The End of Welfare as We Don't Know It

Max Sawicky sawicky at
Tue Oct 13 09:38:39 PDT 1998

>>Tax burdens have been fairly stable over time. Shares
>>move as income distribution changes, which has been a lot
>>in recent decades.
>Hey Max, what about the corporate tax? During the eighties(are they really
over?)I remember reading in one of the left rags that if the corporate tax burden was the same as it was in the 50's, it would wipe out TheDeficit.>

As long as Madonna is taking off her clothes in public the 80's will never really be over.

The 1950's are before "a couple of decades" which was the time period I was noting. It's true the corporate tax share was much higher then. In my view too much is made of this.

Here's a snip from a paper I'm writing, exclusively to LBO-talk:

"In 1996, Federal personal income tax revenues were $687 billion and corporate tax revenues $195 billion. The Federal budget was $1,698 billion, or 22 percent of GDP. For the U.S. public sector (Federal, state, and local) to enter the lower ranks of the European social democracies, it would need at least another seven percent of GDP, or about $530 billion in 1996 (Department of Commerce, 1997).

Corporate profits net of tax were $448 billion, so even under a 100 percent corporate income tax the U.S. could not finance a modestly social-democratic state. If we imagined a whopping, 50 percent increase of $100 billion in corporate taxes, we would still have a shortfall of $430 billion. (This increase would reduce dividend payments subject to the personal income tax, so the $100 billion overstates the net proceeds of the increase, and the shortfall would exceed $430 billion.)" [ (c) Max B. Sawicky ]

Bottom line is that the rich will not finance socialism, social-democracy, or even national health insurance. Not even close.


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