The Tea Party made a lot of noise about our being Taxed Enough Already. While I am sometimes cast as a liberal, I am actually a fiscal conservative and I agree that many of us are taxed enough-if not too much. However, I also contend that some of us are under-taxed in a way that causes the rest of us to be over-taxed, which is probably one reason I get branded as a liberal.
A typical person, say a teacher, who makes $50,000 a year gets taxed at an effective rate of 17.2%. Mitt Romney gets taxed a bit under 15%, mainly because he and his lobbyist cohorts saw to it that the tax laws benefit his sort of people rather than the folks who earn a paycheck. Of course, even Mitt is paying a modest piece of his income compared to some others.
According to the IRS and Citizens for Tax Justice certain industries have managed to get rather desirable tax rates. Aerospace and defense companies are doing very well, having an average tax rate of 1.6%. The telecommunication folks are worse off at 7.5% and the often vilified folks in petroleum and pipelines are taxed at an effective rate of 13.1%. Above that are the utilities who are hit hardest at 14.4%. Of course, some clever folks at the top companies have worked out the means of paying no taxes (most famously GE).
A rational, objective look at the numbers shows that the claim that companies are overtaxed seems to be untrue. After all, they are taxed at a rate less than a person who earns $50,000 by working. Of course, it could be contended that everyone is being overtaxed and that the people who work for a living and do not have armies of well paid lobbyists and lawyers are being brutally overtaxed. If so, it would seem that the focus should be shifted from trying to rescue the corporations from the cruelty of their relatively low effective tax rate to rescuing the working people from their much higher tax rates. After all, corporations have been enjoying record profits and CEO compensation is most excellent while the middle class is generally struggling or sinking into the lower class.
Naturally, there has been some talk about helping out the middle class. However, while politicians have bent over backwards after being slathered with cash from the corporate lobbyists, little has been done for the middle class. Given that the middle class lacks the unified cash to hire lobbyists and lawyers, this is hardly a surprise. However, the pain of the middle class can be cleverly exploited. After all, if we feel hurt by our taxes, it is usually easy to get some of us to shed tears for the corporations on the assumption that if we are being cruelly taxed, then so are they. Of course, this is not true-they are doing quite well.
As far as what to do, the usual call from conservatives has been to lower spending to address the problem of deficits. While that is a reasonable idea, there is the obvious question of whether or not these cuts will be best for the country. After all, we could also address the deficit by increasing the taxes paid by the very wealthy to match those paid by the middle class in terms of percentages. That is, if folks like Buffet were taxed at the same rate as their secretaries, then there would be considerably more revenue while the rich would still remain rich.
It might be objected that taxing the rich at this rate would be harmful. However, the obvious reply is that if someone who makes $50,000 a year can manage to survive while being taxed at 17.2%, someone who makes $ 50 million a year can also survive at that tax rate or even higher.