“This group is key because the top 5 percent of income earners accounts for about one-third of spending, and the top 20 percent accounts for close to 60 percent of spending,” said Mark Zandi, chief economist of Moody’s Analytics. “That was key to why we suffered such a bad recession — their spending fell very sharply.”

2. Since the CBO also acknowledged that “Average tax rates depend on tax laws and economic conditions.”

In fact, the CBO effectively acknowledged such with this statement: “Average after-tax income fell notably, owing to a drop in market income caused by the recession that began in December 2007 thatand decreases in federal taxes.” Since the CBO also acknowledged t was only partially offset by increases in government transfers hat “Average tax rates depend on tax laws and economic conditions”, and since the economic climate started deteriorating in 2007 and culminated in 2009 with over 10% umemployment, then wouldn’t a snapshot look at 2009 tax rates be more heavily influenced by the accumulated effects of the economic downturn moreso than any tax policy that President Obama got passed in 2009?

Finally, the report also states:

Because average federal tax rates rise with income, the share of federal taxes paid by higher-income households exceeded their share of before-tax income, and the opposite was true for lower-income households.

In 2009, the shares of federal taxes paid by households in certain income quintiles were:

Lowest quintile: 0.3 percent
Middle quintile: 9.4 percent
Highest quintile: 67.9 percent

I would assert that contrary to your assertion, there is a group of Americans who probably are overtaxed.

I happen to agree with their analysis that (economics) metaphors matter, and the EMH metaphor assumes that taxes only ‘extract’ from the ‘jobs machine’ that we call ‘The Economy’.

It logically follows that taxes are assumed to always and everywhere ‘shrink the pie’ of economic activity. Ergo, this EMH metaphor sets up an intellectual straight-jacket in which tax rates always have to be ‘lowered’, as a consequence of the serious misconception that ‘rich people create jobs by investing’. (After all, due to the limitations of the EMH metaphor: if markets are always perfect, then anything — like taxes — that happens ‘outside’ markets is assumed to be economically dire and curiously damaging to markets.)

We’ve seen how this metaphor plays out, and the results are ludicrous. We’re caught up in the sticky webs of our own bad metaphors, arguing over arcane tax regs and rates; meanwhile, economic inequality and social instability escalate. We end up spending our energy arguing about whether we pay ‘more than people in Nation X’, as if we’re all racing our ‘economic engines’ in some kind of mad-dash F1 series of Grand Tax Competition; some strange Romneyrama of Tax Avoidance, in which it is assumed that whoever pays the lowest taxes is the ‘winner’. The role that taxes can play in making a more civil, sustainable economic culture is lost entirely in this paradigm of ‘Machinebrain’ EMH economic assumptions.

I also happen to agree with Hanauer and Liu’s ‘Gardenbrain’ economic metaphor, which posits that economics is a social activity, and consequently: (a) the more interactions that occur, (b) the more prosperous the economy, and therefore (c) everyone does better when everyone does better.

The Gardenbrain metaphor does not limit us to asking merely ‘do we pay more than others’? Instead, it focuses on questions like: ‘are we using tax revenue to create the kinds of longer term, sustainable ‘economic feedback loops’ that creates shared prosperity? In other words, in the Gardenbrain metaphor (at least, as I understand it) taxes are more like humus or compost: if you want good results you need good soil. Taxes are like the layer of dirt from which other good things will emerge over time, given reasonable tending and attention.

In this paradigm, concentrated wealth is a symptom that the overall system is stressed: it limits the number and quality of the economic feedback loops. It’s like saying your economic ‘soil’ is too acidic, or contains too few nutrients to sustain economic fertility (as in say, Somalia or Chad). It’s not merely a technical problem: it’s a recognition that complex adaptive systems (like economies) require a basic level of … well, ‘basic nutrients’, that go by the name ‘taxes’. The issue of how to make those tax dollars more accountable is related to getting more feedback loops in the system; the better the information circulating around, the healthier the system will become.

So I think the post falls prey to a set of assumptions about ‘how much’ (relative to Nation X) taxation is acceptable, which kind of keeps us stuck in the Machinebrain EMH metaphors that we’ve already been stuck in too long. I’m aggravated about taxes, but my frustration is more tied to a lack of accountability for where all that money goes. That’s an information issue, more related to the needs of a complex, adaptive system.

http://www.nytimes.com/2012/07/11/opinion/our-gardenbrain-economy.html?_r=2

It certainly would be a huge accomplishment; and its already achieved by doing nothing! Why do we let the Republicans unilaterally decide what’s on the table? Maybe its time to put rejection of the highly coercive Norquist pledge on the table?

I think you have greater confidence in the ability of the administration to negotiate a worthwhile compromise than is likely given the opposition. If you’re not willing to walk away, you’re already at a disadvantage that the current crop of Republicans will surely exploit. Doing nothing is an option too, often the most overlooked, even when it might be the best option.

Rent, which should include things like the license to practice medicine (since residencies per year are limited despite many applicants from within and outside the US) will be higher when inequality is high (due, again, to imperfect price discrimination) which… might lead to these things having a higher cost. Health costs have definitely gone up, since most people have insurance where everyone pays for expensive or unnecessary care. Anecdotally, housing costs in places like New York have been going up which probably affects people with low income, possibly causing them to wish taxes were lower…

If no one thought we were overtaxed, would they have any interest in news stories about $17k drip pans? Maybe that would just be seen as proof of high quality, due to the assumption that everything about the US is, and should be, better than in say Europe?

I doubt that state/local taxes have trended up enough to offset the negative trend in effective federal rates I document in the post.