki/Income_tax_in_the_United_States as well as http://taxfoundation.org/article/us-federal-individual-income-tax-rates-history-1913-2011-nominal-and-inflation-adjusted-brackets for a deeper analysis)
This, however, not only fails to address the big picture – it deliberately (?) misrepresents it.
When you consider the FULL spectrum, the average American pays AT LEAST 50% in taxes, and in fact quite a bit more than that. Depending on how you count, you can represent the average Fed Income Tax as around 30% or even as low as about 18%.
Regardless, this is where the REAL calculation BEGINS.
Add to this lower figure the State and Local taxes (about 10.5% on average), sales taxes (another 10% or so, on average), Social Security and Medicaid (tag on another 7.65%), property taxes (around 2.7% on average), fuel taxes (around 0.6%), then the Federal corporate income tax share of about 3% (since corporate taxes are roughly 1/6 of personal taxes and ultimately wind up being paid by individuals), as well as a host of other taxes such as fees, licenses, inheritance, deficit allowances, and a host more – you get at least another 5-7%.
Now, add to this the inflation rate – another 2-3%, depending on how you’re counting – and we’re looking at well over 54% using 2005 numbers and easily approaching 60%-65% (most likely going well beyond it) in the present!
This makes Schiff right (again), and Uygur dead wrong!
Additionally, there are other taxes which affect the population in varying degrees, depending on their individual situations. Taxes such as Accounts Receivable, Building Permit, Capital Gains, CDL License, Cigarette, Corporate Income, Court Fines, Deficit Spending, Dog License, Federal Unemployment, Finishing License, Food License, Fuel Permit, Hunting License, Inventory, IRS Penalties, Luxury, Liquor, Marriage License, Septic Permid, Road Usage… – whew, I’m just getting warmed up! – Road Toll Booth, School, various types of Telephone taxes, Toll Bridge, Traffic Fines, Utility, Vehicle License, Well Permit, Workers Compensation… this list goes on! I’ll stop here. (See also http://www.nowandfutures.com/taxes.html as well as http://blackburn.house.gov/uploadedfiles/jec_republican_staff_analysis_historical_tax_rates_rhetoric_vs_reality.pdf.pdf).
In conclusion, hiding behind the “falling Federal Income Tax rates” was disingenuous at best, on Cenk Uygur’s part, and deliberately misleading at worst!
Peter Schiff, for his part, might have done better had he preempted Uygur by agreeing with his broad statistical assertion regarding Fed Income Tax – but then proceeded to cite some of all these other taxes as the basis of his argument (not to mention the ever-increasing NEW taxes).
This said, judging by Cenk’s demeanor, that wouldn’t have worked either. So by cutting Peter off, he saved him some time, which is just as well. But he contributed, yet again, to misinforming his audience.
The trouble is that misinformation such as even this “alternative” news source (The Young Turks), compounded with virtually all the mainstream news and views, combine to work as a sanction for all the current government policies – to the detriment of all but the ruling classes.
The EFFECTIVE tax rate in the States now is in fact on par with – or higher – than its most tax-hungry European counterparts. Even Germany, France and Scandinavian countries would be impressed! They too have loads of “hidden” taxes, to be sure, but generally lower than the US.
On the SURFACE, US’s “average” of, say, 30% appears to compare well with Denmark’s 44.2%, France’s 48.3% or Germany’s 50.7% – but this is only impressive until you start adding all the other taxes to it. When you add it all up, US isn’t trailing far behind – and, quite possibly, even trumping them, in some areas! (For more on this, see http://www.nber.org/chapters/c1876.pdf as well as http://www.taxpolicycenter.org/briefing-book/background/numbers/international.cfm. Also see www.oecd.org)
Finally, when you consider that all these taxes go to cover costs which have NO direct benefits to the population, and in many cases result in direct ANTI-social consequences (e.g. wars, over-regulation, economic crisis due to mismanagement, etc), it’s clear that something needs to change – and fast!