Dunigan For Senate Blog

 Everyone loves to complain about taxes.  We all do it.  It seems to be part of our national pastime.  We currently have the Tea Party people who have some legitimate gripes about the government and out of control federal spending.  One of their agendas is that taxes need to be radically reduced, "Taxes Enough Already".  “The idea that taxes are high now is pretty much nuts,” says Michael Ettinger, head of economic policy at the Center for American Progress.

According to a report from the Bureau of Economic Analysis, the U.S tax burden has shrunk to the lowest level in 60 years.  In 2009, all taxes, including state, federal and local taxes – with sales tax and property tax thrown in – the average tax bill came out to 9.2 percent of personal income.  That is down from an average of 12% over the past 50 years.  The 2009 taxes are at the lowest level since 1950, when Truman was President. 

Individual tax rates vary widely based on how much a taxpayer earns, where the person lives and other factors.  On average, though, the tax rate paid by all Americans — rich and poor, combined — has fallen 26% since the recession began in 2007.  This tax drop has boosted consumer spending and the economy, which grew at a 3.2% annual rate in the first quarter.  It also has contributed to the federal debt growing to $8.4 trillion.

Taxes paid have fallen much faster than income in this recession.  Personal income fell 2% last year, while taxes paid dropped 23%.   

Why the tax bite has eased:

• Stimulus law.  One-third of last year's $862 billion economic stimulus went for tax cuts.  Biggest reduction:  The Making Work Pay tax credit reduced income taxes $800 for married couples earning up to $150,000.

• Progressive tax rates.  Presidents Clinton and Busch pushed through a series of tax changes — credits, lower rates, higher exemptions — that slashed income taxes for poor and middle-class families. A drop in income now can trigger big tax breaks and sharply lower rates, sometimes falling to zero.

• Sales tax.  Consumers cut spending sharply in this downturn, thereby paying less in sales taxes.

A Gallup Poll last month found that 48% thought taxes were "too high" and 45% thought they were "about right."  Though 48% say that taxes are "too high", in reality they are at a 60 year low.

Despite the record low tax rate, the three things you can count on are death, taxes and complaints about taxes.