51% of Households Paid no Federal Income Tax for 2009

[I]f government is “free” for a growing number of people, that may lead them to support policies that make government even bigger. More generally, this could be another step toward becoming a failed state like Greece, with too many people riding in the wagon and not enough people pulling the wagon.

I Fantasize about a World with No Income Tax, but…

American Voter Breakdown 2012

The chart [above] depicts the American electorate divided not into two groups – the 1% vs. the 99%, but four groups – the 1% super-rich, then 20% representing government workers, 46% representing citizens who either pay zero taxes or negative taxes (ala the “earned income credit”), and the remaining 33% who are neither super-rich, government employees, or not paying taxes. One might term this group the forgotten 33%, because no special interest will speak for them. They have neither the numbers nor the financial wherewithal to decisively influence elections.

America’s Atlas Generation – The Forgotten 33%

30/30/40 Nation

Barack Obama’s win has a potentially huge effect on policy. The current budget negotiations will affect the level and direction of government spending and on the mix of taxes paid by different groups of Americans. We can guess that a President Romney would have fought hard against upper-income tax increases. Other areas of long-term impact include the government’s stance on global warming, foreign policy, and the likelihood that Obama will nominate new Supreme Court justices who will uphold the right to abortion announced in Roe v. Wade.

When it comes to public opinion, the story is different. The Democrats may well benefit in 2014 and 2016 from the anticipated slow but steady recovery of the economy over the next few years—but, as of November 6, 2012, the parties are essentially tied, with Barack Obama receiving 51% of the two-party vote, compared to Mitt Romney’s 49%, a split comparable to Al Gore’s narrow victory in 2000, Richard Nixon’s in 1968, and John Kennedy’s in 1960. Over the next few months, you will be hearing a lot about Obama’s non-mandate, and rightly so.

But here I want to talk about a slightly different split of the voting-eligible population: the approximately 30% who voted for Obama, the nearly identical number who chose Romney, and the 40% who did not vote at all or who voted for minor-party candidates. . . .

Refusing to vote either red or blue: Some 40% of eligible voters stayed away on Tuesday or cast ballots for third-party candidates

The key to understanding the 2012 election is simple: A huge slice of the electorate stayed home.

The punditocracy — which is more of the ruling class than an eye on the ruling class — has naturally decided that this is because Republicans are not enough like Democrats: They need to play more identity politics (in particular, adopt the Left’s embrace of illegal immigration) in order to be viable. But the story is not about who voted; it is about who didn’t vote. In truth, millions of Americans have decided that Republicans are not a viable alternative because they are already too much like Democrats. They are Washington. With no hope that a Romney administration or more Republicans in Congress would change this sad state of affairs, these voters shrugged their shoulders and became non-voters.

The Voters Who Stayed Home: They need better choices.

3) In Fiscal Year 2011, the federal government collected $2.303 trillion in tax revenue. Interest on the debt that year totaled $454.4 billion, and mandatory spending totaled $2,025 billion. In sum, mandatory spending plus debt interest totaled $2.479 trillion… exceeding total revenue by $176.4 billion.

For Fiscal Year 2012 which just ended 37 days ago, that shortfall increased 43% to $251.8 billion.

In other words, they could cut the entirety of the Federal Government’s discretionary budget– no more military, SEC, FBI, EPA, TSA, DHS, IRS, etc.– and they would still be in the hole by a quarter of a trillion dollars.

4) Raising taxes won’t help. Since the end of World War II, tax receipts in the US have averaged 17.7% of GDP in a very tight range. The low has been 14.4% of GDP, and the high has been 20.6% of GDP.

During that period, however, tax rates have been all over the board. Individual rates have ranged from 10% to 91%. Corporate rates from 15% to 53%. Gift taxes, estate taxes, etc. have all varied. And yet, total tax revenue has stayed nearly constant at 17.7% of GDP.

It doesn’t matter how much they increase tax rates– they won’t collect any more money.

5) GDP growth prospects are tepid at best. Facing so many headwinds like quickening inflation, an enormous debt load, and debilitating regulatory burdens, the US economy is barely keeping pace with population growth.

It Doesn’t Matter

Also see http://www.usdebtclock.org/