WITH HIGHER TAXES LOOMING, MAKE DEBT A 4-LETTER WORD
June 20, 2008
We need to consider our financial plan for the future, says The Spectrum. Many forces will combine to make higher tax rates inevitable:
- The 2008 federal budget started with a projected $400 billion deficit; this was before the more than $150 billion stimulus package.
- The national debt has ballooned to more than $9.4 trillion.
- Our 2007 trade deficit was more than $700 billion.
- Medicare and Social Security together are short an incredible $44 trillion dollars.
- The National Center for Policy Analysis suggests unless tax rates increase, those two programs will require a staggering 76 percent of all federal income tax revenue in 2050.
Taxes are likely to increase, says The Spectrum, and history explains why:
- In 1980, the top federal income tax bracket was 70 percent, double today's rate, and middle class people, earning $100,000 in today's dollars, were in the 49 percent bracket.
- With an impressive reduction in rates, workings earning $100,000 today are in the 28 percent bracket.
- The same story holds true for taxes on investment income; the maximum rate on long-term capital gains has plunged, from 28 percent in 1980 to 15 percent.
- At the end of the Clinton presidency, there were 29 million tax returns filed where no federal tax was paid; in 2005, the latest year for which data is available, the number had climbed to 43 million.
- The top 1 percent of income earners paid 39.6 percent of the taxes while earning only 21 percent of the income, while the top 25 percent of earners pay 86 percent of all taxes.
Source: Eric deVita, "With Higher Taxes Looming, Make Debt a 4-Letter Word," The Spectrum (Southern Utah), June 19, 2008.
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