We pay more in taxes than we do for food, clothing and shelter
By Bruce Thompson
Real Clear Wire
Affordability is a key issue in Washington, and taxes are a major factor. Americans pay more in taxes than they do for food, clothing and shelter combined. But taxes keep going up, and pressure is growing to increase taxes even more.
According to a recent Treasury report, individual income taxes increased $136 billion in the first nine months of the fiscal year, a 7% increase.
Total federal taxes were $4.2 trillion in the first nine months, on track for a record high $5.6 trillion in taxes for the full year. Even with the Republican tax cuts in 2017 and 2025, taxes have continued to soar, giving Washington more and more money to spend and allowing the government to keep borrowing.
From 2018 to 2025, total federal taxes increased 57%, with individual income taxes up nearly 60% and corporate tax revenue increasing 120%. Under current tax law, federal taxes will continue to climb year after year.
According to CBO projections, total federal taxes will increase to $8.3 trillion a year by 2036, a 60% increase over this year’s level.
This massive increase in taxes is not enough for big government supporters.
Virtually every Washington interest group is calling on Congress to raise taxes even more to “fund our unmet needs.”
They want higher individual income taxes rates and higher capital gains tax rates, which would lead to lower investment and growth. They want to raise the corporate tax rate to one of the highest rates in the world, despite the economic evidence showing how a higher rate is economically damaging and would harm workers’ wages and jobs.
They want a new wealth tax, despite the many arguments against the tax. Wealth taxes have been repealed by nearly every European country that ever had one. Legal experts say a wealth tax would be unconstitutional in the U.S., and economic experts say it would directly tax investments supporting wages and jobs.
Groups are also pushing for higher estate and gift taxes, even though most countries around the world have repealed their estate and gift taxes due to the high cost to administer and the low revenue yield.
Supporters of higher taxes point to Sweden and Norway as models for their tax increase plans. But Sweden and Norway are free market capitalist economies which repealed their wealth and estate taxes years ago, and which have corporate tax rates lower than the U.S. corporate rate. In fact, the proposal to raise the corporate rate to 30%, for a combined federal-state rate of 35%, would put the U.S. rate 15 percentage points higher than Sweden’s corporate tax rate.
Rather than raising taxes, or allowing taxes to continue to rise under current law, Congress should put a cap on total federal taxes and make every American’s life more affordable. A tax cap would turn off the tax spigot and reduce the amount of taxes Americans send to Washington to spend.
Bruce Thompson was a U.S. Senate aide, assistant secretary of Treasury for legislative affairs, and the director of government relations for Merrill Lynch for 22 years.