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Cara Tan, editor
Protesters in Yakima, Washington assemble against Obama's tax policy.
Photo credit: athena60_98 Creative Commons license
Really the protests are more against what some feel to be excessive government spending, in anticipation of the US citizens having to pay back the government for its various bailouts.
"I have nothing against taxes, I pay them every year," said one protester in Nebraska who identified himself an Independent. "But the government has gone out of control. The Republicans and Democrats have a stranglehold on this country and we need to vote them all out."
"I want the president and Congress take notice of the protests. And I want them to slow down on this spending -- just slow down."
These sentiments were echoed from coast to coast across the US in rallies largely organized by conservative group FreedomWorks, led by Texas Republican Richard K. Armey.
“I don’t know what all the hype is about. Taxes are lower now than they have been in years, and Obama’s only raising taxes on the rich,” exclaimed Marvin McSuds, of Yakima, Washingtion.
The federal income
tax rate is the lowest it has been in about thirty years. According to the CBO (Congressional Budget Office), the average American household paid out about 9% of its income in federal taxes in 2006, the most recent year for which these tax data are available.
The people seem to agree. In a recent Gallup poll, the majority of respondents said their federal tax payments are either “too low” or “about right”. This poll is said to reflect the faith the people have in President Obama’s promise to not raise taxes on those earning less than a quarter of a million per year.
"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. "Those goals are the foundation of the American dream, and they are the focus of my tax policy."
So what’s the hype about? Even Armey agreed, “the federal tax rate right now is at a good level." However, he added, "there are very few people who believe Obama will be content to leave it at that."
He elaborated that their gripe is not with this low rate but that in the future taxes will have to be raised dramatically to repay the trillions of dollars in bailouts, Obama’s large health-care and education projects, and the stimulus package.
"There's no way he can do the spending he does and cut taxes for most people. People know that spending inevitably means more taxes," Armey added.
Indeed, many states are contemplating rising taxes as they are hit by a 'double whammy' of dropping tax revenues and major rises in costs for welfare.
The diagram below shows the drops in state tax revenues in the fourth quarter of 2008. Eight states have seen income reductions of 25 per cent to 10 per cent. Only fourteen states have seen tax receipts increase. At least 10 states are already considering tax increases, and government finance experts say it is almost certain that more will follow suit.
David Smith,
Investigative Journalist
Raghuram Rajan,
EconomyWatch Contributor
Andrew Sheng,
EconomyWatch Contributor
Mario Blejer & Eduardo Levy Yeyati,
EconomyWatch Contributor
Henry Mintzberg,
EconomyWatch Contributor
Isam al Khafaji,
EconomyWatch Contributor
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