The last several days (here and here), I've been dissecting this e-mail that I got from a friend of mine. The e-mail is something that we've all seen. It is an over the top treatise which is designed to get us emotionally charged over our tax burden. I have a few final thoughts on this e-mail.
The author of this e-mail is trying to tell us that $1 billion is just an enormous sum of money. On one hand, $1 billion is a lot of money. If the average American family takes home approximate $40,000 a year, $1 billion is 30,000 times greater than the average family's median income. Yet, there's over 300 million people in the United States. $1 billion is just a little over $3.33 per person. The average salary for the top 10 highest paid hedge fund managers is over $1 billion apiece. This is $1 billion per year for one man (one guy is getting paid over $2.5 billion per year). Exxon Mobil's quarterly income for the last quarter was $12.8 billion.
Things are expensive. We've seen conservatives rail against domestic spending. They talk about how spending is so wildly out of control but I have yet to see a conservative stand up and say we're spending too much on the military. The F-22 raptor is one of our flying marvels. It is an amazing fighter jet. It is a third-generation Stealth fighter in our military arsenal. As we sit here and debate the wild spending in Congress let's consider this third-generation Stealth fighter. No other country in the world has developed a first-generation Stealth fighter. As far as I know, no radar has been able to detect our first or second generation stealth planes yet, we continue to spend money on these technological marvels. Each one of these planes F-22 cost $187 million apiece. For $1 billion, you can have four planes. We won't even talk about the more expensive fourth-generation F-35 Joint Strike Fighter Lightning II which is more expensive. Our nuclear aircraft carriers cost almost $200 million apiece. The budget for the Pentagon when you add in the supplemental spending on both Iraq and Afghanistan is almost $1 trillion.
We are overtaxed. This a common refrain heard from conservatives and the foundation of their anti-tax rhetoric. This refrain is basically a re-wording of Ronald Reagan's famous, "the government is the problem." Yet, I think that any thoughtful review of the tax code which show that our tax burden is actually less than it was 20 or 30 years ago. John F. Kennedy cut the upper tax rate from 90% down to approximate 70%. Nobody pays anywhere near this in federal income tax anymore. The average American currently pays approximately 18% of their income to the federal government. There is the myth that over 40% of Americans don't pay any federal tax. That number is incorrect. More than 75% of Americans pay some federal tax. If you add up all of the taxes that Americans pay, this would include federal, state and local taxes, Americans pay $3.8 trillion or 27% of our gross domestic product. If you look at the 30 richest countries in the world we ranked 25th in tax burden. Only Mexico, Turkey South Korea and Japan have lower tax rates. So, it's hard for me to believe that were overtaxed.
I know that many Americans believe that were paying more in taxes. The question is why? Why do Americans feel like the government is vacuuming up every last penny that we have? The problem is wages. Our wages have not kept up with expenses. We are paying more and making relatively less. Because we're having more and more trouble making ends meet we start looking around for reasons why. The reason is our work is not being valued. Almost nobody is getting paid more, in absolute dollars, than they were paid 20 or 30 years ago. This is our problem in the US. We need to get a pay raise. Without a significant pay raise, conservatives will continue to whine about taxes as if that is the problem. In a nutshell, we are working harder and getting paid less for our efforts.
