Skip to comments.Prescott and Ohanian: Taxes Are Much Higher Than You Think
Posted on 12/12/2012 6:36:19 AM PST by SeekAndFind
President Obama argues that the election gave him a mandate to raise taxes on high earners, and the White House indicates that he won't compromise on this issue as the so-called fiscal cliff approaches.
But tax rates are already highmuch higher than is commonly understoodand increasing them will likely further depress the economy, especially by affecting the number of hours Americans work.
Taking into account all taxes on earnings and consumer spendingincluding federal, state and local income taxes, Social Security and Medicare payroll taxes, excise taxes, and state and local sales taxesEdward Prescott has shown (especially in the Quarterly Review of the Federal Reserve Bank of Minneapolis, 2004) that the U.S. average marginal effective tax rate is around 40%. This means that if the average worker earns $100 from additional output, he will be able to consume only an additional $60.
Research by others (including Lee Ohanian, Andrea Raffo and Richard Rogerson in the Journal of Monetary Economics, 2008, and Edward Prescott in the American Economic Review, 2002) indicates that raising tax rates further will significantly reduce U.S. economic activity and by implication will increase tax revenues only a little.
High tax rateson both labor income and consumptionreduce the incentive to work by making consumption more expensive relative to leisure, for example. The incentive to produce goods for the market is particularly depressed when tax revenue is returned to households either as government transfers or transfers-in-kindsuch as public schooling, police and fire protection, food stamps, and health carethat substitute for private consumption.
In the 1950s, when European tax rates were low, many Western Europeans, including the French and the Germans, worked more hours per capita than did Americans. Over time, tax rates that affect earnings and consumption rose substantially in much of Western Europe.
(Excerpt) Read more at online.wsj.com ...
Obama Predicts GOP Surrender on Taxes
Tuesday, December 11, 2012 10:00 PM
By: Todd Beamon
President Barack Obama told ABC News on Tuesday that he believed Republicans would join Democrats to extend current rates for 98 percent of earners by the end of the year.
“I’m pretty confident that Republicans would not hold middle-class taxes hostage in trying to protect tax cuts for high-income individuals,” Obama told Barbara Walters in an interview.
“I don’t think they’ll do that,” he said of Republicans forcing tax-rate increases for families earning $250,000 a year or less.
For instance, Illinois taxes:
Aircraft Use Tax
Automobile Renting Occupation & Use Taxes
Bingo Tax & License Fees
Business District Tax
Business Income Tax
Charitable Games Tax & License Fees
Chicago Home Rule Municipal Soft Drink Retailers’ Occupation Tax
Cigarette & Cigarette Use Taxes
Coin-Operated Amusement Device Tax
County Motor Fuel Tax
County School Facility Tax
Dry Cleaning License Tax & Fee
DuPage Water Commission
Electricity Distribution & Invested Capital Taxes
Electricity Excise Tax
Energy Assistance & Renewable Energy Charges
Environmental Impact Fee & Underground Storage
Gas Use Tax
Home Rule County
Home Rule or Non-home Rule Municipal
Hotel Operators’ Occupation Taxes
Individual Income Tax
Illinois Sports Facility Hotel Tax
Liquor Gallonage Tax
Manufacturer’s Purchase Credit (MPC)
Mass Transit District (Metro-East Mass Transit (MED) Taxes and Regional Transportation Authority (RTA) Taxes)
Metro-East Park and Recreation District
Metropolitan Pier and Exposition Authority (MPEA) Food & Beverage Tax
Metropolitan Pier and Exhibition Authority Tax (Hotel)
Motor Fuel Taxes
Municipal Hotel Tax (Chicago)
Oil & Gas Production Assessment
Personal Property Replacement Tax
Prepaid Wireless E911 Surcharge
Private Party Vehicle Tax
Property Tax Information
Pull Tabs & Jar Games Tax & License Fees
Qualified Solid Waste Energy Facility Payments
Real Estate Transfer Tax
Rental Housing Support State Surcharge
Sales & Use Taxes
Sales of Aircraft & Watercraft by Lessors
Simplified Municipal Telecommunciation Tax
Special County Retailers’ Occupation Tax for Public Safety, Public Facilities, and Transportation
Tax Increment Financing (TIF)
Telecommunications Infrastructure Maintenance Fees
Tire User Fee
Tobacco Products Tax
Use Tax for Individual Taxpayers
Watercraft Use Tax
Withholding (Payroll) Tax
All clickable links at the source.
And the election was all about taxes??
The President is an idiot.