Of all developed countries, America self-invests the least because of tax cuts for the 1 percent
As tax day (April 18) approaches, it’s interesting to consider the lie that America is “overtaxed.”
The average developed country reinvests 34 percent of its gross domestic product back into the country and its people.
As of 2014, America only invests 26 percent, which puts it ahead of Korea, Chile, Mexico, and exactly zero other developed countries.
What does this do?
Read More: http://www.dailykos.com/stories/2017/4/16/1652776/-Of-all-developed-countries-America-self-invests-the-least-because-of-tax-cuts-for-the-1-percent#read-more
I hear all the whining that every developed country has better health care, free college, work weeks etc. Perhaps if our taxation were not tilted to the richest we too might have these thing as well. Check out that chart, we are an embarrassment.
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The people are the government. The "us versus them" attitude we ascribe to (R) is correct or it's not. We try to say it's not.
The people invest a lot in health care and in education. That includes the wealthy, who make far more than their numbers would indicate and who pay a lot more than their numbers would indicate.
If the people are the government, you have to include that.
https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51361-HouseholdIncomeFedTaxes_OneCol.pdf
The top 20% pay the highest effective tax rate, on average. It's still true that apart from FICA and Medicare, the bottom 40% or so don't pay federal income taxes. At some point reimbursable subsidies ("tax credits"
kick in. We heard of absurdly low tax rates for a few years for this group, but it was after the 2007 financial debacle as a lot of folks were writing off bad debt. There was a sharp uptick in effective tax rates in 2013. Just about then is when we all started to cite only tax rates from 2012 and before.
https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51361-HouseholdIncomeFedTaxes_OneCol.pdf
There's info in that link to stoke outrage. On the other hand, while it's great for rhetorical mining it's even better to mine it for comprehension. That sort of mutes most of the outrage, as you realize that the class hatred is for those making just a bit above $220k in 2014. Not so much. We had flame wars over whether to consider that "wealthy" or not in the past at DU. If you make $20k/year, yeah, it's rich; but if you want your kid to go to a good high school in a very low-crime neighborhood, houses cost a lot, expenses are high, and $250k isn't all that much. (I saw 2k sq ft houses for $70k for sale in 2009, and 4k sq ft houses for sale for $400k, and considered both to be eligible for 'middle class.' But one was in a high-crime area with sucky jobs and stores and schools, and every teenage boy wanted to be in the NBA and *not* college; the other was newer and in an area where taking AP and dual-credit classes was trendy.) Note that in Europe, both the poor house and the upper-middle-class house would cost a lot more, because, well, living standards are lower. Apartments, houses, cars are simply smaller. And schools are more, much more, bureaucratized.
Historical trends have the current top-20% tax rate around where it normally has been since the 1950s. We like citing the marginal rates, which were historically high; but we don't look at average incomes, tax shelters, or the effective rate. Bad for the argument, and we've stopped thinking we need to be fair with facts. In so doing we confuse logic with rhetoric, and while rhetoric is good, logic is better. Otherwise you don't realize when your own rhetoric is misleading, and you don't have the chops to question it. As a percentage of revenues federal income tax is down, but a the presentation hides the facts: lot of that is because of increased taxes for FICA and such, not typically considered "federal income tax."
Those above median income tend to use a larger percentage of their income on big-ticket and luxury goods. This has been known for a long time. The bottom 20% spend almost all their income, but they do so in cheap imports and food or basic transportation--they help create low-paying jobs in supermarkets and inexpensive retail; the production and manufacture is often in other countries. They contribute to things like automotive jobs at best indirectly--they keep demand for used cars high and that makes trade-ins worth more and so the net cost of a new car is a bit less.
It's the same in other countries--above a certain income, you have money to buy good things that can pay workers better or use more professional services.
And, of course, while the poor pay a higher percentage of their incomes on FICA and other payroll taxes, the top-20% pay far more on things like state income tax and sales tax. If we buy my kid a viola, it'll be a tough call: do we write off the rental money accrued towards a purchase or avoid the sales tax? (In hindsight--should have rented mail-order from out of state, and saved both ways.)
Unused income goes to provide bank liquidity. In normal times, that means banks making those small-business loans or house or car loans are using rich people's savings.
Even the "hollowing out" of the middle class is a misperceived appropriate metaphor. Last I checked--perhaps 2014?--the numbers of middle class people had declined rather strongly. On the other hand, most of the decline came from economic units moving *up* into the upper class, not down into the lower class.
It would be interesting to update my knowledge-base on this for the last few years. But as of 2014 one of the reasons was declining numbers of high-paying jobs, but the decline in the middle class also tracked long-term with the loss of two-breadwinner households. For example, a lot of the middle-class families where I live now went into foreclosure and fell out of the middle class a couple of years *after* 2008 when the husband and wife divorced. Suddenly it was a one-income family, so instead of $55k or so on average there were two economic units of around $28k. Bam, the middle class was hollowed out just a little bit. The same would hold for me and my wife if we separated and our gross income's a lot higher: One person's income could hold the house, but whoever got the kid wouldn't be able to do it solo.
I'd note that apparently Mexicans would be predicted to be far happier if their country doubled the tax rates. Not sure those we like to say we defend would be in favor of that unless they paid little and got benefits as a result.
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