Tags: disposable | income | tax | recession

Tax Burden Growing as Income Declines

By    |   Wednesday, 24 Jul 2013 08:03 AM

Average income has been growing slowly since the Great Recession. Governments have not seen fit to share the burdens of slow growth with America's families and the percentage of income that goes to taxes has been rising.

The Bush tax cuts gave Americans more disposable income, which is money they can spend on their families rather than tax bills. Disposable income was growing 25 percent faster than gross income was by the time President Bush left office.

In December 2007, the Great Recession started and pushed income down. Income growth is now running well below its historical average, but the tax burden the average family faces has returned to its historic average.

Income gains that have been seen are going to tax bills rather than family expenses, which is one reason many Americans feel like the recession never ended.

Government spending crowds out private investment, but it can also reduce the standard of living for individual taxpayers. When taxes take a larger share of income, there is less left over for housing, food and other expenses.

Taxes have become an entitlement for government, and decreases in taxes seem to be a dream given the current levels of spending and debt. It is only during a deep crisis that governments admit families know best how to spend their money and offer small tax breaks. Disposable income did grow faster than gross incomes when the Social Security tax was temporarily reduced to combat the effects of a slow economy.

The best thing for the average American family now could be another recession, which might result in Washington letting keep them keep more of their own money.

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MichaelCarr
Average income has been growing slowly since the Great Recession. Governments have not seen fit to share the burdens of slow growth with America's families and the percentage of income that goes to taxes has been rising.
disposable,income,tax,recession
274
2013-03-24
Wednesday, 24 Jul 2013 08:03 AM
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