Non-blogging Advised by Wolves found this graph posted last year at Reason, which they pulled from American Thinker.

Advised by Wolves writes:

I am pretty sure that the models used by the Congressional Budget Office are about as accurate as the models used to predict global warming.

Federal Revenue as a percentage of GDP has held stable at about 19%. This is a historic fact of the last 80 years (since 1930), despite the tax rate of the wealthiest Americans.

Yet, the CBO consistently scores the end of the Bush Tax Cuts as a revenue enhancer to the Federal Government. Just as consistently, this has not occurred while the economy is in recession. Revenues continue to fall and only turn around when the economy recovers. Based upon historical evidence, CBO scores are wrong, therefore, the mathematical models that produce these scores are wrong.

To which The Big Kahuna responds with:

This is the classic example of garbage in, garbage out.  The CBO works with assumptions given them by Congress.

I am waiting for a president to run on the platform of limiting Congress’ influence in the areas of science and economic theory. Geez, the damage they did with just the food pyramid is staggering.

According to a recent Rasmussen poll, 66 percent of American voters believe that America is overtaxed. Only 25% disagree.

The gap is even wider when those polled are divided into Mainstream Americans (those who are “skeptical of both big government and big business”) and the Political Class (those who trust political leaders and are “far less skeptical about government”).

Not surprisingly, the tax issue provokes a wide gap between the Political Class and Mainstream Americans. Eighty-one percent (81%) of Mainstream American voters believe the nation is overtaxed, while 74% of those in the Political Class disagree (see more about the Political Class and Mainstream Americans).

Eighty-one percent (81%) of Republicans believe the nation is overtaxed. So do 73% of voters not affiliated with either major party. Democrats are evenly divided on the question.

So not only do Republicans and Independents overwhelming believe that they are overtaxed, so do half of Democrats! How’s that going to play out in November?

Then there’s this:

Forty-three percent (43%) of voters believe that the average American should pay about 10% of their income in taxes in exchange for the services provided by the government.

We have a long, long way to go to get to the 10% mark.

In calculating the amount of time Americans have to work to pay for government in order to determine Tax Freedom Day, the Tax Foundation says:

Tax Freedom Day answers the basic question, “What price is the nation paying for government?” An official government figure for total tax collections is divided by the nation’s total income. The answer this year is that taxes will amount to 26.89 percent of our income, and the stretch of 99 days from January 1 to April 9 is 26.89 percent of the year.

Nearly 27%! And that’s the average. The Tax Foundation notes that Americans will pay more taxes in 2010 than they will spend on food, clothing and shelter combined. Why? Because there are taxes everywhere we turn.

This is before Obama slips in the “stealth sales tax” that we will soon know as value added taxes, or VAT, similar to Britain.

According to a couple of Boston University economists, the Tax Foundation’s figures may even be a little light. In 2007, Laurence J. Kotlikoff and David Rapson calculated the actual tax burden imposed on the citizenry by “the true maze of taxes and government benefits.” They found that our “all-in marginal tax rate” is 40%. Read it again: Forty Percent.

Most workers will pay about that much on each dollar of income when all taxes — federal and state income taxes, sales taxes, taxes for benefit programs, etc. — are considered.

As a consequence, a 30-year-old couple earning only $20,000 a year has a marginal tax rate of 42.5%, while a 45-year-old couple earning $500,000 pays at 43.2%. There are some exceptions: A 30-year-old couple earning $50,000 a year, for instance, pays 24.4%, and a 60-year-old couple making $150,000 a year faces a tax rate of 47.7%.

Consider that while you watch the deficit explode and feel the bite of higher prices after the imposition of the VAT on virtually all sectors of our economy.

Technorati Tags: Rasmussen Polls, Actual Tax Burden, Crushing the Middle Class Through Taxation, Bankrupting America, Value Added Taxes, VAT, Taxing the Middle Class, Taxing the Poor, Hyperinflation, Declining Jobs in America, Unemployment, Barack Hussein Obama the Dangerous Choice

The Hill’s Congress Blog asks The Big Question: Would a VAT make sense for the U.S.? The article contains responses from internet a variety of sources. My favorite:

Justin Raimondo, editorial director of Antiwar.com, said:

If you want to kill off what’s left of the economy and impoverish the average American, then — please, by all means — be my guest and impose a “value-added tax.” A new tax during a recession is the best way to push us into a full-fledged depression. We can call it America’s Great Obama Depression, or to depersonalize it somewhat, simply “the Demo-pression.” Just for the historical record, you understand ….

Demopression. Nice. Yes, it started on Bush’s watch. But the non-stimulating stimulus and trillions of additional debt forced on us by the Democrats radically extended the depression, just as Roosevelt’s socialist policies did during the Great Depression. Demopression. Again.

My thoughts on a VAT were posted yesterday.

Technorati Tags: Bankrupting America, Value Added Taxes, VAT, Taxing the Middle Class, Taxing the Poor, Hyperinflation, Declining Jobs in America, Unemployment, Barack Hussein Obama the Dangerous Choice

Economics professor Thomas F. Cooley says that Obama’s campaign promise that he would not raise taxes on the middle class “is unsustainable.” Furthermore, Cooley says, “Virtually every individual and every investor will face higher taxes.”

The dashed vertical line shows where we are right now (end of government fiscal year 2009). Everything beyond that is a projection (read: wishful thinking) based on these assumptions — no new spending programs, expiration of the Bush tax cuts, no more adjustments to the Alternative Minimum Tax, and very optimistic assumptions about economic growth over the next decade. Even with these assumptions, it is not a sustainable path.

Cooley suggests that because Obama can’t raise taxes directly (his poll numbers are already in the dumper), new taxes will be levied in the form of value added taxes, something Cooley calls “a stealth sales tax,” and warns:

Value added taxes can be a good fiscal tool. They are less distorting than other taxes, so if they substitute for other taxes that can be a good thing. But they have one huge drawback: Once they are in place they can be increased with a stroke of the budgetary pen. They become an ATM machine for spendthrift politicians. Europe has relied heavily on VAT for decades. Average rates in the E.U. are around 20%, but they can be much higher. In Germany, they started out at 4% but are now at 19%.

If we end up addressing our fiscal problems with a value added tax without cutting some other tax rates and spending, we will be on a very slippery fiscal slope. Credibility is something that is very easy to lose with irresponsible fiscal policy, and very, very hard to rebuild once it is lost. Right now it is leaking away.

Precisely. And yet that is where we are headed. Democrats have no desire to reduce federal spending and Republicans do not have the stomach. In the end, the price of everything we produce will go up, more manufacturing will move offshore. Where will we be with more jobs lost and higher prices?

Technorati Tags: Bankrupting America, Value Added Taxes, Taxing the Middle Class, Taxing the Poor, Hyperinflation, Declining Jobs in America, Unemployment, Barack Hussein Obama the Dangerous Choice

The Washington Times alerts readers to a passage buried in the Federal Communications Commission’s (FCC) National Broadband Plan released this week:

Digital Goods and Services Taxation

RECOMMENDATION 4.20: The federal government should investigate establishing a national framework for digital goods and services taxation.

The National Broadband Plan is focused on increasing beneficial use of the Internet, including e-commerce and new innovative business models. The current patchwork of state and local laws and regulations relating to taxation of digital goods and services (such as ringtones, digital music, etc.) may hinder new investment and business models. Entrepreneurs and small businesses in particular may lack the resources to understand and comply with the various tax regimes.

Recognizing that state and local governments pursue varying approaches to raising tax revenues, a national framework for digital goods and services taxation would reduce uncertainty and remove one barrier to online entrepreneurship and investment.

Using the twisted logic found only in government halls, this recommendation is listed under Broadband Competition And Innovation Policy. New taxes are being proposed to increase innovation. To increase competition.

I’m stunned.

The thing is, they’ll probably get it. Big government takes big money. Washington Times explains:

The Obama Era has become a protracted, nightmarish Whack-A-Mole game of tax increases and bureaucratic self-enlargement. In sector after sector of American life, another scheme to expand government and wrench more earnings from Americans’ pockets pops up.

Exactly.

Technorati Tags: FCC, Internet Taxation, Broadband Competition and Innovation, National Broadband Plan

. . . does it take to collect 4 cents? Answer: Two:

Arriving at Harv’s Metro Car Wash in midtown Wednesday afternoon were two dark-suited IRS agents demanding payment of delinquent taxes. “They were deadly serious, very aggressive, very condescending,” says Harv’s owner, Aaron Zeff.

The really odd part of this: The letter that was hand-delivered to Zeff’s on-site manager showed the amount of money owed to the feds was … 4 cents.

Inexplicably, penalties and taxes accruing on the debt – stemming from the 2006 tax year – were listed as $202.31, leaving Harv’s with an obligation of $202.35.

You tax dollars at work.

Technorati Tags: IRS, Big Government, Wasting Tax Dollars

From Rasmussen, 78% Expect Middle Class Tax Hike To Pay For Health Care Reform.

With almost 25 percent real unemployment, is it any wonder that the vast majority of Americans want Congress to start over?

Technorati Tags: Socialized Medicine, Crushing the Middle Class with Taxes, Rising Unemployment, ObamaCare and Other Bad Ideas

From The Hill, via Drudge:

Twenty-one freshman Democratic House members have signed a letter opposing their leadership’s plan to raise taxes to finance a healthcare overhaul.

Rep. Jared Polis (D-Colo.) circulated the letter, saying that the income surtax on the wealthy would place an undue burden on small businesses, some of which pay taxes in the same way as an individual. The letter had 22 signers, all freshmen except for Rep. Paul Hodes (D-N.H.), who is in his second term.

“Especially in a recession, we need to make sure not to kill the goose that will lay the golden eggs of our recovery,” the letter said. “We are concerned that this will discourage entrepreneurial activity.”

While some would be hopeful on news like this, I suspect that this bit of mutinous behavior will be short-lived.

Technorati Tags: Taxes, Creeping Socialism in America, Bankrupting America

Democrats are putting an escalating surcharge in place to increase the tax burden on the wealthy, as high as an additional 5.4% on the “ultra” high earners in our society. Former Treasury Department economist and Forbes contributor Bruce Bartlett notes:

Former Labor Secretary Robert Reich calls this “the most blatant form of Robin Hood economics ever proposed.” An outspoken liberal, Reich meant this as praise.

And there you have it — Democrats have become so arrogant that they have no problem in publicly admitting that they are out-and-out stealing from the rich to give to the poor. Wealth redistribution by any other name is still, well, socialism.

Bartlett goes on:

The real problem is that higher tax rates will encourage the wealthy to spend more of their time and resources engaging in tax avoidance rather than making money. . . .

When the top federal income tax rate went as high as 70% back in the 1970s, it led to a vast amount of tax sheltering activity. . . .

It almost goes without saying that tax sheltering is socially and economically wasteful. It does nothing to increase the size of the economic pie and is essentially parasitic. It is far better for people with the talent and skill to earn large incomes to concentrate their efforts on ways to earn more by starting new businesses, revitalizing old ones, finding investment opportunities and so on. Spending more time with their accountants and tax lawyers trying to figure out how to keep their money away from the tax collector does nothing to enrich anyone except the accountants and tax lawyers.

As the top rate rises we can expect Congress to create new tax loopholes for their wealthy campaign contributors. No doubt, they will be justified on the grounds of meeting some critical social need, but their effect will be to lower the effective tax rate–the rate that is actually paid–well below the statutory rate. The result will be to further complicate the tax code and bias investment decisions, which will reduce growth.

In the end, it is highly unlikely that the surtax will bring in anything close to the projected revenue. This is almost inevitable because the models used to project the revenue effects of tax increases are largely static and assume that they don’t significantly impact on economic behavior. . . .

I remain convinced that just down the road major tax increases will be needed to avoid national bankruptcy. When that day comes, it will be harder for Democrats to go back to the same well and demand that all the burden fall upon the wealthy, especially if it is clear by then that the surtax didn’t raise nearly as much revenue as expected. Congress will have no choice except to look for ways to tax people who have much more limited opportunities for tax avoidance: those who have only wage income, which means the middle class.

Historically, increases in the top rate have tended to pave the way for higher rates on the middle class. Holding down the top rate in effect places a cap on how high tax rates on the middle class can go. If the top rate rises, higher rates on the middle class probably won’t be too far behind.

The wealthy aren’t going to just give up vast amounts of money without a fight. As taxes go up, time and attention that should be devoted to getting on with one’s life will be diverted to protecting one’s possessions and legacy. And when taxing the wealthy won’t pay for the massive “stimulus” packages and enhanced entitlement programs, the Democrats will turn to other “haves” in order to give to the have-nots.

Higher taxes are coming for all. Personally, I’m looking for tax shelters now in order to avoid the rush later.

Technorati Tags: B. Hussein Obama the dangerous choice, Return of Big Government, US Tax Policy, Economics, Bankrupting America

Forbes’ columnist Bruce Bartlett posits that 2 government reports on long-term budgetary trends released this week, one on Social Security and the other on Medicare, prove that an 81% tax increase will be necessary to fund these two government programs alone.

They both show that we are on an unsustainable path that will almost certainly result in massively higher taxes. . . .

Since many taxpayers have just paid their income taxes for 2008 they may have their federal returns close at hand. They all should look up the total amount they paid and multiply that figure by 1.81 to find out what they should be paying right now to finance Social Security and Medicare. . . .

The reality, which absolutely no one in either party wishes to face, is that benefits are never going to be cut enough to prevent the necessity of a massive tax increase in the not-too-distant future. Those who think otherwise are either grossly ignorant of the fiscal facts, in denial, or living in a fantasy world.

So while we hurtle down the path of growing government entitlements in the midst of a recession depression, Obama is forced to wait to raise taxes in order to keep from totally sinking the economy and the deficit is ballooning out of control. This will make the ultimate day of reckoning even more disastrous.

Can’t wait until Obama gives us “free” health care.