November 19, 2011 11:59 AM
State of the Nation
12% are satisfied with the way things are going in the United States, while 86% are specifically dissatisfied. Positive satisfaction below 15% was previously recorded in 1979, 1992 and 2008-09. [Gallup 11/11]In early November, 73% of Americans said that the country is on the wrong track. That same number has been recorded every month since August. [NBC/WSJ 11/11]
44% believe that the worst of the recession is ahead of us. [NBC/WSJ 11/11]
The University of Michigan Consumer Confidence Index is 64.2, up from 60.9 in October, and up from a low point of 55.7 in August. However, it is still well below the 74.3 recorded in March. [Bloomberg News 11/11]
The Gallup survey of unemployment in mid-November ticked up to 8.5% from 8.3% in mid-October, but is still below the 10.3% it found in March, and the 9.2% it found in September. Looking at Gallup’s second number, which it defines as underemployed (those who are unemployed and those working part-time but want full-time), that also rose from 17.8% in mid-October to 18.2% in mid- November. [Gallup]
It is a close call, but 47% of respondents favor repealing the 2010 Patient Protection and Affordable Care Act, while 42% believe it should go forward. As expected, 80% of Republicans favor repeal, and 64% of Democrats want the country to stick with it. Independents favor repeal by 48% to 43%. [Gallup 11/11]
No surprise, 77% of Americans want their political leaders to follow the public’s views more closely. A plurality of 31% want their leaders to be willing to compromise (15% say they should stick to their beliefs). Americans also believe that 51% of every dollar that goes to the Federal government is wasted, and 81% are dissatisfied with the way in which the country is being governed. [Gallup 9/11]
There is little difference in the amount of public support for the Tea Party and the “Occupy Wall Street” movement. 28% support the Occupy movement and 25% support the T Party movement. [NBC/WSJ 11/11]
There are Limits
In Ohio, voters overturned by referendum a law that would have limited collective bargaining rights for public employees.The Maine legislature had repealed election day registration. The voters of Maine overturned the law in a referendum.
A referendum on the Mississippi ballot that said that Life Begins at the Moment of Fertilization was defeated by 58% to 42%.
All three of these States have Republican governors. The Governors of Ohio and Maine led the legislative efforts in those States that were overturned at the ballot box. To his credit, the Governor of Mississippi did not support the referendum in his State.
Taxes
There is a considerable argument to be made that the top marginal Federal income tax rate of 35% should be lowered. It appears that few, if any, pay that rate on anything close to most of their income.For the Federal income tax year 2008, based on adjusted gross income
| Average tax rate | Group Share of Income Taxes |
| All taxpayers - 12.24% | 100% |
| Top 1% - 23.27% |
38.02% |
| Top 5% - 17.21% |
58.73% |
| Top 10% - 18.71% | 69.94% |
| Top 25% - 15.68% | 86.34%/ |
| Top 50% - 13.65% | 97.30% |
| Bottom 50% - 2.59% | 2.70% |
| [Internal Revenue Service Data published by Tax Foundation] | |
I asked my personal accountant what share of my total income from 2010 was taxed at the top marginal rate of 35%. The answer was, none of it.
It turns out that I am subject to the Alternative Minimum Tax, which has a top marginal rate of 28%. My accountant then provided me with a detailed description of how my taxes were calculated.
Actually my taxes were calculated twice. First, they were calculated on the basis of the 35% marginal rate and the deductions relevant to that calculation. Then they were calculated on the basis of the 28% AMT marginal rate without many of those deductions. The net result was that I paid more taxes under the AMT calculation than the regular calculation.
Makes a lot of sense, doesn’t it?
There have also been a number of challenges to the special 15% Federal income tax rate that is paid on dividends and capital gains. It doesn’t seem fair does it? If you invest in a stock and make a profit you pay at a lower rate than a person whose total income comes from his or her employment. Well, it turns out that it is not that simple.
Assume that I own all of the stock in a company. The company makes a profit and that profit accrues to my ownership of the company’s stock.
The effective tax rate of the company is 17%. Effectively, I am paying a 17% tax on the profits before I receive any dividend. Only a portion of the profits are paid out in dividends, and when I receive that income I pay the 15% rate. It is clear that I have paid considerably more than 15% on the profits of the company. In fact, I have paid slightly more than 30% on the profits of the company. [Note: While the above is based on ownership of the whole company, the impact is the same if I owned a fraction of a company.]
The balance of the profits that are not paid out in dividends increase the value of my stock in the company, but I will not face a tax on that part of the profits until I sell the stock, hopefully for an amount greater than I paid.
Total income taxes received by the Federal government in 2009 were $1,090,000,000,000. So-called tax expenditures (amounts not taxed) were $1,076,000,000,000. (Tax expenditures include the mortgage interest deduction, the charitable deduction, etc.)
