StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



Personal Taxes At Lowest Level Since 1950

12 May 2010
Posted by Stan Collender

So says the Bureau of Economic Analysis. 

Here's the whole story from yesterday's USA Today (Hat Tip: Taegan Goddard at Political Wire).  Putting aside the snarky, politically motivated quotes from people with an agenda in the story, here's the data-driven money quote:

Federal, state and local taxes — including income, property, sales and other taxes — consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.

Enjoy...or not.

USA Today got their numbers wrong

There's no way all taxes at all levels are only 9.2% of personal income. USA Today got their numerator wrong: they used was the BEA reports as "personal current taxes" which only includes personal income taxes (and a few other minor sources) but excludes property, sales, and corporate income taxes, despite what the article says. Include everything at all levels, and tax receipts were 31.1% of personal income in 2009, the lowest since 1957. More details here.


Trying to understand what your point is

So it reads like the old saw that taxes are just too low. But maybe you should consider.

1. UI counts as personal income but isn't taxed. As as share of PI, it's at an all time high.

2. Sales tax revenues tend to decline dramatically in a recession. Last I checked, the consumer still thinks we are in one.

3. You (and USAT) conveniently excluded payroll taxes that are at their highest level ever and going higher because of the changes under HCR.

If you have a different point, please let us know. But if this is your point, a more complete analysis might be helpful

I


Ernie--why would you include

Ernie--why would you include corporate income taxes in a measure of personal income taxes? Without, presumably, including the corporate income?


Our taxes were much lower in 2009

Thanks to the American Opportunity Credit (Obama put this in the American Reinvestment and Recovery Act of 2009) we got a big break on our 2009 taxes.

Most Americans saw tax relief due to the tax cuts in the stimulus bill.

Unfortunately our property tax is about to go up:

http://mnpublius.com/2010/05/pawlenty-to-force-a-statewide-property-tax/


@moopheus Two reasons: 1)

@moopheus

Two reasons:

1) Corporate income taxes are ultimately borne by individuals through lower dividends, lower wages, etc.; and,

2) Corporate income taxes were about 7% of federal receipts in 2010 and are a significant chunk of many states' coffers. Excluding them takes out a big piece of the tax story.


Entitlement tax exclusion massively dubious

Considering the relentless rise of the SS/MC tax rates (not to mention the epoch-making fact that SS went cashflow negative *this* year) it is extremely dubious to run any analysis and conveniently omit the SS/MC taxes.

Ditto with all of the aforementioned one-off/temporary measures listed above.

I suggest that the guilt-ridden, party-less aspiring autarchs pay my "low" taxes this year.

They can enjoy my massive government benefits in exchange.




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