It may just be the upcoming elections or they may actually believe it, but among conservatives there is an oft used phrase which goes something like this: “We don’t have a tax problem, we have a spending problem.”
While our government may be spending more than it needs to, it is also true that tax rates are at or near historic lows. What tax rate is just right? Maybe the tax rates under Reagan were the ideal tax rates for growth and job creation. If that is the case then our current rates would be problematic.
Regardless, there are certainly other issues with our current tax system that should be considered a “tax problem.” First, it should be noted that included in the 47% of American’s that “pay no taxes” are 1.5% of millionaires, 2% of Americans making between $200,000 and $1 million, and 3.5% of Americans making between $100,000 and $200,000.
Second, as the graph below from this year’s Economic Report of the President shows, our tax system allows for many of the “rich” to pay lower taxes than some of the middle class.
This rhetoric about not having a tax problem is perpetuated by people like Mitt Romney who hides behind that fallacy that he is a job creator while spending his own money to secure the tax loopholes that allow him to pay a tax rate similar to that of the average American.
If we could close all of the tax loopholes and level the playing field then we might not have a tax problem anymore, but when some of the poorest Americans pay higher rates than some of the richest Americans, I don’t know what else you can call it.