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Saturday, December 1, 2012

Math Time Again!


So as our nation now is poised to careen off the fiscal cliff (again) I thought it was time to do some math. With apologies to Bill Clinton, who says Republicans need to do some math, I dare say it’s the Democrats who are in need of a math lesson.

Team Obama is claiming Americans are not paying their fair share in taxes and has proposed increasing income taxation (albeit of people earning 250k or more) and postponing spending cuts until after the economy recovers more. Furthermore, he has argued that we should return to the ‘Clinton era tax schedules' when we ran a surplus.

I’m all for that, assuming we return to Clinton era spending levels, and if I were the GOP that’s the deal I would argue for.

Ultimately though, what defines fair share? Here are some head spinning numbers.

There are approximately 114,825,428 households in the US (US Census numbers)

The average income of those households is 46,326 dollars. (ed note- using raw data to achieve an average mean result rather than a median result, this number would be closer to 102, 000, resulting in a number similar to the national GDP of about 13 trillion--see below)

If you multiply that out, you come to 5,319,402,777,528 – or 5.3 trillion dollars of annual income.

However, Team Obama's proposed spending plan for 2013 is 3.803 trillion dollars to run the federal government.

Essentially, he wants to spend 60+ percent of your income next year—and that’s not even counting state and local taxes. A small tax increase will little to no difference on that ridiculously oversized budget, but it could have a dramatic negative impact on the economy. If you take out all the households below the poverty line, the federal government would only run for about 8 months before imploding.

It gets worse.

Assuming you factor in all the state and local taxes the government takes in, from state income taxes down to the local parking tickets, the GAO reports that as of last year the state and federal government (in total) raked in 5.1 trillion dollars nationally—OR 98% OF THE TOTAL (MEAN) INCOME GENERATED IN THE NATION LAST YEAR! (ed note-- or approximately 33-43%-- depending on budgetary calculations-- of the total nation's GDP on absolute raw personal income)

If you are wondering how that is possible, you have to realize that the GDP (gross domestic product) of the country is 15 trillion dollars and therefore as money exchanges hands taxation takes a hidden bite of it. You don't directly feel it in your wallet, since income taxes are a small percentage of overall revenue. You feel it indirectly, as jobs are lost, your dollar gets pinched and prices go up while wages go down. It's one reason why gas is 4 bucks a gallon and your grocery bill has doubled in the last 4 years.

Government is soon poised to make more money off of our businesses and labor than we are.

As for those ‘Clinton tax rates’ let’s examine that too.

In 2007, the national GDP was approximately 14.5 trillion dollars, the same as it is now—no growth in 5 years. The federal government spending plan was an astonishing 2.7 trillion dollars, almost a trillion dollars LESS than we are spending now- but at least Bush was taking in 2.3 trillion in taxes on essentially the same sized economy we have now. Clinton’s GDP numbers?  1.8 trillion in spending—more than half of what Obama was spending – on an 11 trillion dollar economy. As for the median income in 2000 (Clinton’s last year,) it was 42,148 on 106 million households (4.4 trillion in income), so the federal government was only consuming 30% of your tax dollar rather than Obama’s 60%. (ed note-- again using mean income averages, that would be about half (15-30%) but the ratio relationship would be essentially the same since mean incomes from that time period were also flat)

So please, don’t tell me the government needs more revenues, it has almost entire income of the American people now, double that of ‘Clinton’s tax rates’ and wants more, despite being able to historically run fine on much less. What government needs to do is SPEND less, and get more productivity out of what it spends. 

Time for some fiscal belt tightening, and to stop redistributing the wealth of this nation.