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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Brumar89 who wrote (686963)	12/3/2012 11:48:03 AM
From: puborectalis	Respond to of 1583639

The U.S. federal tax burden, relative to gross domestic product, is lower than it’s been in half a century. Americans pay lower taxes in relation to the size of their economy than all but a handful of developed countries, including Chile and Mexico.The relatively low tax burden on Americans is, in part, an illusion that results from heavy reliance on hundreds of billions of dollars of so-called “tax expenditures.” To make government spending appear lower than it really is, the U.S. tax code is larded with givebacks, deductions and exemptions. For example, the government lets you off the hook for paying taxes on the cash your employer pays to cover your health insurance coverage - income by another name. The cost of those uncollected taxes would show up as spending if the Treasury paid you a direct subsidy for health care. (That tax break, by the way, is the biggest single giveaway the government provides.) Or take the earned income tax credit, which issues payments to low-income households. This giveback costs the Treasury just as much as if it collected the money from all taxpayers and then turned around and used it to write checks for those with the lowest wages. “It doesn’t really make much difference whether the government taxes people - and spends the money in order to redirect it - or whether it gives a tax incentive that encourages people to spend their own money in the same way,” said Bruce Bartlett, who served as a Reagan administration policy adviser and as a Treasury official under President George H. W. Bush. “Economically, it's exactly the same thing.” The biggest sticking point in the current debate centers on whether tax rates should rise. Thanks to the thicket of loopholes available at all income levels, those "marginal" rates have little to do with how much of your hard-earned money you must fork over to the government. As a percentage of their total income, though, Americans are paying less than they have in more than a half century. Since 1960, the government’s total take has been remarkably steady at about 18.3 percent of gross domestic product, give or take a percentage point. In the second half of the 1990s, that changed. Thanks to a booming economy , the Treasury began collecting money faster than the government could spend it – without raising tax rates. The dot-com stock market boom, for example, produced a surge in capital gains taxes, even after the government cut the tax rate on those gains in 1997.