“.. Washington doesn’t have a revenue problem, it has a spending problem,” says House Majority Leader Eric Cantor (R-Va.). All Republican legislators have been taught to chant this tired Republican “talking point” as if it were the Hare Krishna mantra.
To borrow one of Cantor’s favorite sneers, “How could anyone believe that?” Here’s a graph showing federal revenues as a percentage of GDP. Clearly Washington has a revenue problem.
In fact, Americans are paying the lowest percentage of their income in taxes since 1958. Corporate taxes which brought in over 6% of GDP in 1950 are now near historic lows of barely 1%. Senator Carl Levin has just introduced the Stop Tax Haven Abuse Act of 2011 targeting the $100 billion in taxes lost annually to offshore tax havens. (Needless to say, House Republicans vow to go to the mat to protect the corporate tax dodges since loopholes are deemed tax hikes in their Fox world)
It gets worse. Hedge Fund billionaires now pay a lower tax rate than their chauffeurs, or the teachers of their children, or the cops that patrol their streets. The IRS reports that the richest 400 Americans – who made an average of $354 million a year in 2007 – paid an effective tax rate of 16.6%, down from 30% in 1995 and 23% in 2002. Even as their incomes doubled from 2001 to 2007, their effective tax rates were virtually halved from 1995.
If you count payroll taxes, the richest 400 Americans, pocketing over $354 million a year, are paying a lower tax rate than a hospital orderly working for $29,000 a year.
Clearly we have a “revenue problem” – and a major league indecency problem.