Federal taxes at a 60-year low

As I've mentioned before, the "American are overtaxed!" meme is counter-factual. In fact, as the AP reports, this year federal taxes as a share of GDP -- 14.8% -- will be the lowest since 1950. In W's last year in office, the figure was 17.5%.

Combine the ever-growing deductions, credits and exemptions (which lower the effective tax rate) with the crappy economy (which lowers the amount out there to tax) and, according to the CBO, income tax payments will be nearly 13% percent lower than in 2008, and corporate taxes will be lower by a third.

As the chairman of the Senate Budget Committee. Ken Conrad, says, "The current state of the tax code is simply indefensible. It is hemorrhaging revenue."

And even Donald Marron, a former economic adviser to Bush, says "America's tax system is clearly broken. It fails at its most basic task, which, lest we forget, is raising enough money to pay for the federal government."

The AP had The Tax Institute at H&R Block compared some hypothetical family's tax bills for 2008 and 2010. While tax rates are the same, Obama has put in place more generous tax credits -- many as part of the 2009 economic stimulus package.

Here are the scenarios:

— A married couple with two young children and a combined income of $25,000 will pay no federal income taxes for 2010. Instead, they'll get a payment of $7,085 — up from $6,700 in 2008...

— A married couple with two children, including one in college, and a combined income of $50,000 would pay no federal income taxes, instead getting a payment of $734 from the government this year. However, they did better in 2008 when they netted a $1,234 payment from the government...

— A single person making $50,000 while paying interest on a student loan would have a 2010 tax bill of $5,325 — a $63 decrease from 2008...

— A married couple with two children, including one in college, with some modest investments and a combined income of $200,000 will see their federal income tax bill drop by $780, to $28,496...

-A rich couple with two kids in college, larger investments and a combined income of $1 million will see their taxes drop by $6,740, to $277,699 in 2010...

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