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    Great News! Taxes Are Lower! (er, because economy stinks)

    Great News! Taxes Are Lower! (er, because economy stinks)

    The AP (via CBS News) has a headline sure to warm the hearts of the Obama communications team:  High Taxes? Actually, They’re at a 60-Year Low:

    Actually, as a share of the nation’s economy, Uncle Sam’s take this year will be the lowest since 1950, when the Korean War was just getting under way.

    And for the third straight year, American families and businesses will pay less in federal taxes than they did under former President George W. Bush, thanks to a weak economy and a growing number of tax breaks for the wealthy and poor alike.

    Income tax payments this year will be nearly 13 percent lower than they were in 2008, the last full year of the Bush presidency. Corporate taxes will be lower by a third, according to projections by the nonpartisan Congressional Budget Office.

    As TaxProf points out, however, there is a little something left out of the AP story, namely, that the same CBO report demonstrates that under the current tax structure tax revenues will soar to an all time high as a percentage of GDP once the economy picks up (chart via TaxProf):

    In addition to leaving out the context of the “lower” taxes, the AP also misuses the term “lower taxes.”  What it means is “lower tax revenues” which is not the same thing.

    But who reads or fact checks the details anyway?  Certainly not AP.

    Update:  Not surprisingly, Steve Benen citing to the Center for American Progress (which runs Think Progress) repeats the headline message uncritically:

    As Michael Ettlinger, head of economic policy at the Center for American Progress, said at the time, “The idea that taxes are high right now is pretty much nuts.”

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    Comments


    Bzzt. Try reading the actual report. The increase in tax is due to the lapsing of current tax law and return to 2001 law. So it's not "under the current structure" and the impact of the economy is marginal.


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