AN UNDERTAXED AMERICA?
February 5, 2007
House Speaker Nancy Pelosi is contemplating new taxes. But even with a booming economy, thanks to President Bush's tax cuts, Americans are still taxed plenty -- especially investors and entrepreneurs, says Investor's Business Daily (IBD).
Each year, the Tax Foundation measures all taxation at the federal, state and local level as a percentage of income.
- By the end of the Clinton administration, Americans' average tax burden had reached the historically unprecedented level of 33.6 percent.
- Under the current administration, the total tax burden has gotten as low as less than 30 percent.
- Since 2004, however, it's rising again, standing now at 31.6 percent; federal taxes are responsible for two-thirds of that tax burden.
Those who earn the most money -- and invest the most in the economy -- pay almost all federal personal income taxes:
- As reported by Congress' Joint Economic Committee, the richer half of the American population pays almost 97 percent of income taxes.
- And most of that -- 54 percent -- is paid by those in the top 5 percent.
- Those ranked in the top 1 percent -- the richest of the rich -- pay more than 34 percent of all personal income taxes collected by Uncle Sam.
- What's more, the Congressional Budget Office last month found that the after-tax income of those "superrich" actually declined after the Bush tax cuts -- by 8.3 percent from 2000 to 2004.
Hand in hand with these trends, about 14 million Americans at lower incomes have been removed from the federal income tax rolls since 2000 because of the earned income tax credit and the per-child tax credit.
With an already rising tax burden -- borne disproportionately by those who are successful, and who invest -- the Democrats' plans for big tax increases could be more damaging to the U.S. economy than ever before, says IBD.
Source: Editorial, "An Undertaxed America?" Investor's Business Daily, February 5, 2007.
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