Monday, September 17, 2012

A Fistful of Dollars


Let me begin by saying that I am no finance expert nor do I consider myself an economist. I am just using common sense and as Bill Clinton said, arithmetic.

The government of the United is funded mostly by taxation.

The Great Depression started by the end of 1929 and ended by the end of 1940. During those tough times, the wealthy responded to the crisis not by taking their money somewhere else or by hiding it, they loved their country and were willing to do whatever was necessary to help America come out of the predicament it found herself in. The tax rate for individuals from 1932 to 1963 making over $200,000 was brutal (to see the rates, click here), yet they paid it and we came out of the Depression and flourished. Corporations were not as willing or perhaps the government was as usual more lenient on them, from 1929 until 1939 the maximum tax rate corporations paid was 19% but in 1940 their rates jumped, literally from one year to the next to 38.3% and by 1952 the corporate tax rate for any income above $25,000 was a whooping 52%! That sacrifice from both the wealthy and corporations is what helped this country to move forward and to cement us as the richest country in the world.

By the end of 1989 or beginning 1990, Grover Norquist introduced the concept that taxes could not be raised to any corporations or the wealthy and that is what has caused the steady economic decline of this country. The government of the United States of America does not produce anything, does not sell anything and it depends solely on taxation to survive. It is precisely during a financial crisis those taxes must be raised or we will never get out of the recession and will only keep increasing our national debt.

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The total revenue collected by the United States (in millions) from 2000 to 2012 as taxes (I = Individual Taxes) (C = Corporate Taxes) and (O = Other) were as follows:

2000 – $2,025,191 (I) $1,004,462; (C) $207,289; (O) $813,440
2001 – $1,991,092 (I) $994,339; (C) $151,075; (O) $845,668
2002 – $1,853,136 (I) $858,345; (C) $148,044; (O) $846,747
2003 – $1,782,314 (I) $793,699; (C) $131,778; (O) $856,837
2004 – $1,880,114 (I) $808,959; (C) $189,371; (O) $881,784
2005 – $2,153,661 (I) $927,222; (C) $278,282; (O) $948,107
2006 – $2,406,869 (I) $1,043,908; (C) $353,915; (O) $1,009,046
2007 – $2,567,985 (I) $1,163,472; (C) $370,243; (O) $1,034,270
2008 – $2,523,991 (I) $1,145,747; (C) $304,346; (O) $1,073,898
2009 – $2,104,989 (I) $915,308; (C) $138,229; (O) $1,052,452
2010 – $2,162,724 (I) $898,549; (C) $191,437; (O) $1,051,452
2011 – $2,303,466 (I) $1,091,473; (C) $181,085; (O) $1,030,908

From the taxes collected, about 85% of the total amount came from individual taxes, 12% from corporate taxes and 3% from other taxes.


In average, corporations made from 2002 to 2011 around $5.4 trillion dollars in profits and paid $2.8 billion in taxes while individual taxes for the same period were $19.7 billion. According to the Small Business Administration, there were 27.5 million companies in the United States in 2009, that is the latest data I could find. Considering all the taxes loopholes, foreign banking, etc. corporations are literally getting a “free ride.” Even Social Security and Pensions paid more than corporations.

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The days when privileged people and businesses were concerned about the well being of the country are long gone. The very rich just want more and more money and don’t have any shame in admitting it and the country can go down the drain for all they care; the only thing that matters to them is money. The patriots that during the depression contributed at times with more than half of their earnings to help the country is a thing of the past. Back during the Great Depression these companies didn’t think of dismantling their businesses and take them somewhere else. They understood what  needed to be done and everyone benefited from their sacrifice, the economy finally flourished and businesses bloomed.


Republicans keep insisting in extending the Bush tax cuts for the very wealthy, refusing to raise the taxes of those making huge profits during a recession while increasing the taxes on the middle class and the elderly. Not satisfied with this, they are persisting in engaging in more wars and refusing to make cuts to the Defense budget or reducing Defense expenses. Their sense of balance, fairness and simple arithmetic its non-existent.


According to Statista.com, the above statistics show corporate profits after tax in the United States from 2009 to 2011 Corporate profits are defined as the net income of corporations in the National Income and Product Accounts (NIPA). In 2010, corporations made profits of $1.4 trillion AFTER tax.

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This trend of less revenue and more weapons has to stop; no country can sustain an economy where the money that comes in is below to what goes out. As usual, Republicans want to make cuts to balance the budget on the things that help the poor and elderly survive, on education, scientific research, police and everything but the kitchen sink in order to keep giving to the rich and stealing from the poor, in order to keep the war machine going and the fat cats purring. I wonder how much money do the weapons manufacturers “donate” to these loyal Republicans, there has to be big money involved for the GOP to be so faithful… they would sell their soul to the devil for a fistful of dollars.

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There is absolutely no way that we can ever balance our budget and come out of a recession unless we take drastic measures. Our obsession with war has to come to an end, we can’t continue on this trend where there is no end and no matter how armed we are, it seems it’s never enough. Our desire to be feared (which some call it “respected”) is nothing but cowardice, masquerading as a Good Samaritan and the main reason most of the world hate us and distrust us. Would you trust someone coming to your aid that has a bloody axe on his shoulder? Neither would I!


Sources:

White House Budget
Bureau of Economic Analysis
Statistica.com
Small Business Administration
IRS

6 comments:

  1. http://www.unique-design.net/library/economics.html

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    1. OK, thanks for sharing your site, which corroborates more or less what I stated above... It is also great that you are promoting your website, but don't you think that if you are using my blog to promote your site the least you could do was to leave a few words - agreeing or disagreeing? I find this self-promoting a little bit rude.

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  2. Excellent analysis. Thank you so much for the work you put into this.
    Sharing, extensively.

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    Replies
    1. Thank you for liking it and sharing it!

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  3. Really enjoyed your down-to-earth analysis. I'll share. Thanks.

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