How The US Became a Low Tax Country

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This article shows how changes in the US tax structure have reduced federal tax revenues to the lowest percent of GDP since 1950. There are 10 slides that tell the story. The GOP has had a simple campaign strategy since Reagan that has worked wonders for them. Setting aside all of the value issues that defines them as the defenders of "family values" and of the "real America", their economic policy has been a politicians delight. Everyone likes tax cuts so give a little bit to most Americans and give most of the cuts to those who pay for political campaigns. Everyone also likes to receive benefits from government so they don't pay for the tax cuts with spending cuts. They borrow instead, because as Dick Cheney told George W. Bush "Deficits don't matter. Reagan proved it". Of course, when Democrats hold office, they switch back to their strategy of running against "tax and spend Democrats" and screaming about the budget deficits (produced by their tax cuts).

They have had remarkable success with a strategy so simple that even intellectually challenged candidates can run on it. Their strategy has also changed the Democratic party. It used to be the party that represented American's who worked in factories and who belonged to unions. The demise of manufacturing in the US, along with the decline in union membership, has caused the Democratic party to seek campaign contributions from some of the same groups that have historically purchased GOP candidates. The result is that both parties are paid for by corporate interest groups, but they both have to convince the electorate that they really love small businesses and the traditional American family. The media help out by focusing on the horse race between the two parties and the minor differences that separate them.

David Brooks, a normally conservative pundit, wrote an article in today's NYT's in which he said that he would cover the 2012 election, but he would do so under protest. He accused the GOP of running a campaign with a focus on cutting budget deficits while they propose to cut taxes by trillions of dollars. He also argued that the Democrats have not done much to address the real structural problems in the US economy. He does not see any purpose in covering a campaign that looks like all of the other campaigns he has covered in which both resort to their traditional song books.

In any case, the slides on US tax policy tell a story. Show them to your friends from both parties and ask them what should be done about it.