J.C. Moore Online
Current Events from a Science Perspective

Debt and Taxes in Pictures and Graphs

We all have different ideas about what is a fair tax policy and a fair distribution of wealth.  Below are some pictures and graphs  which  show that conventional wisdom may not give us a clear picture of the facts – and that we may need to reconsider what is actually fair.

State Taxes: Last year, Oklahoma cut  state taxes and is considering another tax cut. The graph below is the data for Oklahoma from the Institute on Taxation and Economic Policy .  It shows that those in the lowest income group pay the highest percentage  of their income in taxes.  The 2012 Oklahoma tax cuts skewed the distribution even more, as 75% of the tax cuts went to the top 20%  in income.  You may look  up the data for your state at the link above. The tax cuts in Oklahoma, and perhaps in your state, were justified by using Laffer’s economic theory, though the theory apparently fails in practice.

Capture
Distribution of Wealth:  The graph  below compares what people consider the ideal distribution of wealth, with how they think wealth is distributed. Both are very different from the actual distribution of wealth. Taxation and spending policies have greatly contributed to this distribution of wealth.

 

Wealth in Amer 2

 

National Debt:  Taxation and spending policies greatly affect our national debt. The graph  below, from the CBO, shows how the surplus projected in 2001, the top red line, was decreased by the weakening economy, tax cuts, and spending decisions. The stimulus accounted for  6% of the decrease and Obama’s policies for 8%.

 

debt

 

Tax Rates: This chart gives some historical perspective on the top marginal tax rates. Those in the top  income bracket     have been enjoying the lowest tax rates since World War II.

 

tax rates

 

Spending:  The conventional wisdom is that our current deficit is because of  increasing government spending. That is not borne out by the data.

spending

 

The Deficit: Though there have been many claims about our growing deficit,  the deficit has actually been shrinking as a share of the GDP.

 

Deficit Obama

 

Ancient Wisdom: Aristotle thought that nature, and even politics, could best be understood by observations and reason. In the fifth century BC, Aristotle compared the democracy in Athens with other forms of government and warned against a major flaw in democracy. If the poor gain too much power, they will vote too many benefits for themselves and will deplete the treasury.  If the rich gain too much power,  they will use that power to further enrich themselves, leaving too many of the citizen’s poor. Aristotle thought democracy was only a viable form of government if there was a strong middle class.

Economics is not the only issue in most elections, and many people vote for a candidate based on social issues, sometimes without considering that  the candidate may make decisions against their best economic interests. Perhaps it’s time we put divisive  social issues aside for awhile, and work on restoring the economic balance in our society. Our education system, our infrastructure, our health, and our economic well-being all depend heavily on our taxation and spending policies. Although economic imbalance may be becoming a threat to our democracy, that can be changed if we will become informed and

 

Vote

 

(C) 2013 J.C. Moore

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