Tuesday, August 23, 2011

Taxes, A Summary for an Old Friend

Please, please, Randy T., feel free to comment on any blog entries I have posted. I have posted most of this before with commentary. I get no feedback because either no one reads me, or no one that reads me understands me. :) My wife thinks I am obsessed. :)

The following chart is the most famous and most posted chart.

I don't do math if I don't have to, Randy. I do like charts. They help me see things clearer. Look at the huge amount of the Bush tax cuts here, as opposed to the new spending of Obama (the Obama figure is projected over an 8 year period, which probably won't happen.) The only basic flaw in logic here is that Obama has not had 8 years to make decisions that might cost more money. But it puts to rest the notion that Obama is a big spender so far. We have actually had too little stimulus. Unemployment insurance has saved us from another Great Depression but we can't count on handing out money like this forever.

 Please look at the non-defense discretionary spending comparisons. They are the only real place to cut spending other than defense, or social programs. Social programs won't happen from either party, sorry. I remember a line from Oliver North's hearings when Lt. North was hinting that the American people were wrong and that was why Reagan had to start a shadow government. The congressman questioning North said something like, "The American people have the democratic right to be wrong."

I am in favor of more taxes across the board, much later. We have to pay for our government, but until the unemployment rate is back to a manageable figure, the rich will just have to pay the share they haven't been paying since 1980's Reagan tax cuts. That moment in history marks the beginning of our increase in debt.  You can follow that putting these two charts together:

The chart above shows the tax rate for the affluent. If trickle down really worked then, the debt wouldn't be gong up at precisely the time we cut taxes for the rich. See below:

Notice that the debt goes up for the first sustained period with Reagan's tax cuts. Then it goes down for a sustained period with Clinton's tax increases (even though they were small). To put a little perspective, some of this was Bush senior's tax increase, the little two year sliver before Clinton. Of course, the debt goes up tremendously at the end. This is our current crisis, where we lose tax revenue across the board, and simultaneously have to stimulate the economy with bailouts and stimulus. The following chart puts taxes and expenditures on the same chart using share of GDP as the gauge. Notice where expenditures are paid for (Clinton with his tax increases) and notice Obama's leveling off. Also notice how tax receipts are at their lowest, as a percent of GDP, right now.

Income inequality that has increased to levels not seen since 1928 is the real cause of the downfall of our nation. Concentrating wealth into the hands of the ultra rich causes a lack of demand.

This graph is a little tricky. the first part shows the population broken down into 20 percent segments. The second part, breaks down the top fifth to show that the top 1% are actually the one's gaining.

The lack of economic activity because of the lack of demand because of the concentration of money to the top 1% of the people IS our problem.

Here is the state of the recovery of employment. The people without jobs are NOT where taxes are coming from: