It is a fitting coincidence that I'm wearing largely black today. It's April 15, Tax Day. I'm writing this before I make out my check and further sour my mood.
No one likes to pay taxes, but it's a necessary evil. The government must do some things, and that takes money. The question is how much money and whose.
The debates about "sharing the wealth" and transfer payments and "paying your fair share" all boil down to this:
Some people think there is a certain amount of money beyond which you have no claim to your earnings. And they think they should get to decide what that is.
And the number keeps going down. They get stars in their eyes and wild ideas of all the good they could do if they just had a little more of your money. So brace yourselves; it's about to get worse.
Some tax-related reading for your ... well, enjoyment certainly isn't the right word:
The Preemptive Tax Revolt
Obama's promised tax increase on "the rich" "will raise almost $700 billion [over 10 years], or only enough to cover about half of the budget deficit this year alone."
Europe's VAT Lessons
VAT taxes start low then grow and never lower income tax rates.
Showing posts with label taxes. Show all posts
Showing posts with label taxes. Show all posts
Thursday, April 15, 2010
Wednesday, April 14, 2010
Tea Partiers Tax Hypocrites?
I recently highlighted an article that said 47% of Americans don't pay income taxes. At least one person took this fact and labeled the Tea Party folks hypocrites. Why?
By this person's "logic," if 47% of Americans aren't paying income taxes, at least 47% of the Tea Partiers aren't. So they're receiving more benefit from the federal government than they're paying in taxes — for example, they pay $1 in taxes and get $1.50 in benefits. They're benefiting from the government's redistribution of wealth and complaining about it at the same time.
Let's say that's accurate. How do we respond?
1) The US government spends much more than it takes in. Technically everyone gets more "benefit" than they pay in taxes. This will continue right up to the point where the federal government implodes (i.e., no one will lend them any more money).
2) Implosion or not, eventually we're all going to have to help pay that money back. Us, our kids, and their kids.
3) For this to be anything like hypocrisy, you'd need to be applying for some government benefit. Your state getting money for roads or schools isn't up to you. It's a passive benefit. These folks probably aren't actively seeking benefits.
4) Even if they are, our alleged benefiting from this government policy doesn't make it right.
This argument makes as much sense as a teenager watching his parents spend themselves into the poorhouse. Why should he care as long as he's getting new shoes, phones, ipods, and whatever else he wants?
How about because he cares about his family's financial situation? How about because he doesn't want his parents to ruin themselves? How about because he knows if this continues his family will get their house, cars, and boat taken away?
Enlightened self-interest? Nothing wrong with that.
Agree with them or not, the Tea Partiers are not hypocrites; they're concerned citizens.
By this person's "logic," if 47% of Americans aren't paying income taxes, at least 47% of the Tea Partiers aren't. So they're receiving more benefit from the federal government than they're paying in taxes — for example, they pay $1 in taxes and get $1.50 in benefits. They're benefiting from the government's redistribution of wealth and complaining about it at the same time.
Let's say that's accurate. How do we respond?
1) The US government spends much more than it takes in. Technically everyone gets more "benefit" than they pay in taxes. This will continue right up to the point where the federal government implodes (i.e., no one will lend them any more money).
2) Implosion or not, eventually we're all going to have to help pay that money back. Us, our kids, and their kids.
3) For this to be anything like hypocrisy, you'd need to be applying for some government benefit. Your state getting money for roads or schools isn't up to you. It's a passive benefit. These folks probably aren't actively seeking benefits.
4) Even if they are, our alleged benefiting from this government policy doesn't make it right.
This argument makes as much sense as a teenager watching his parents spend themselves into the poorhouse. Why should he care as long as he's getting new shoes, phones, ipods, and whatever else he wants?
How about because he cares about his family's financial situation? How about because he doesn't want his parents to ruin themselves? How about because he knows if this continues his family will get their house, cars, and boat taken away?
Enlightened self-interest? Nothing wrong with that.
Agree with them or not, the Tea Partiers are not hypocrites; they're concerned citizens.
Thursday, January 14, 2010
We Want Our Money Back
The Obama administration wants to tax banks to pay for the financial bailout, telling banks, "We want our money back."
Can we say that to Washington?
Anyway, some claim this is unfair. They're right.
They want to tax some banks — those meeting certain magic criteria — without asking if these banks have paid back or even ever received taxpayer funds.
But didn't all these banks benefit from the assistance to troubled banks? Probably. But does that make it right to ask you to pay a special tax to pay for actions of another you have no control over?
Would we accept this with individuals? No. Then we shouldn't accept such tortured logic with banks.
Can we say that to Washington?
Anyway, some claim this is unfair. They're right.
They want to tax some banks — those meeting certain magic criteria — without asking if these banks have paid back or even ever received taxpayer funds.
But didn't all these banks benefit from the assistance to troubled banks? Probably. But does that make it right to ask you to pay a special tax to pay for actions of another you have no control over?
Would we accept this with individuals? No. Then we shouldn't accept such tortured logic with banks.
Tuesday, January 13, 2009
A Booming Tax Bill
An opinion piece in the Wall Street Journal claims that taxes must go up no matter who's in charge. The argument is basically that, unless spending goes down, there simply will not be enough money to fund all of the government's responsibilities, especially Medicare and Social Security for Baby Boomers, and spending is not going to go down.
My question is, why not?
People often say about SocSec, "I paid into it, and I want to get my money back out of it." Newsflash: Your money's long gone.
Instead of raising taxes, we need to tell people to accept that they're not going to get their money back.
When Barack Obama suggested raising the ceiling on SocSec taxes, people said decoupling input and payout would turn it into welfare. Well that's exactly what we need to do.
Social Security was never a good plan. For years we've known that it would crash and burn as soon as a smaller generation (e.g., Generation X) had to support a large one (e.g., the Baby Boomers). In fact, calling it a ponzi scheme is probably fair. As in any ponzi, eventually someone is going get the shaft, and the shaft is upon us.
There is no nonpainful solution to this mess. The best we can hope for is to keep it from destroying both our economy and our way of life.
The first thing to do is impliment means testing for Social Security payments. Bill Gates and Rush Limbaugh do not need Social Security; they're not alone. We need to tell those folks who can get by without Social Security, "Sorry, we screwed up, and you're not going to get your 'investment' back."
Second, we will have to keep SocSec payments low. Not only will this keep costs down, it will help fix one of the unfortunate unintended consequences of the Social Security system: its enabling young people's failure to support their elders. We need, as a society, to remind people they are responsible to financially support those who supported them. This will be painful to many; some will have to cut down on the number of Wii games they buy. Others may have to switch from Starbucks to McDonalds. A few will even have to make real sacrifices ... just like their parents and grandparents made for them.
Perhaps we can make it easier for people to declare their elder relatives as dependents. Maybe we can make it possible to share the tax deduction. We can probably find ways to help, but we will need people to start taking care of their own families.
Third, and related to the last, we need to reconsider the retirement age. When SocSec appeared on the scene, people generally lived about 3 years after retirement. We now have a large segment of our population that is retired for 15 years. Besides the cost of supporting these retirees, we deprive our society of the benefit of having these experienced, wise people in our workforce, and we deprive our senior citizens of purpose -- which frequently leads to declining health and happiness.
Fourth, we cannot fix Medicare without fixing healthcare. And Medicare, Medicaid, and the VA have shown us that centralized control of medical care or medical insurance do not lower costs. We will have to impliment real changes in the way we do things if we want to see our health insurance system improve.
While we're at it, we need to get serious about cutting spending across the board. We need to cut how much we let the First Lady spend on redecorating the White House, and we need to cut how much we give to foreign countries for military spending. We may need to explore alternatives to prison for nonviolent felons and alternative funding for the space program. Nothing should be off the table.
As our neighbors across the Atlantic are finding out, you cannot support a large welfare state for long, and certainly not with low reproductive rates. We have escaped many of their problems by keeping our entitlements somewhat in check, by having more kids, and by having a booming economy, but it's about to catch up with us. We can spare ourselves some painful lessons if we learn from their mistakes and fix our problems before they become crises.
My question is, why not?
People often say about SocSec, "I paid into it, and I want to get my money back out of it." Newsflash: Your money's long gone.
Instead of raising taxes, we need to tell people to accept that they're not going to get their money back.
When Barack Obama suggested raising the ceiling on SocSec taxes, people said decoupling input and payout would turn it into welfare. Well that's exactly what we need to do.
Social Security was never a good plan. For years we've known that it would crash and burn as soon as a smaller generation (e.g., Generation X) had to support a large one (e.g., the Baby Boomers). In fact, calling it a ponzi scheme is probably fair. As in any ponzi, eventually someone is going get the shaft, and the shaft is upon us.
There is no nonpainful solution to this mess. The best we can hope for is to keep it from destroying both our economy and our way of life.
The first thing to do is impliment means testing for Social Security payments. Bill Gates and Rush Limbaugh do not need Social Security; they're not alone. We need to tell those folks who can get by without Social Security, "Sorry, we screwed up, and you're not going to get your 'investment' back."
Second, we will have to keep SocSec payments low. Not only will this keep costs down, it will help fix one of the unfortunate unintended consequences of the Social Security system: its enabling young people's failure to support their elders. We need, as a society, to remind people they are responsible to financially support those who supported them. This will be painful to many; some will have to cut down on the number of Wii games they buy. Others may have to switch from Starbucks to McDonalds. A few will even have to make real sacrifices ... just like their parents and grandparents made for them.
Perhaps we can make it easier for people to declare their elder relatives as dependents. Maybe we can make it possible to share the tax deduction. We can probably find ways to help, but we will need people to start taking care of their own families.
Third, and related to the last, we need to reconsider the retirement age. When SocSec appeared on the scene, people generally lived about 3 years after retirement. We now have a large segment of our population that is retired for 15 years. Besides the cost of supporting these retirees, we deprive our society of the benefit of having these experienced, wise people in our workforce, and we deprive our senior citizens of purpose -- which frequently leads to declining health and happiness.
Fourth, we cannot fix Medicare without fixing healthcare. And Medicare, Medicaid, and the VA have shown us that centralized control of medical care or medical insurance do not lower costs. We will have to impliment real changes in the way we do things if we want to see our health insurance system improve.
While we're at it, we need to get serious about cutting spending across the board. We need to cut how much we let the First Lady spend on redecorating the White House, and we need to cut how much we give to foreign countries for military spending. We may need to explore alternatives to prison for nonviolent felons and alternative funding for the space program. Nothing should be off the table.
As our neighbors across the Atlantic are finding out, you cannot support a large welfare state for long, and certainly not with low reproductive rates. We have escaped many of their problems by keeping our entitlements somewhat in check, by having more kids, and by having a booming economy, but it's about to catch up with us. We can spare ourselves some painful lessons if we learn from their mistakes and fix our problems before they become crises.
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