Tax cuts or tax shifts?

As we were reminded last week, nobody likes to pay taxes. But we do like the services they provide, or at least most of them. Visit Peru or Paraguay if you want to see what happens when government has little money.

Having said that, there is much to dislike about America’s current system of taxation. Over the past four decades, and especially under the Bush administration, the tax burden has steadily shifted in favor of the wealthy and corporations and against middle-class and low-income individuals. Consider these facts, provided by the tax reform group United for a Fair Economy:

• Corporations have gone from contributing 21 percent of federal revenues, in 1962, to just 7 percent last year. Many pay nothing. Between 1996 and 2000, record-profits years for American businesses, fully 60 percent of large corporations paid no taxes at all. What that means, of course, is that individual taxpayers have been footing the bill.

• Most tax cuts in recent years, including President Bush’s, have focused on such progressive taxes as income, corporate and estate taxes, which hit the rich proportionately harder than the less rich. Meanwhile, regressive payroll taxes (Social Security and Medicare), which hit lower-income people much harder than the wealthy, have gone up. Most of us—71 percent—now pay more in payroll taxes than in income taxes.

• As federal tax rates have gone down, state governments have had to make up a $200 billion collective shortfall, which they’ve done by hiking state taxes or cutting services or both. Meanwhile, the wealthiest 1 percent of Americans, those households making $337,000 a year or more, saved about the same amount, $197.3 billion, because of the Bush cuts.

• Taxes on work have gone up, while taxes on wealth have gone down. Since 1980, the payroll tax has gone up 25 percent, while the top tax rates on investment income and inheritances have gone down between 31 and 79 percent.

• Taxes have shifted from current taxpayers to future generations. It’s estimated that, between 2002 and 2007, Bush’s borrow-and-spend policies will impose $13,000 in additional debt on every man, woman and child in America. For a family of four, that’s $52,000.

Excuse us for piling on the pain. Paying taxes is hard enough. It doesn’t help to know that your government is making it even worse.