Tea and taxes

From the Inquirer.

Editorial: Tea and taxes Posted on Sun, Apr. 19, 2009

Tax protesters who held "tea parties" in Philadelphia and other cities are both right and wrong.

They're right that the national debt is out of control. But they're wrong about taxpayers now bearing an especially heavy burden.

The demonstrations ignited partisan disagreements about motives, but they also raised a point that's beyond dispute: The federal government must get serious about balancing its books, soon.

Despite bailouts and massive government spending to combat the recession, overall tax burdens today are not as high as in previous years. That's because the federal government, instead of paying its way, habitually takes the easy way out by borrowing too much.

Still, the average taxpayer this year will pay 28.2 percent of his or her income in federal, state, and local taxes, according to the conservative-leaning Tax Foundation in Washington. That's the lowest overall tax burden since 1967. The high was 33.6 percent in 2000.

Middle-income households in 2006 paid an average of 14.2 percent of their income in federal taxes, the lowest level since 1979, according to the left-leaning Center for Budget and Policy Priorities in Washington.

Tax Freedom Day, billed as the day each year when Americans have worked enough to pay off all of their taxes, was April 13. That's two weeks earlier than 2007, and the earliest date since 1967.

That doesn't mean taxes are low everywhere. Certain states and cities have chronically high taxes. New Jersey ranks second behind Connecticut in overall tax burden (Pennsylvania is 11th). Philadelphia, with its wage and business privilege taxes, is one of the highest-taxing cities in the nation.

Overall tax rates are lower than in the past, but what's high is the government's credit-card balance. Federal spending has soared in the past decade, and tax revenue hasn't kept pace.

If taxes funded all of Washington's spending this year, Tax Freedom Day wouldn't arrive until May 29, which would be the latest ever.

When President George W. Bush took office in 2001, the national debt stood at $5.7 trillion. Bush cut taxes but boosted spending dramatically. When he left office, the national debt had risen to more than $10 trillion, with nary a tea party in sight. For most of that time, Republicans controlled Congress.

With Democrats now in charge of Congress and the White House, the deficit in the fiscal year that ends Sept. 30 will hit $1.85 trillion. The nonpartisan Congressional Budget Office calculates that President Obama's budget would add $9.2 trillion to the national debt over the next 10 years, a level that can't be sustained.

Overall tax rates are lower now than in previous years, but deficits are a looming tax bill that must be paid eventually. Faced with that, arguing whether tea-party protesters have partisan motives is like playing the violin badly while Rome burns.

Spending to fight the recession and create jobs was necessary. And anti-tax protesters don't talk enough about what spending they'd like to cut. The Pentagon's half-trillion-dollar budget? Government pensions or Medicare's prescription-drug program?

The deficit problem didn't begin with the economic-stimulus plan. Nor will it be solved without public pressure, including tea parties.