The Real Value of $100 in Each State

The states where $100 is worth the least are the District of Columbia ($84.60), Hawaii ($85.32), New York ($86.66), New Jersey ($87.64), and California ($88.57). That same money goes the furthest in Mississippi ($115.74), Arkansas ($114.16), Missouri ($113.51), Alabama (113.51), and South Dakota ($113.38).

As we showed in an example in our recent paper on income data, adjusting for prices reveals average real incomes in Kansas to be higher than in New York, despite New York having much higher incomes as measured in dollars.

The tax policy consequences of this data are significant. For example, because taxes must be calculated based on nominal income, the average New York resident pays significantly more in taxes than the average Kansas resident. But the Kansas resident actually has higher purchasing power, meaning that they get to pay lower taxes despite getting to have a richer amount of consumption.

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Are Capital Gains and Dividend Taxes Too Low?

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Cartoon: Taxes

Income Share for the Wealthy

Upper-income taxpayers have paid a growing share of the federal tax burden over the last 25 years.

A 2008 study by the Organization for Economic Cooperation and Development, for example, found that the highest-earning 10% of the U.S. population paid the largest share among 24 countries examined, even after adjusting for their relatively higher incomes. "Taxation is most progressively distributed in the United States," the OECD study concluded.

Meanwhile, the percentage of U.S. households paying no federal income tax has been climbing, and reached 51% for 2009, according to a new analysis by the Joint Committee on Taxation. That was the first time since at least 1992 that more than half of households owed no federal income tax, according to JCT estimates.; earlier data were unavailable on Monday.

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Federal Taxes as Percent of GDP

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Cartoon: Spending

Happy Tax Day

Debunking Pro-Tax Increase Propaganda

Cartoon: Sluggish Growth

Reagan's Tax Increases

It may come as a surprise to some people that once upon a time in the not-too-distant past Republicans actually cared enough about budget deficits that they thought raising taxes was necessary to bring them down. Today, Republicans believe that deficits are nothing more than something to ignore when they are in power and to bludgeon Democrats with when they are out of power.

Legislated Tax Changes by Ronald Reagan as of 1988

Tax Cuts	Billions of Dollars
Economic Recovery Tax Act of 1981	-264.4
Interest and Dividends Tax Compliance Act of 1983	-1.8
Federal Employees’ Retirement System Act of 1986	-0.2
Tax Reform Act of 1986	-8.9
Total cumulative tax cuts	-275.3

Tax Increases	Billions of Dollars
Tax Equity and Fiscal Responsibility Act of 1982	+57.3
Highway Revenue Act of 1982	+4.9
Social Security Amendments of 1983	+24.6
Railroad Retirement Revenue Act of 1983	+1.2
Deficit Reduction Act of 1984	+25.4
Consolidated Omnibus Budget Reconciliation Act of 1985	+2.9
Omnibus Budget Reconciliation Act of 1985	+2.4
Superfund Amendments and Reauthorization Act of 1986	+0.6
Continuing Resolution for 1987	+2.8
Omnibus Budget Reconciliation Act of 1987	+8.6
Continuing Resolution for 1988	+2.0
Total cumulative tax increases	+132.7

Source: Office of Management and Budget, Budget of the United States Government, Fiscal Year 1990 (Washington: U.S. Government Printing Office, 1989), p. 4-4.

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Mises on Government Job Creation

"Government spending cannot create additional jobs. If the government provides the funds required by taxing the citizens or by borrowing from the public, it abolishes on the one hand as many jobs as it creates on the other."

Ludwig von Mises--Planning for Chaos

Cartoon: Treasury

Taxes and the Deficit

Cartoon: Regulation and Taxation

Tax Increases and Tax Revenue

Cartoon: Entreneurship and Taxes

Tax Freedom Day: April 13, 2009

Tax Freedom Day® will arrive on April 13 this year, the 103rd day of 2009. That means Americans will work about three and a half months of the year, from January 1 to April 13, before they have earned enough money to pay this year's tax obligations at the federal, state and local levels. Tax Freedom Day falls a full two weeks earlier in 2009 than it did in 2007. In fact, not since 1967 has Tax Freedom Day come earlier than this year's April 13 date.

This shift has been driven by two factors: the recession has reduced tax collections even faster than it has reduced income; and the stimulus package, a.k.a. HR 1, the American Recovery and Reinvestment Act of 2009, includes large temporary tax cuts for 2009 and 2010. Nevertheless, in 2009, Americans will pay more in taxes than they will spend on food, clothing and housing combined.

While tax revenues are falling, government expenditures are expected to explode in 2009, also driven in significant part by HR 1. Tax Freedom Day, like almost all tax burden measures, ignores the current year's deficits. If the projected deficit for 2009 were counted as a tax, Tax Freedom Day would arrive on May 29 instead of April 13-the latest date ever for this deficit-inclusive measure.

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The Rich Are Paying Their "Fair Share" and Then Some

The chart shows that the difference between the top 1%'s tax share (about 25% in the late 1980s) and the that group's income share (about 14% in the late 1980s), which increased from 11% in the earlier period to 18% by 2006, when the tax share had increased to about 40% for the top 1% compared to that group's income share of 22%. Stated differently, the income share of the top 1% increased by about .55% per year from 1986 to 2006, compared to the tax share of the top 1%, which increased by about .75% per year.

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Historical Tax Rates by Quintiles

Lowest quintile: 4.3 percent
Second quintile: 9.9 percent
Middle quintile: 14.2 percent
Fourth quintile: 17.4 percent
Percentiles 81-90: 20.3 percent
Percentiles 91-95: 22.4 percent
Percentiles 96-99: 25.7 percent
Percentiles 99.0-99.5: 29.7 percent
Percentiles 99.5-99.9: 31.2 percent
Percentiles 99.9-99.99: 32.1 percentTop 0.01
Percentile: 31.5 percent

N.B.: These figures include all federal taxes, not just income taxes.

source (HT: Greg Mankiw)

Cartoon: Death and Taxes