For some time now, the Tea Party has been making a ruckus over the size of government, tax rates and the alleged debt/deficit ‘crisis.’ Rather than understanding that; our tax rates and government as a percentage of GDP are lower than virtually any other nation in the industrialized world; or that the current deficit/debt crisis has more to do with a loss of revenues from tax cuts and a recession than any increased spending; or that the wealthiest Americans pay the lowest in top marginal tax rates since the great depression; or that the in drop these tax rates on the wealthy have coincided with more wealth going to the top and a loss of real income for the middle and lower classes, they would prefer to rally under the mistaken notion that our government is treading on Orwellian waters.
Tax rates as a percentage of GDP
Here is a comparison of tax rates as a percentage of GDP across industrialized nations. It’s interesting to note where Mexico stands in this graph, given the Tea Party’s apparent stance on immigration.
CBO Data on the Deficit/Debt
While the Tea Party (along with other Republicans) blame what they claim to be a crisis (that must all of the sudden be solved overnight through drastic cuts in spending while the US economy is still in a very slow and fragile recovery) on government spending, CBO data shows that our growing debt has more to do with lowered revenues necessitating borrowing than increased spending.
While completely non-existent throughout the reckless spending of the previous administration, the Tea Party suddenly became concerned over the growing debt within the last two years or so. Many claim that Obama stepped in and increased spending. There is one problem with this; the fiscal years starts in October of the previous calendar year. So the 2009 fiscal year started in October 2008. Most of the spending in 2009 is based on policies set in 2008. Even the CATO institute (not a fan of Obama, but rather an equal opportunity critic of anything that hints at big government) wrote a piece explaining this issue; Don’t Blame Obama for Bush’s 2009 Deficit
I fact, a study by Forbes highlights just how misinformed the Tea Party really is. Below is an excerpt from The Misinformed Tea Party Movement.
Tuesday’s Tea Party crowd, however, thought that federal taxes were almost three times as high as they actually are. The average response was 42% of GDP and the median 40%. The highest figure recorded in all of American history was half those figures: 20.9% at the peak of World War II in 1944.
Tea Partyers also seem to have a very distorted view of the direction of federal taxes. They were asked whether they are higher, lower or the same as when Barack Obama was inaugurated last year. More than two-thirds thought that taxes are higher today, and only 4% thought they were lower; the rest said they are the same.
As noted earlier, federal taxes are very considerably lower by every measure since Obama became president. And given the economic circumstances, it’s hard to imagine that a tax increase would have been enacted last year. In fact, 40% of Obama’s stimulus package involved tax cuts. These include the Making Work Pay Credit, which reduces federal taxes for all taxpayers with incomes below $75,000 by between $400 and $800.
According to the JCT, last year’s $787 billion stimulus bill, enacted with no Republican support, reduced federal taxes by almost $100 billion in 2009 and another $222 billion this year. The Tax Policy Center, a private research group, estimates that close to 90% of all taxpayers got a tax cut last year and almost 100% of those in the $50,000 income range. For those making between $40,000 and $50,000, the average tax cut was $472; for those making between $50,000 and $75,000, the tax cut averaged $522. No taxpayer anywhere in the country had his or her taxes increased as a consequence of Obama’s policies.
So there you have it. These are the Tea Party’s (along with Republican congress members riding the Tea Party wave) alleged concerns. These concerns are misplaced and misinformed. But nevertheless, the Tea Party is tired of oppressive big government socialism, and they just aren’t going to take it anymore! In all likelihood, these ‘reasons’ are little more than proxies for bigotry and Tea Party racism.
The Tea Party's Take on Tax Rates and Size of Government by Fact and Myth