Saturday, April 18, 2009

Has Santa Claus Come to Town? He has. He has. He has.

In Americans' Tax Burden Near Historic Low, the Washington Post today provides a good summary of how the current administration is channeling and exceeding the failure of the prior one to tell the people that sorry, there really is no Santa Claus. Here are some excerpts:

As . . . the president promised tax cuts for most, new data showed that the federal income tax burden is already hovering near its lowest level in three decades for all but the wealthiest Americans.

The nonpartisan Congressional Budget Office estimates that the average family forked over barely 9 percent of its earnings to the IRS in 2006, the most recent year for which information is available.

. . . Middle-class families -- to whom President Obama has delivered even more tax relief since he took office in January -- have fared especially well, according to the CBO. The middle fifth of taxpayers, who earned an average of $60,700 per household in 2006, paid just 3 percent in federal income tax that year, down from a high of 8.3 percent in 1981.

"We start from the simple premise that we should reduce the tax burden on working people, while helping Americans go to college, own a home, raise a family, start a business and save for retirement," Obama said (Ed.: speaking on April 15). "Those goals are the foundation of the American dream, and they are the focus of my tax policy."

DoctoRx here. In opposing G W Bush's tax cuts in 2001 and 2003, a united Democratic Party (and for a time, John McCain) opposed them in large part on the argument that though there was a recession (2001) and a near-relapse into recession (2003), they were unfunded. Vast increases in cumulative deficits later, and even more gigantic Federal deficits ongoing and proposed, where is the President's thinking on the continuing "simple premise" that, las with President Bush, he is really not Santa Claus?

Back to the article:

The White House stuck to its own low-tax message yesterday, as Obama repeated his "clear promise that families that earn less than $250,000 will not see their taxes increase by a single dime." Asked whether Obama is confident that he can stick to that pledge throughout his administration, press secretary Robert Gibbs told reporters: "He is. He is. He is."

DoctoRx here. Let us remember the three "He is"'s. Will they be the 2012 equivalent of "Read my lips: no new taxes"?

Those with a longer sense of history also recall Ronald Reagan pushing through the "riverboat gamble" of a tax cut at the outset of his first term, then finding the rest of his budgets "dead on arrival" and agreeing to a multiplicity of tax increases through the rest of his tenure in office.
Of course, he never asked anyone to read his lips or gave a triple promise as Robert Gibbs has just done.

Back to the article:

To add heft to that promise, the White House released a lengthy list of tax breaks included in the stimulus package to benefit college students, car buyers, first-time home buyers, families with children, poor people and others -- all told, about 120 million households.

DoctoRx here. Where's my tax break?

Back to the conclusion of the article:

This year, with the profusion of new credits in the stimulus package, about 65 million households -- or 43 percent of all filers -- are likely to owe no income taxes . . .

Of course, even filers who have no income tax liability still pay federal taxes, due in large part to the payroll tax, which funds federal insurance programs like Social Security. According to the CBO, taxpayers shelled out an average of 7.5 percent of their earnings in payroll taxes in 2006.

But if the recession lingers and Congress and the White House consider another economic stimulus package, that tax could temporarily disappear, as well. Economists say one of the first items that should be considered is a payroll-tax holiday.

DoctoRx here. Presumably any lost revenues to the Government from a payroll-tax holiday will be provided by the Tooth Fairy if Santa is either worn out from overwork or finally has an empty red bag.

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