Several Items: Greece, Taxes, Bond Market

by Dollars and Sense

Today's items:

(1) Taxes: Since it's tax day, it's time to dispel some of the myths around taxation. For this purpose I like Mark Engler's recent post over at Dissent's "Arguing the World" blog, busting the myth of "Tax Freedom Day." Here is part of his post:

Military spending accounts for over half of our federal tax dollars after you add up the allocations for the Department of Defense, war appropriations, military components of other arms of the government, and debt from previous military ventures. This means that, unless they want to rethink the nature of their holiday, the “Tax Freedom” people should be spending January and most of February joining the picket lines of the War Tax Resisters.

Last I checked, the Tea Partiers weren’t interested in reeling in military spending. So what else is on the list? Well, the next big budget items are Social Security, Medicare, and Medicaid. While some on the far right want to privatize or eliminate them, these programs tend to be very popular with most Americans—so much so that fear-mongering about a government takeover of Medicare became a paradox-laden Tea Party talking point. Medicare, Medicaid, and Social Security total around 39 percent of the total federal budget. So once we take those off the table, we’re up above 80 percent of the federal budget that’s going untouched.

Are the Tax Freedom Day people celebrating freedom from functional national highways and bridges that don’t collapse? If not, that’s another $73 billion in taxes we can agree to keep.

Should there be a public response to public health hazards like the Swine Flu? Unless you believe that the rich should be vaccinated and the poor should go ahead and suffer the epidemic (a recipe for festering ever more virulent diseases), then you support some type of national public health system, which means funding the Center for Disease Control and related agencies.

Disaster relief? Unless you think people caught in floods and earthquakes should fend for themselves, keeping FEMA will shave another day or so off the “Tax Freedom” concept.

National parks? Some whack jobs might want to sell off Yellowstone and Yosemite. But red-blooded, Ken-Burns-loving Americans, not such much.

The list goes on. Keep in mind that Tax Freedom Day is not just about federal taxes, but also about state and local taxes. A lot of these go to services like garbage collection, local police, schools, and firefighting.

Read the whole post.

And David Leonhardt's column in yesterday's NYT targets the "47%" myth (which I'd never heard about—guess I don't listen to the right right-wing radio shows?), according to which 47% of Americans supposedly don't pay any taxes, unfairly burdening the remaining hardworking folks. Here's a sample:

The 47 percent number is not wrong. The stimulus programs of the last two years—the first one signed by President George W. Bush, the second and larger one by President Obama—have increased the number of households that receive enough of a tax credit to wipe out their federal income tax liability.

But the modifiers here—federal and income—are important. Income taxes aren’t the only kind of federal taxes that people pay. There are also payroll taxes and investment taxes, among others. And, of course, people pay state and local taxes, too.

Even if the discussion is restricted to federal taxes (for which the statistics are better), a vast majority of households end up paying federal taxes. Congressional Budget Office data suggests that, at most, about 10 percent of all households pay no net federal taxes. The number 10 is obviously a lot smaller than 47.

On taxes, also check out United for a Fair Economy's Tax Pledge, which has been getting some attention in the national media.

(2) The Greek Debt Crisis: The spotlight on Greece and its debt crisis intensified this week, as European leaders finally agreed to a rescue package.

Yesterday we posted a comment by Mike-Frank Epitropoulos on the Greek debt crisis; Mike argues that Greece has become a demonstration project for other European countries with "overly" militant populations. Here's the beginning:

There has been an avalanche of coverage on Greece's economic situation in the past few months. Most of the coverage rightly attempts to diagnose the underlying problems of Greece’s dual deficits of the public sector and its national debt, and how this might affect the value of the euro and the integrity of the Euro Zone. But, as anyone who has followed this story knows, Greece is not alone in this precarious situation. They are lumped into a group of EU countries that have been labeled the "PIIGS"—Portugal, Ireland, Italy, Greece, and Spain. Additionally, it is known that some of the other countries have worse problems and are larger than Greece, which could have even greater negative impact on the EU and the value of the euro. So, why the focus on Greece?

Click here for Mike's analysis. Our May/June issue will also include an explanation of the kind of "pressure from the bond market" that the Greek government is facing. (On this topic, in connection with Greece and the financial crisis more broadly, see Kevin Gallagher's recent Guardian piece, The Tyranny of the Bond Market.)

Labels: bond market, David Leonhardt, Greece, Greek debt crisis, Kevin Gallagher, Mark Engler, Tax Freedom Day, taxes

 

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4/15/2010 11:48:00 AM