23 July 2012
For Immediate Release
Contact: Mattea Kramer, Senior Research Analyst
National Priorities Project
Tax cuts, corporate tax avoidance, and tax loopholes must be addressed in deficit reduction
As the House and Senate prepare to vote on whether or not to extend the Bush tax cuts – and for whom – a new report from National Priorities Project (NPP) shows how declining tax revenue over the past decade has been a major contributor to ballooning deficits.
According to the report, “The Untold Story of Deficits in Washington,” federal tax revenue as a share of the U.S. economy is at its lowest level in more than half a century. Partially as a result of tax cuts, corporate tax avoidance, and loopholes in the tax code, deficits have climbed over the last decade.
The new report shows how changes in tax policy would make a big dent in the deficit. If there were no Bush tax cuts, the 2012 deficit would be $822 billion instead of $1.2 trillion, a 31% reduction. If corporations paid the official tax rate of 35% of all profits, the deficit would be $1 trillion instead of $1.2 trillion, a 14% reduction.
“We hear so much about cutting federal spending to reduce the deficit,” said Jo Comerford, NPP executive director. “Where’s the revenue in this picture? There’s an alarming lack of attention to revenue and the long-term impact of tax policy.”
The report acknowledges the role the economy has played in the decline of tax revenue, yet it also points to the enormous impact of tax breaks and loopholes for the wealthy and corporations.
“In 2012, the average taxpayer in the top 1 percent will receive a tax break of around $70,000 as a result of the Bush-era tax cuts. And corporate income taxes averaged only 9.5% of profits last year, nowhere near the official tax rate of 35%,” said Comerford. “It’s essential that we look at the facts of shrinking revenues when considering policies to reduce deficits.”
The full report can be found at: http://nationalpriorities.org/en/analysis/2012/untold-story-deficits-washington
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National Priorities Project (NPP) is a non-partisan federal budget research organization that makes our complex federal budget transparent and accessible so people can exercise their right and responsibility to oversee and influence how their tax dollars are spent. NPP envisions and works for an effective and accountable federal government that promotes our general welfare. Visit www.nationalpriorities.org.