The Real Problem with Taxes

It is not just tax rates but tax complexity and regulatory compliance costs that affect the economy.  Taxes, too little?  Too much?  Is that even the question? The fact is that Uncle Sam's take this year will be the lowest since 1950, when the Korean War was just getting under way.  This fact is not in dispute.  The question is what to make of it. Recently (5/31/11), Bruce Bartlett, in a NYT article, argued that taxes are too low by historical standards.  This certainly seems to undercut the Republican argument that taxes need to be cut to stimulate the economy.  The argument is basically that stimulating the economy will result in an increase in jobs and ultimately an increase in tax revenues.  The increase in tax revenues together with cuts in government spending will bend the deficit trend line and begin to reduce the national debt.  Bartlett defines the tax rate in its "broadest" sense as total revenues divided by GDP.  Using that...(Read Full Article)

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