Do we as a country really care about reducing our national debt? At its most basic elements, the national debt increases when government expenditures exceed revenue. Therefore, in order to reduce the debt we need to either reduce spending and/or increase revenue.
Our national debt was at $14.3 trillion at the end of 2011. It is interesting to note that it was at $5.8 trillion at the start of 2000. During eight years of the Bush era, the debt increased by $6.1 trillion to $11.9 trillion. It more than doubled in eight years. The first six months of the Obama administration saw another $2 trillion of debt because of the Wall Street bank bailout initiated by the Bush administration.
The debt continues to increase at an alarming rate during the worst recession we have been in since the great depression, but nothing like it did during the Bush administration.
Let us look at what has happened to the marginal tax rate, the highest rate of personal income tax applied to the highest income bracket.
From 1932 to 1986 it ranged from 94 percent to 50 percent with an average of 70 percent. The 94 percent rate was the way we paid for the huge debt we had after WWII.
Current corporate profits are at an all-time high while corporate income tax revenue is at an all time low as a percentage gross domestic product, or GDP.
In 1952, 32 percent of all of the revenue generated in this country came from large corporation. Today, just 9 percent of federal revenue comes from corporate America.
In recent years, one out of four large corporations paid no income tax at all. In 2010, Bank of America made a profit of $4.4 billion and received a $1.9 billion refund from the IRS.
Combined results of record low personal income tax rates and record low corporate tax revenue is that total federal revenue as a percent of GDP is at or near the lowest it has been in the last 60 years. In the meantime, the richest 400 Americans control more wealth than the bottom 150 million
It is clear to me that if we can possibly learn from history, and we really want to reduce our national debt, that we need to seriously look at the revenue side of the equation and not rely totally on cutting spending. The beneficiaries of our record low tax rates are the very richest amongst us and the ones hurt the most by spending reductions are the poor and the middle class.