The myths about taxes – revised

April 27, 2008 at 4:35 pm Leave a comment

I am an old guy who has heard the myths about taxes for over 50 years.  I remember a discussion in college economics about these myths.  Every American President in my lifetime has said he would cut taxes and keep the programs we need.  The myths are:


1.      We can lower everyone’s taxes and keep the programs we like and we need.  Simple math and common sense should tell us this isn’t true.  If we want the program we have to pay for the program.  The real underlying problem is we all want something for nothing.  We want the other taxpayers to pay for our programs and we don’t want to pay for their programs.  In fact most of us want to pay no taxes at all.      


2.      There is a lot of waste and fraud in our government programs and if we just cut all the waste and fraud we can cut taxes.  This problem has been studied and restudied over the years and the waste and fraud found is less than 2% in any given government program, with the exception of the military programs and there it is 5%.  Of course when we hear there is $25 billion in waste in the Military budget of $548 billion, but we don’t demand cuts in these military contracts.  Having spent 35 years in corporate America I can attest to the fact all programs have some waste and even some fraud.  You can never eliminate all waste and fraud, because these programs are run by imperfect human beings, like you and me, who make mistakes and errors in judgment.


3.      Americans are over taxed as a society.  This is the biggest myth.  If we look at the industrial countries in the world including Europe, Canada and Japan it is clear Americans are the least taxed.  Americans pay 26% of GNP in taxes.  The other industrial countries pay an average of 36%, with Sweden paying 51% of GNP and Canada paying 33%.  Many of these countries have a higher standard of living, far fewer poor people, almost no poverty, far fewer really rich people and most have universal health care.  No one wants to pay 51% or even the 36% average, but can we afford to continue to borrow to pay for programs we all want?


4.      All Americans pay their fair share in taxes.  This is not so.  Every tax year over 5,000 Americans have income over $1 million and pay no taxes.  Warren Buffett, the second richest man in America, with net worth over $40 billion brags he paid a tax rate of 17% while those working for him paid 34%.  Buffett said in an interview in the New York Times in 2006,”There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”  We need to fix the tax system and the rich must pay taxes.         


5.      We can cut taxes by eliminating government programs.  This is just plain false.  How about no federal funding for education?  If we cut the entire program it would save us $32 billion out of a total budget of over $2 trillion, a drop in the bucket.  Teachers all over America would lose their jobs and children who are already at risk would suffer.  Most Americans want this program and in fact want all the government programs we now have.


6.      We can avoid taxes by borrowing to pay for our government programs.  This is the Bush policy and that of the Republicans in Congress.  They added $2 trillion dollars to our national debt in the 7 plus years we have suffered with this highly dishonest group.  The national debt is currently $9.4 trillion, $31,094 for each and every citizen, man, women and child.  It increases by $1.6 billion each day, because we aren’t honest enough to pay for our spending.  We can’t continue to run up our national debt and expect our economy not to suffer.     



The Bush administration cut taxes, mostly for the richest Americans me included, and then borrowed $2 trillion to cover his spending.  This is dishonest.  He tells the American people he cut taxes and then borrows $2 trillion and pays interest on the money he borrowed.  It costs us $243 billion a year just to pay the interest on the national debt and we are still borrowing at the rate of $1.6 billion per day.  Our children and grandchildren will have to pay for our irresponsible and dishonest behavior.  


The truth is we can’t cut taxes and our taxes are not too high.  We need to start being honest about our financial situation and either start funding the programs we all want through taxes, or start eliminating them.  Our national debt will soon begin to harm us all.     


Next time you hear one of the myths about American taxes remember this; Americans are the lowest taxed people in the industrial world, many rich people pay no taxes and the middle class in some cases pays a higher tax rate than the 400 American billionaires.  We are also the biggest borrowers and the most dishonest about how we fund our government.



Entry filed under: Rants.

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