Sure, we have safety nets like social security, welfare, medicaid, medicare, and unemployment programs. The U.S. is middle of the road to the lighter end of tax rates compared to other industrialized nations.
Here are the real numbers on how taxed we really are:
We have a 35% corporate tax rate, 0-12% corporate tax rate for state-local taxes. The global corporate tax rate, for comparison, is 24%. (Source)
We have a 0% to 55.6% income tax rate that includes federal, state and local taxes. (Source)
Payroll tax pays 15%-19% for social security and 2.9%-3.8% for medicaid/medicare. (Source)
25% of the GDP goes to taxes. (Source)
I’m not saying the country should have higher tax rates. But I do think that having moderate tax rates and fewer safety nets than other industrialized countries shows a lack of efficiency in how the money is being spent.
This is which taxes make up the government’s tax revenue:
Your income tax and your employer’s payroll tax bill make up the majority of the pie. Even though we have the highest corporate income tax among the OECD countries, it still makes up a small percentage of the revenue. Corporations are already taxed 39% of their revenue/profit. Making it higher, in fact, does causes businesses to move their operations elsewhere, where costs are cheaper, so they don’t have to decide to raise their prices, and lose customers who come across a cheaper product made overseas.
Here’s how our taxes are spent:
It really fucking sucks. Because what are we going to cut? The biggest pieces of the pie are health, social security, and defense. It might be nice to have less of an imperialist boot in the face of every country on earth, but even if we cut half of that, it’s still only 8%, and that money would probably need to be swallowed up to pay for social security and healthcare for people who really need it.
I also find it sad that 16% is spent on military but only 4% on veterans. I’ve never been in the military. I don’t know what that’s like. But I imagine watching your friends die in front of you for some rich politician’s political aim deserves more than 4% of the entire budget. Especially when 16% is being spent on starting or maintaining more intervention. I think if you work any job where your risk of dying or being injured is high, you should probably have more benefits than someone working a cushy white collar office job where they sit at a computer all day like me.
It makes sense to me more now why we are so in debt. Because who wants to deliver the bad news? So we keep borrowing, printing, and inflating.
What about raising taxes on the rich? (There’s a graph for that too.)
The rich actually do pay the majority of the taxes.
Let’s go over the list of why all the great solutions are not great solutions at all:
- The U.S. doesn’t pay income taxes that are too high OR too low. It’s more moderate to light, compared to the rest of the world.
- Income and business taxes already pay 40% of what they earn.
- Corporate taxes make up only 8% of the government revenue but they are already taxed 39% on what they make. Too much and they could move overseas, resulting in higher unemployment, meaning even less tax revenue, and people needing to collect on government programs even more. Detroit is an example of this.
- Wasteful spending is not the culprit. The majority of taxes are being spent on healthcare, social security, and to a lesser degree, defense.
- The rich already pay the vast majority of the taxes. 97% if the tax revenue comes from the richer, top 50%.
I thought when I started this, after I dug into the research, I would be able to find the most common sense solution. Now, I don’t.
But what I have gotten out of the research, is that any politician giving you any of these solutions is full of shit and just trying to get votes to stay in power OR they’re uneducated on the real research on the topic.
Another thing I understand more now is why we borrow so much money from China and Japan. It buys time until someone smarter than us comes up with a better solution.