bdp (12/09/82)
This discussion of taxation reminds me of an article I posted in early
September, but which never got of our system (pyuxcc). I present it
again for your amusement. I apologize to those who may have seen
this before.
From "The Nation," 21-28 August 1982, by John McDermott
Everybody in Washington deplores deficits, but nobody can
agree on what causes them. Some blame the growing national
debt on excessive spending for social programs. Others
pinpoint Pentagon waste. Still others blame the recession,
with its concomitant high interest rates and rising
unemployment. Liberals and conservatives, hawks and doves,
Keynesians and supply-siders all have different theories.
But these explanations fail to consider an obvious cause:
Federal tax policy. A cursory look at the nation's tax
history since World War II shows that tax policy has been
consistent in one area. The tax burden on big business has
been systematically eased by shifting it -- or at least part
of it-- to individual taxpayers. The resulting shortfall in
revenues has been made up by borrowing.
Let me illustrate. In 1946, individual taxpayers paid 50.1
percent of all the taxes Washington took in; 45.9 percent of
this amount was paid in income taxes and 4.2 percent in
payroll assessments. Corporate taxes made up 30.7 percent
of the total, with virtually the entire amount coming from
taxes on profits. For every $5 in Federal revenues paid by
individuals, corporations paid $3.
By 1976, the picture had altered dramatically. Personal
income taxes made up 52.6 percent of Washington's take, and
payroll taxes (which are notoriously regressive) had climbed
to 24.5 percent. Big Business's share of the tax load,
meanwhile had fallen to 15.5 percent. In other words, the
Internal Revenue Service was drawing 77 percent of its
collections from personal income taxes. For every $5 in
Federal revenues paid by individuals, big business paid $1.
By 1980, the corporations' share was 13.9 percent, an this
should drop another percentage point or two once all the tax
breaks written into the Reagan Administration's "economic
recovery program" have taken hold.
.....
The best way to alter the terms of the [budget] debate is to
calculate the long-range effect of tax policies on the
national debt. In the 1970's, U.S. corporations paid a
total of $470.2 billion in taxes, or 16 percent of Federal
taxes collected. Had corporations paid the same share of
Federal receipts in the 1970s as they did in the previous
decade, the government would have collected an additional
$171.3 billion and would have saved an estimated $64.9
billion in interest payments on the money it borrowed to
make up the difference. Thus the effect of tax changes
during the 1970s was to divert $171.3 billion from the
Federal treasury into the coffers of private corporations
and to shift an additional $64.9 billion to big banks. And
the national debt grew over $500 billion.
Since the 1960s were prosperous years for big business, the
22 percent burden was apparently not harmful. The 1950s
were also banner years for big business-- indeed, just about
the best ever. During that decade business paid about 28
percent of all Federal taxes collected. Had it continued to
pay the same share throughout the 1960s and 1970s, the
Federal treasury would have gained $24.5 billion more than
it did and there would have been a further savings on
interest of an estimated $215 billion. Thus, changes in the
Federal tax policy from 1960 to 1980 deflected $639.5
billion from the U.S. Treasury.
In 1980, the total Federal debt stood at $907.7 billion,
having grown by $616.8 billion in the previous two decades.
The significance of that shift of $639.5 billion to big
business becomes apparent. We can account for the entire
rise in the Federal debt in terms of tax reductions that
benefited big business and big banks.
.....
Orthodox conservatives prefer to blame the deficit on
excessive spending on social programs. But in recent years
the United States has spent only about 12 percent of its GNP
on social programs, compared with those paragons of fiscal
rectitude, Japan, which allocates 20 percent to such
programs, and West Germany, which spends 30 percent.
Bruce Parker
BTL Pissthatawayrenner@sri-unix (12/14/82)
#R:pyuxcc:-40700:uiucdcs:29200004:000:455
uiucdcs!renner Dec 14 10:31:00 1982
I still don't think that taxing corporations makes much sense. The
taxes just get passed on to the customers, who are eventually individuals.
Furthermore, dividends end up being taxed TWICE. Taxes on corporations
should be designed to make their actual production costs reflect social/hidden
costs (economists have a special word for this); general income taxes are not
appropriate.
Scott Renner
University of Illinois (uiucdcs!renner)