Talking about how the Federal Government doesn't take in enough money seem to be all the rage this morning (well the New York Times did take the lead).
"We as a society will either have to pay more for our government, accept less in government services and benefits, or both," says Douglas Elmendorf, director of the nonpartisan Congressional Budget Office. "For many people, none of those choices is appealing — but they cannot be avoided for very long."Ah. So taxes need to be raised. And why are collections so low? Rather simple. The rich (who pay most of the income tax) are not making so much money these days.
This year's federal tax revenues are forecast to equal 14.4 percent of gross domestic product, a broad measure of economic output, according to the Office of Management and Budget.
That's the lowest share since 1950, long before Congress approved expensive programs such as Medicare.
But are we really undertaxed? Historically taxes raise an amount equal to about 20% of GDP in America. So what are they raising now? The data is from the Wiki so some salt might be handy. But it is at least instructive. Taxation at all levels of the US economy is at 26.9% of GDP according to the Heritage Foundation. According to the EU it is 24%. So you get the ball park.
Taxation has been at a record level of GDP for a while now. Let us look at a little history thoughtfully provided by the federal government.
It looks like we are just returning to "normal" levels of taxation to me. In any case tax rates don't matter. If rates get too high people start working off the books. The people rule.
Cross Posted at Classical Values