The Truth About Taxes
Published on - August 31st, 2009 (Modified on - January 15th, 2012) (by J.D. Roth) Note: Although I try to keep GRS a politics-free zone, today’s topic is inherently political. I’ve stayed as neutral as possible in the article, but I know that there’ll be some political discussion in the comments. Please keep conversation civil, as always.
Because I was frustrated with my own ignorance about the U.S. federal budget and our tax system, I recently spent twelve hours researching a variety of tax topics. From my research came two articles: last week’s short guide to the federal budget and today’s post, which answers some of my personal questions about taxes.
Last week, we tried to take a few small steps toward understanding the federal budget. We looked at where the U.S. government spends its money. But where does it actually find the cash to spend?
Of the $2.333 Trillion dollars in U.S. government receipts:
- $1050 Billion (45.0%) comes from Individual Income Taxes
- $939 Billion (40.2%) comes from Social Insurance/Retirement Receipts
- $221 Billion (9.5%) comes from Corporate Income Taxes
- $76 Billion (3.3%) comes from Excise Taxes
- $20 Billion (0.9%) comes from Estate and Gift Taxes
- $28 Billion (1.2%) comes from Federal Reserve Deposits
- $16 Billion (0.7%) comes from other miscellaneous sources
As you can see, nearly half of government receipts come from individual
income taxes. Naturally, taxes are a hot-button issue. They have been since this nation was founded. (To be fair, though, the driving force then was “taxation without representation”. Modern complaints are against taxes in principle, I think.)
During my research, several questions about taxes occurred to me. In today’s article, I’ll do my best to share the answers I found.
Is it true that X% of Americans pay no federal income tax?
In a recent discussion about taxes at The Simple Dollar, Kevin wrote:
Roughly half of all Americans don’t pay any income tax at all. I’m sure those folks feel the current tax levels are just fine and dandy, no complaints. Those of us who DO pay taxes, however, are buckling under the weight.
Kevin’s comment left me wondering: Are there really that many Americans who don’t pay income tax? And are those of us who do pay income tax really “buckling under the weight”?
I was unable to locate government data on people who don’t pay taxes. Instead, I found a March 2006 article from the Tax Foundation, a nonpartisan tax research group based in Washington, D.C., which calculated that 43.4 million tax returns resulted in zero (or negative) tax liability. Another 15 million households file no tax return at all. Based on these numbers, the article concludes:
Roughly 121 million Americans — or 41 percent of the U.S. population — will be completely outside the federal income tax system in 2006. This total includes those who pay no tax, and those who pay some tax upfront and are later refunded the full amount of the tax paid or more.
So, according to this study, 41% of the U.S. population lives outside the federal income tax system, and 32% of U.S. tax returns resulted in zero or negative liability in 2006.
This 32% number is relatively high. Previous peaks were at 28% in 1950 and 26% in 1978. Lows were 16% in 1968 and 18% in 1984. In general, the percentage of tax returns with no tax liability is between 20% and 25%.
The Tax Foundation sees these numbers as a call to “broaden the tax base”, but admit that nonpayers tend to be younger and earn lower incomes. (Here’s a past GRS article about people who live on low incomes in order to avoid paying taxes.)
If there are a large number of non-payers, does that mean the rest of us are “buckling under the burden”? Let’s look at more numbers.
How do current income tax rates compare with those from the past?
In the United States, the federal individual income tax went into effect in 1913. The top marginal rate was 7% — and that’s if you earned over half a million dollars. (According to the Bureau of Labor Statistics inflation calculator, that’s equivalent to an income of nearly $11,000,000 today!)
The Tax Foundation has published a handy viewer that allows users to explore U.S. federal individual income tax rates from 1913 to 2009. (They offer PDF and Excel versions of the data, too.)
Using their data, I created a graph that shows the history of U.S. marginal tax rates. This graph shows the lowest marginal rate in red and the highest marginal rate in blue. At any one time there are many other rates in between. (The tax tables are simple right now, believe it or not.)
Based on this information, it would be easy to conclude that tax rates are low in the United States right now relative to past history. While I believe this is probably true, it’s impossible to know this for sure without copious data regarding average incomes and effective tax rates. Still, the answer to the next question provides a bit of a response.
What tax rate does the average person pay?
Because the United States has a system of progressive taxation, it’s difficult to know exactly how much each person pays for income tax. We all know our marginal tax rates — the rate at which the last dollar of our income is taxed — but our effective tax rates (or average tax rates) fluctuate from year to year.
I don’t know a source for comprehensive data on this question. The IRS does provide some statistics (and may, in fact, provide all the data one needs), and other parties have taken the time to collate some of it. For example, the Tax Foundation has produced several pages of summary tables. From this info, I built the following chart:
This chart shows the average federal income tax rates over time for a variety of income levels. The red line shows the average tax rate from 1980 to 2007 for the top 1% of the population based on Adjusted Gross Income (AGI). The black lines shows the top 10% of earners based on AGI. The blue line shows the overall average federal income tax rate for all U.S. citizens.
In 1980, Americans paid 15.31% of their AGI in income taxes. In 1990, that number was 12.95%. In 2000, it was 15.26%. In 2007 — the last year for which there is data — that number was 12.68%. Based on this, I’d say that the average American has an effective federal income tax rate of 13-15%. (And top earners pay about 22%.)
Note that these numbers don’t exactly match the statistics for effective tax rates that are available from the Congressional Budget Office. (Which show, for example, an effective individual income tax rate of 11.7% in 1980, 10.1% in 1990, 11.8% in 2000, and 9.1% in 2006.) I’m almost certain it’s a matter of methodology, but I don’t have the time to dig in and discover the details. That last link, by the way, contains loads of great data, some of which is analyzed in this piece at The New York Times.
So are Americans “buckling under the burden” of taxes? I’m not convinced. Taxes seem to be moderately low right now based on our past history. But maybe we pay more than the rest of the world? Let’s find out.
How does the U.S. tax burden compare with that of other countries?
Though I was unable to locate comprehensive statistics for every country in the wold, the Organization for Economic Co-operation and Development (OECD) does collect data on its 30 member nations.
In fact, you can view 18 years of OECD tax data all on one page. These numbers represent each country’s tax revenue as a percentage of GDP (gross domestic product). These figures include all taxes: federal, state, and local. (Note that you can export the data from this page in a variety of formats! Fun for statsgeeks and taxgeeks alike.) Here’s a graph of the data from 2006, the most recent year for which complete stats are available:
In 2006, tax revenue in the United States was 28.0% of the gross domestic product. Put another way, the average American paid 28% of her income to taxes (state, federal, and local). Of the 30 OECD member countries, only four had lower taxes (Japan, Korea, Turkey, and Mexico). The highest tax burdens were in Denmark and Sweden, where tax revenue was 49.1% of the GDP. The lowest tax burden (by far!) was in Mexico, where tax revenue was only 20.6% of GDP.
These numbers indicate that relative to other countries, the United States has a low tax burden.
How much is this all costing me?
Social Security, Medicare, Medicaid. Food Stamps, Unemployment Compensation. The Army, the Navy, the Air Force, the Marines. And the interstate highway to grandmother’s house. How much does this all cost you?
Well, Jess Bachman (the Death and Taxes poster guy) has done the calculations for you:
The average U.S. taxpayer has an income of $43,650. For every billion dollars of government spending, this taxpayer is on the hook for five bucks. These numbers scale up or down depending on your income. If you earn $100,000 a year, for example, you pay $15 of taxes for every billion dollars the government spends. Ouch.
Conclusion
Based on my research, U.S. taxes actually seem relatively low, both historically and in relation to other countries. I am not arguing that we should have higher taxes. Nor am I arguing we should have lower taxes. I’m just relaying the facts.
In fact, I don’t really have a purpose behind my research other than education. With all of the recent national discussion about taxes, I felt woefully under-informed on the subject. When listening to people argue about taxes, it’s difficult to know whom to believe. I wanted to do my own research and then share the results with you.
For more exciting information about taxes, check out the following:
- Internal Revenue Service: Tax statistics
- U.S. Treasury: A history of the U.S. tax system
- FedStats provides easy access to tons of statistics collated by the U.S. government.
- Tax Foundation: State and local tax burdens (by year) and State and local tax burdens (by state)
- Congressional Budget Office: Data on the distribution of federal taxes and household income (with thanks to Dan, a commenter at The Simple Dollar, who shared this info with me)
After all that, how would I balance the budget if I were dictator of the United States? Easy. I’d cut all programs across the board by 10% while increasing taxes on everyone by 10%. Yeah, that sucks, and every citizen of the U.S. would be unhappy. But you know what? If I were dictator, I wouldn’t care. I’d be sitting in a cozy room reading comic books while eating chocolate chip cookies with milk.
Update #1: As with last week’s post, I’ll post updates here at the end of the article as readers offer clarifications or important points. For example, although I focused exclusively on federal income tax for individuals in this article, several readers noted that this is not our only federal tax in the United States. Linear Girl provides a succinct summary: “The second largest source of funds for the federal government is payroll tax, aka Social Security and Medicare. All employed people who aren’t paying any income tax do pay payroll tax of 7.65% on all earned income (their employers also pay and additional 7.65%; if you are your own employer you pay both sides). “ So, if you want to include the complete federal tax burden in the above conversation, you need to add 7.65% to all figures — 15.30% if you’re self-employed.
Update #2: For those requesting a second part to this article about how this money is spent…that was actually the first part, last Monday’s short guide to understanding the federal budget.
Graphs courtesy of me. Images courtesy of Jess Bachman, creator of the Death and Taxes poster. Bachman is generously offering a deal for GRS readers. Order two or more posters and get 50% off when you use the code ‘slowly’ at checkout. “It’s basically buy-one, get-one-free,” Bachman says. Thanks, Jess!
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This article is about Economics, Taxes
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@Jessica – Why do you assume I’ve had a good life handed to me? That is unfair.
I do not come from a family with money. I did not grow up “rich.” I have worked hard for everything I have.
Another unfair assumption is that “no parent wants food stamps … ” Also untrue. Many people are willing to do the bare minimum and milk the system for everything they can get.
And again, I do not use equal resources. I use fewer resources, on average, than those who do NOT pay taxes.
Finally, I am a huge believer in charity. In many cases, charitable organizations are more effective at helping people who truly deserve it. My family gives 10 percent of our income to charity each year – which is a big sacrifice, especially considering our overwhelming tax burden.
I do NOT believe government should act like a charitable organization. Sure, we should keep people from starving. But those not willing to work should not have free housing, free schooling, free everything.
One of my favorite passages from the Bible states, “He who does not work shall not eat.”
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@Gwendally
“…the provisions of the 16th Amendment conferred no new power of taxation…”
http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=240&invol=103
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@Tip, so if you want to credit the government with my success … then surely my fellow countrymen should all be able to succeed for themselves, since we all live under the same system. With your reasoning, transfer payments such as EITC and welfare can all go away. Hooray!
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From a number of these posts it seems taxpayers who express the most entitlement, including people like #70 who complain that the people who pay the most in taxes for example “are the ones least likely to ever need to call the police, or occupy an expensive cell in a prison, or take up a judge and juries time, or apply for food stamps month after month, or take advantage of subsidized housing.” Poor you!
Fair tax (taxes only on consumption) are not fair, because it is a regressive tax where the poorest who have to spend all their money on consumables would be effectively paying taxes on 100% of their income while the wealthier one is the less % of income would be taxed, because they have the luxury of not having to spend all their income to survive.
As a child of an immigrant who gave up everything to move here for a better opportunity, I don’t understand how people who pay higher amounts of taxes due to income don’t appreciate the many benefits they have living and working in the US. Judging from the trend downwards on the highest marginal tax rates and the increasing division between rich and poor (rich still getting richer, middle class falling behind), that taxes still favor the wealthy (creation of corporations, estate tax, use of lobbyists in Washington) so that they acrue more advantage than they pay out. I am not including in this group self-employed people not in the highest tax brackets, who do have taxes that are normally invisible to the rest of us.
I do agree that if possible, the tax code should be simplified, and there should be more transparency about how money is spent. I don’t necessarily feel we are spending “too much” on taxes. I wonder though if we get the best value received for the amount we pay, especially considering it doesn’t even include health care (let alone college education, maternity leave, long term home health and other benefits other countries manage to include for the taxes).
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In the words of Kevin, “Let’s be rational.” We need to look carefully at the conclusions we draw from the facts. In some cases we are using a set of facts lead to one conclusion to justify the anti-conclsion. (I know that’s not the right term but hopefully the intent is clear.) Just because, for example, 41% of Americans don’t pay taxes, doesn’t mean that all of them are freeloaders or that all of them are poor. I think that 41% comes from people that file a tax return so it probably doesn’t include non-working children. But it does include working children and college students that don’t make enough to live on their own and are being supported through other means (student loans, parent, etc.) That does skew the conclusions we draw from the fact.
That is one example from the comments on this post. It’s very easy to make a leap from a given set of data to our own preconceived conclusions. I am greatful that JD has tried to be as open as possible and that he has drawn conclusions that the data supports. When we are discussing a set of facts we need to think carefully about what our opinions are based on. Are they based on a conclusion that the data explicitly supports or a conclusion that is based on the assumption of what the data means based on our already conceived ideas.
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Paul in cAshburn, I really do appreciate you elucidating your opinions clearly; it’s rare in these debates. But I do think your argument is weakened by not having numbers in front of you. It seems that you suspect that the lower 50% of the entire population (i.e., those who “don’t pay taxes”) are the primary beneficiaries of something like Cash for Clunkers or Medicare. But as people have discussed in the comments, many of these 50% are in fact children, so they clearly aren’t benefiting from such programs and probably should not be counted in such figures.
Also, you seem fixated on two groups: those who don’t pay taxes and those in the top 5%. But those are very small portions of the US population (though the former is growing and latter is shrinking). My impression is that you are ignoring the largest subset of the tax base, and I think many of them benefit from such programs. It seems to me that our conversations in the US always focus on the populations on the extreme ends of the spectrum and that we neglect/willfully overlook the ways that those in the middle pay and benefit. (This is what drives me batty about the Fair Tax people. They completely obfuscate how the sales tax will cause most pain to the middle class.)
People like you keep focusing on the top 5% as paying the most in taxes, which I am suspicious of because of the number of tax loopholes and the way that labor is taxed much more deeply than, say, investments. The very wealthy take advantage of investment vehicles, etc., that are simply not available to those with median net worths. This is why I’m so perplexed when Americans defend the top 5% and attack the bottom “50%”–most Americans share more in terms of taxation with the bottom “50%” than with the top 5%.
I suspect that more of your friends and neighbors benefit from these programs than you realize.
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@ lesley and nathan
I am not assuming that you had any sort of upbringing, nor am I assuming that taxes = charity. As I pointed out roads, police, national defense, etc. make up a lot of our budget, so a large percentage of our taxes, not matter how many you pay, goes to this cause.
I also didn’t say taxes = charity, because I do not believe giving others the ability to get help = charity. Charity is one thing, and it’s awesome to give to the red cross, but can you honestly say that if you had more money because there were no social programs, you would give all of that extra money to charity? Furthermore, if you really care that much you could figure out what percentage of your tax bill goes to social programs, donate that amount to a charity you’d rather see have that money, and then write it off. You’re still paying for roads, and cops, and everything else, as well you should, because you live here.
Let me give you an example. In my city, the current budget crisis is threatening to close the libraries. I, and thousands of others, are supporting a sales tax and city wage tax increase to keep the libraries open. I am doing this not only because I like to check out books, but because I know that 50% of the city’s residents cannot afford internet service, which the library provides free to 1 million users a day. I also know that finding a job or learning new skills without the internet is extremely difficult, and if those too poor to afford the service could find a better job or learn a new skill, my community would be a better place, and more taxes would be paid for roads and such. I am also insuring that this service is there in the future (which you obviously missed in my last comment) in case, were I ever to lose my job and not be able to afford internet service, there would be funding in place for a free internet service I could use to help myself find a job. That is being a part of a society. I also donate to organizations I like that help the community directly. That is charity. They are different.
And if, in this consumer driven, more-is-better place we live in, you can honestly find me a significant percentage of people who relish in doing nothing and living on measly government hand outs in crappy neighborhoods, I will personally pay your taxes for five years.
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There is a problem with looking at annual “tax returns” to determine who is paying taxes and how much they pay. Income tax returns use adjusted income for a particular year. Those annual returns do not reflect a long-term look at the sources for government revenue.
I seem to recall a controversy when Ronald Reagan paid little or no income tax one year when he was president with six digit salary. he had losses against that income. So one year he was in the “rich” category paying taxes and the next year he was a tax “deadbeat”.
And, of course, one of the biggest groups of “deadbeats” is the elderly. Social security is largely untaxed for the lowest recipients. And savings are taxed only to extent they earn additional income. But most of those “deadbeats” worked all their lives and paid a lot of income taxes on the money they saved as well as Social Security taxes.
And lets not forget children. Any kid who has a summer job is likely to file a return just in order to get his withholding back, but his parents may well pay very high taxes. In fact, even infants who have income from investments set aside for them have to file an income tax return.
It ought to be clear that looking at annual tax returns for a single year does not give a very clear picture of where federal revenue is coming from. The simple statement “roughly half of all Americans don’t pay any income tax at all” simplifies to the point of misrepresentation. It is the epitome of figures lie and liars figure. But then the Tax Foundation is a dedicated anti-tax organization and non-partisan only to the extent it doesn’t distinguish republicans from democrats in its anti-tax bias.
The goal of these “studies” is to mislead people into thinking that they are being unfairly taxed. In some cases, you even have the “deadbeats” complaining because they don’t recognize themselves. There are a lot of people who lost money on their investments last year that may end up with no taxable income or are living off their savings this year. Those folks are “deadbeats” this year, but they were also taxpayers and will be again.
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Just an aside, I was thinking about the 15 million who don’t pay taxes, and it’s a shame the IRS doesn’t release more numbers. I know there are some programs, though I’m not sure if they are state or federal, where if you are a retired person and can show that your savings are post tax (like a Roth IRA only or something) you can fill out a form to only have to file every five years? I know some counties in NY have this for county taxes because my grandfather had post tax savings, but that was a long time age, and I’m not sure how wide spread they are.
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Group me with Nathan Rice (#58). Unfortunately, the tax cannot be deemed unconstitutional, simply by definition that it is a ratified amendment of the Constitution. I do believe that the Federal Government has, to say it nicely, adopted several responsibilities that are far beyond what it was originally meant to be. And they definitely meddle in the affairs of the States by way of threatening to withhold federal money if the States do not comply, which I feel is grievously stepping beyond their bounds.
Also, I see statements about double-taxation and so forth. But double taxation is actually quite pervasive, the easiest example being paying tax on receiving your income, followed by tax on spending that same income. This is not a burdened tax, such as property tax or capital gains tax or car registrations, but a direct tax on the spending of income which was already taxed.
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Thank you, Gwendally (#26), Linear Girl (#31), and Alex (#73), for the information and advice!
I guess there is no escaping payroll taxes, so in essence, NO ONE gets away with a zero tax burden (well, almost no one. Seems there are still loopholes, as evidenced in comment #75). A person’s employer will help shoulder the tax burden, while someone who is self-employed has to go at it alone.
Also, at #35 (Paul), there is no guarantee that those Payroll taxes will result in any benefits for those of retiring 30-40 years from now. The government keeps predicting that Social Security will eventually fail, and who knows where Medicaid will be. There’s a good chance I’ll NEVER see the money that the government has taken from me for those programs, and there’s no guarantee that I’ll get a full return from any new future programs.
At #50, Lesley:
I disagree with your statement that lower income people should pay more, because they consume more. What about me? What about my friends? We’re all low income, close to poverty, but because we have NO children, we consume NOTHING from the government. There isn’t a single government handout that I’ve received because I’m poor (relatively speaking. Yes, I know people in the slums of Calcutta are truly poor, but I’m speaking in relative terms, since i do not live in Calcutta). Not one. The only government ‘benefits’ I get are the same ones that EVERYONE gets: roads to drive on, national security, libraries, etc.
While I agree that we should stop penalizing success (I sum it up as ‘don’t bite the hand that feeds you’), I don’t think we should add more burdens to people like myself who are barely surviving, yet not taking a single extra government resource than the ones offered to all income levels. If you want to add taxes in somewhere, I’d personally propose a limit to how many child credits a family gets. It seems unfair to me that a family or person (Octo-mom, anyone?) can just keep popping out children (even if they cannot afford them), and essentially get ‘paid’ by the government to do so.
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This is such a complicated topic, as is clear from the wide variety of responses. I think it’s just basic common sense that we have to have some taxes to live in our society. Some of us would pay 50% of our income to have benefits like those offered in Denmark, some of us I guess would like to pay nothing at all. I don’t think either is realistic for the United States.
We’re going to pay something, because we need our roads, libraries, schools.
Some things just annoy me — like the police fund asking for my money for the family that lost their primary earner on the job. I feel terrible for them, I truly do. But I already pay their salary through taxes, and I think they’d be seriously, seriously stupid to be a police officer and not have life insurance. I work at a desk and I have life insurance.
The problem is… we can’t legislate common sense. I would love to, believe me. I wouldn’t even let that Octo-mom keep her kids. I think she’s got to be close to the height of irresponsibility in that department.
BUT — our kids need education for our society to continue to function. Our children need food. I think technology has helped a lot with food stamps actually — now it’s an electronic benefits transfer, and can only be used for food. Before, people used the change to buy cigarettes or lottery tickets (yes, I worked minimum wage in a convenience store). So to me, that EBT is totally worth it — people don’t starve and they don’t use tax dollars to buy cigarettes.
I understand the complaint about top earners being taxed more, but is there no level at which it becomes ridiculous what people spend? I have a spendy sister, she spends tons of money. I can’t even really comprehend the amounts. And yes, her taxes are higher than mine. I expect she pays more in taxes than I earn in a year (and my household is in that 100k range, I’m not saying we’re poor — our taxes pain us too) but then she SHIPS a $5,000 rug to me so she doesn’t have to pay NYC taxes. I think people with more income have a lot better ways to figure out how to get around what’s reasonable to pay.
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@Brenda: to be clear, your employer helps “shoulder the burden” of the 7.65% in payroll taxes they pay for you by paying you 7.65% less than they would otherwise have paid you. In other words, to the employer, if they’re willing to pay $10,000 for your labor and they’ve got $765K in payroll tax they have to cover, they’re willing to pay you $9235 now, instead.
The employer pays not one dime more than they value your labor at.
Same goes for health insurance: if they pay your health insurance, they are paying you less in salary as a result. Your total compensation package is what they look at as it leaves their wallet, not how the benefits break down to you.
The luxury of having someone else make these payments for you without you having to pay attention or notice comes at a cost, by the way. This has all sorts of implications about whether you’re getting a good deal on your health insurance through your employer, by the way. But, again, a story for another day.
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@ethel #106:
I agree that focusing on the extremes doesn’t tell the whole story. However, wouldn’t it seem logical that the greatest injustices usually occur at the margins?
In the past, I have “benefited more from these programs”. I think I’ve mentioned it in previous posts, but the average of the first 27 work years on my social security statement is $13,977. I decided this wasn’t good enough (I know, what took me so long?), and took action (attending undergraduate and graduate college classes after work for 6 years).
Anyway, by reducing the injustices at the margins, might we not move toward bringing everyone into the fold of “I am proud of my country, and am proud to pay my share to support the ideals my country represents”.
The injustices at the extremes tear us asunder and reduce our strength, I think. We need to have pride as a country, not “pride” as a member of small special-interest groups. In fact, if someone wanted to hurt our country, could anything more divisive be found than sequestering us into special interest groups that then have “pride” in fighting over how to draw more benefits from the federal government? Government would grow and grow and the country would get weaker and weaker.
Making the tax system fairer might reduce divisiveness and help us move toward unity.
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@Paul (114) and others:
While it would be nice to get everyone grouped under this ideal pride in paying for taxes, the sad fact is that there are simply too many differing viewpoints to every accomplish this. I, with a Randian viewpoint, would pretty much only be happy when I get to keep all of what I legally and rightfully earn with my mind and body. Others won’t be happy until the government provides for all their “needs”, both real and imagined. There is no middle ground, where both of these groups can be happy. Working towards such a futile goal leads to nothing but discontent for everyone and constantly shifting rules.
@JD:
There’s something wonky about the system. Everytime I post, it gets mixed up and takes me back to a different post, instead of to the comment I just posted.
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@Jessica
Roads can be paid for 100% by gasoline and property taxes, ensuring that only those who USE the roads have to pay for them.
Police departments can be paid for by LOCAL taxes like sales and property taxes.
National Defense could be paid for with a combination of corporate taxes, assuming we increased them, even if we eliminated the income tax completely.
Now, if you’re not making the case that the rich should pay a significantly larger portion of their total income to taxes, then perhaps this point is moot … but none of your examples (police, roads, military) are good excuses for hosing the rich to support the poor.
“can you honestly say that if you had more money because there were no social programs, you would give all of that extra money to charity?”
Nope, but that’s the great thing about charities … they’re efficient. I’d be willing to wager that for every 3 dollars fed into gov’t support systems, only $1 actually gets to the people who need it. Whereas in a REAL charity, that ratio gets a LOT closer to 1:1.
So yeah, eliminate social programs at the federal level. I’d be more than happy to take 1/3 of what I get back and send it to charities. Some people might take the whole thing and donate it. Really rich people might invest that money, which helps the economy, creates wealth and new jobs. Some people might blow all that money on new cars and clothes … but even that is GOOD for poor people. It creates new jobs at car and clothing factories.
The point is, we ALL benefit from being able to decide where we want to spend our money, even the poor. When the rich spend money, poor people cash those checks.
This cycle reduces the need for charity. So again, your point is moot. I don’t need to give all the money I’d save to charity.
As to your library point … if you want to save the library so badly, why not just write a check yourself? And start lobbying your friends to do the same? Why do you feel it’s necessary to force the entire town to pay more money in sales taxes to pay for a project that they may not care about?
Why is it that when you saw a problem, you (and others like you) immediately thought that petitioning the local government to force others to pay for it? Why not just pay for it yourselves?
FWIW, there are many public libraries that operate on a nearly 100% donation budget.
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@Nathan Rice (116):
I can almost agree 100% with your post. But let’s be honest… Any tax on a corporation is simply a tax on its customers, at best. At worst, it becomes the last burden that puts a struggling company out of business.
@JD:
I got the URL with this post that it tries sending me to. It includes this interesting extra part right before the anchor:
http://www.getrichslowly.org/blog/2009/08/31/the-truth-about-taxes/&cp=1/#comment-195386
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@ nathan
JD has asked that this be civil, so I’m done. If you can’t read my whole argument, or don’t think a library of all things is a worthwhile public service, you and I are just to far apart in values to make this work. And for the record, I do donate to keep the library open as well as pay taxes. Furthermore, we did not petition for higher taxes, we voted for them, which is different, and when most of a city wants higher taxes to pay for libraries, well, I think we should get them. As you probably don’t live in my city and it is a local tax, I don’t see what concern that is to you if yes, we want higher taxes.
Also, few public libraries that are open to all members of a municipality, the kind that can actually afford books, are entirely funded by non-profits. If you have information to prove otherwise, please post it, I would love to see how those libraries do it and forward it to my own library.
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To #28 and others:
Bottom 50% paid 3% of federal income taxes.
Top 5% paid 53% of federal income taxes.
Top 1% paid 33% of federal income taxes.
Trying to use these statistics as the basis for the argument that “the top earners pay more than their share in taxes” is wrong and misleading.
The only comparison that can be fairly made is total income of each group versus total taxes paid by each group.
I couldn’t find numbers to match exactly the above percentiles, but the following are the income stats from wikipedia for 2007:
Top 3% earned 17.5% of the income
Top 8% earned 25% of the income
Top 20% earned 50% of the income
Bottom 10% earned 1% of the income
Anyone who wants a sobering realisation of where income and wealth really reside see David Chandler’s site: http://www.lcurve.org/. The first time I saw this site, I thought I was looking at the axes, not the graph itself!
The truth is that all these statistics are horribly skewed by the very top earners. Some salient points from the site (you’ll want to see the graph before reading on):
1) Some professional people, with incomes over a hundred thousand dollars may feel “rich”. They may have nicer homes and cars, and they may have attitudes that separate them from the masses. But they still must work for a living and are primarily consumers of their earnings. Whether they recognize it or not, they actually have more in common with the people at the bottom than they do with the people in the top 1/2%.
2) The horizontal spike has the votes. The vertical spike has the money. Who wins, when it comes to electoral politics? Who has influence? Whose interests are being represented in Washington? Can democracy meaningfully exist where the distribution of wealth, and thus the distribution of power, is this concentrated?
3) Those in the vertical spike would like to have you resent the poor who are portrayed as welfare leeches. Which group actually has a bigger negative impact on your lifestyle: the people in the bottom half of the graph, or the people in the vertical spike?
4) The mainstream media has been bought up by people in the “vertical spike.” The primary channels for information and expressed opinion are controlled and filtered by a small, powerful group on the vertical spike whose interests are not representative of the majority of Americans. Even when there is no direct political message the programming is tailored to the perspectives and sensitivities of large corporations.
The last 2 points here seem particularly on the mark to me.
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@Justin,
If the increase in corporate taxes wasn’t met with a significant reduction in income and capital gains taxes, then I’d agree with you 100%. But put a TON of money (~ $1 Trillion) back into the hands of the American people, and companies would probably WELCOME the increased corporate tax, since people would be spending like crazy. Don’t you think?
@Jessica
I’m not trying to be uncivil, and I don’t know what part of your argument I missed. I understand that you think that helping the poor benefits entire communities. I AGREE with you. We only disagree on the METHOD of delivering that help.
I think it’s the citizen’s personal responsibility to help his community by voluntarily giving of his time and money.
You think it’s the citizen’s collective responsibility to accept the involuntary transfer of money from us to those who need it.
The problem with your idea is that the money goes from our pockets to the IRS, then to the Congress, then to a bureaucracy, then to a social worker, then finally to those who need it (and potentially to those who don’t, but want it anyway). That is an inefficient system that ends up WASTING most of the money it takes in, which seems to be one of the only things government is good at doing. Not to mention the millions of dollars that we all end up paying (wasting) in April to have our taxes prepared.
As for a library, you’re right, I don’t see much need/value in it. But you’re 100% correct in pointing out that I don’t live in your city and don’t pay your city taxes. If the people of your city voted to increase sales taxes to help the library, then more power to them. It doesn’t affect me, and if it did, I’d probably move out of the city limits so it wouldn’t. That’s the great thing about local governments … you don’t have to put up with them if you don’t want to.
I still think that if a person wants to have a library and are OK with paying higher taxes to pay for it, then they should just eliminate the middleman and give it straight to the library instead. That would seem like the more efficient thing to do.
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“Contrary to some arguments, high income earners do pay more in taxes than low-income earners. ”
No, it doesn’t because no one has every made the argument based on the adjusted annual incomes found on tax returns. This is a bit of a circular argument. People who have large deductions may well not have high adjusted incomes. It doesn’t mean they are not wealthy. Simple math says that those who have to pay 35% pay more than those who pay 30%. The question is how much of their real sources of wealth are they paying those taxes on.
The first thing to look at is those social security taxes which are only paid by wage earners and only on wages under $100,000. In essence, those making less than 100,000 pay a higher percentage of their income than those who make more than that. People who have earnings come from investments don’t pay any social security taxes on that income at all, regardless of amount (they also don’t get benefits based on it).
The other problem, is that you are ignoring state and local taxes that are far more regressive than even the current income tax. This includes property taxes (whether paid directly or in rent) and sales tax as well as both federal and state gas tax.
“Roads can be paid for 100% by gasoline and property taxes, ensuring that only those who USE the roads have to pay for them.”
No, they can’t. In fact there is very little relationship between the amount of gas a person burns and the cost of the roads they happen to use while burning it. In fact, that disconnect is why roads in many states are going very slowly back to gravel from lack of maintenance.
“I, with a Randian viewpoint, would pretty much only be happy when I get to keep all of what I legally and rightfully earn with my mind and body.”
Who determines what is legal? Or what is rightfully yours? Or even what you have “earned”? The simple truth is that we are all living on the backs of several thousand years of human civilization. What portion of that history you are entitled to make use of, and what parts you aren’t, is not very obvious.
Taken to an extreme, only the direct descendants of Einstein should have the right to make use of his ideas to create nuclear weapons. And we should all be paying Newton’s descendants a licensing fee for any use of gravity.
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@Ross
Yes, then can.
All local roads *could* be paid for by adjusting gasoline and property taxes, and federal gasoline taxes could cover major highways that cross states.
Perhaps not at their current levels, sure. But get rid of $1 Trillion in federal income taxes, and adjustments in gasoline taxes won’t be a problem.
And yes, determining how much gas a person burns is a good (but not perfect) way to measure their use of the road. MOST people drive vehicles that get between 19-35 mpg.
However, it is true that some roads would be much more efficiently funded by tolls. That is the MOST accurate way to pay for a road based on usage. But toll roads generally only make sense on high traffic roads like interstate highways or roads with bridges.
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Lesley, I’m sorry, but I’m in that taxpaying half (and I look at the deductions every paycheck, not simply every quarter) and I have no interest in a revolt. Get worked up about people who “milk the system” with food stamps? No, I get a lot more worked up about people who take home equity loans to pay for vacations to Aruba, then deduct the loan interest. I am extremely resentful of those who want to eliminate taxes on income they got because Granddaddy left them a trust fund, while those of us who earn our money the hard way are expected to pay taxes.
I’m more concerned about the other kinds of waste Kevin brought up. Somebody who lives in the projects trying to get an extra can of tuna out of WIC doesn’t disturb me a hundredth as much as a wealthy businessman getting a no-bid contract because his buddies are still holding public office.
By the way, all, the 16th Amendment argument is nonsense.
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If we are discussing property tax to pay for roads and public infrastructure products…. what about proposing a “renters tax” so that all citizens pay for the public works instead of just property owners?
I’m for taxing the heck out of people if everybody shares in the pain.
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“So, if you want to include the complete federal tax burden in the above conversation, you need to add 7.65% to all figures — 15.30% if you’re self-employed.”
That is inaccurate in two ways. The first, I mentioned earlier, is that SSI only applies to the first 100,000 of wages. After that there is no tax.
The second, more subtle, is that the marginal tax brackets are paid on adjusted income, not gross income. Social security taxes are paid on gross income. That is a very substantial difference in the effective rate.
Regardless of whether it is paid directly by the employer or taken out of the employee’s paycheck, the person generating those taxes is the employee. I guarantee that any employer considers SSI part of an employee’s costs when setting salaries.
And, just to be clear, the self-employed only need to pay social security on money they are paid in wages, not on any profits their business makes even if they pay income taxes on the profit. So your small business owner who takes 100,000 in profit is saving himself 15,000 in taxes. (assuming the IRA lets him)
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RE:comment #40 from Jessica:
From the stats on the IRS site, they have data from 1998 (most recent) that breaks down income levels based on age group. About 5-6% of the people to file income tax returns in 1998 were under age 20. About 60% of those people earned less than $5,000.
So roughly 2-3% of the people who pay no federal income taxes are teenagers who make very little.
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@ Ross:
Ross, you’re referring here to S Corps and LLCs with salaries or guaranteed payments to partners. By far, most small businesses are Schedule C Sole-proprietorships. The ones that DO have a profit over and above their salaries had better show it comes from some investment decision, not their own labor, or they’ll be slapped with a lot of fines and penalties. So, in other words, the IRS doesn’t let them.
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Why not divide the Federal budget by the number of citizens age 18 or older and send everyone a bill each year? That looks like about $5,000 per person according to last year’s receipts, excluding the entitlement programs (which could be construed as user fees). Now *that* is what I all a “flat tax”.
I bet we would see taxes fall immediately by the preferred method: people voting for budget cuts and demanding that much of Federal funding be replaced by user fees rather than blanket fees. Why? Because nobody wants to pay for everyone else’s crap! We just got suckered into it, and still are, by our own shortsightedness and lack of principle.
“The American Republic will endure, until politicians realize they can bribe the people with their own money.” – Alexis de Tocqueville
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@Nathan: do you know why your questions about the legality of the 16th amendment are moot? Because it was reviewed by the Supreme Court, and there have been a gazillion tax laws passed by congress since then, nearly all of which have been vetted by the Supreme Court at one point or another.
That is what it means to be legal: it was voted by the Legislative branch, reviewed and okayed by the judicial branch, and executed by the Executive Branch. You really can’t get much more affirmation that something is “legal” than that.
Now, SHOULD it be legal? That’s another question, and perhaps the one we’re discussing. But please don’t be confused, income taxes ARE legal.
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Great article!!!!! Any republicans out there old enough and wealthy enough to have payed taxes under Eisenhower?
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Ethan – Your really think it’s fair for an 18 y old high school student making under 10k a year to pay the same amount as the CEO of Bank of America who makes 28 million a year. I bet you do if your the CEO of BofA.
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@Gwendally
Yeah, you’re definitely right about that. All 3 branches of gov’t consider the income tax a legal practice. Not really surprising.
Don’t get me wrong, I file my income taxes, and don’t ever plan on not filing. I just believe that according to the constitution (despite the 16th amendment) they haven’t yet made it legal. But as the old saying goes, “he who has the guns makes the rules”
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“All local roads *could* be paid for by adjusting gasoline and property taxes, and federal gasoline taxes could cover major highways that cross states.”
Not unless you required everyone to drive a vehicle that burns the same amount of gas per mile and drive at the same time over the same roads. The fact is that most of the cost of new construction serves only people who are driving on roads when they are congested, everyone else gets zero benefit. Right-of-way (ROW) in urban areas is much more expensive than the same ROW in rural areas. People who need a bridge, or cross wetlands or steep hillsides all have greater costs for road construction than people who drive in flat dry areas.
The simple reality is that the disparity between what people pay in gas tax and the costs associated with driving are at least as large as the disparities in income taxes paid and government benefits from the income tax.
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“The ones that DO have a profit over and above their salaries had better show it comes from some investment decision, not their own labor, or they’ll be slapped with a lot of fines and penalties.”
That is not really true. Many small businesses have employees that they can make money from and they can take profits as a reasonable return on their investment as well. Some small business people don’t do any work for their business, they just take the profits.
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Gwendally,
Employees do not pay the 7.65% that the employer pays. That is a tax paid by the employer.
Taxes paid by employers are not taxes paid by employees. I also do not pay the pension that my employer gives me, I also do not pay the health insurance premiums that my employer contributes, I also do not pay the corporate taxes that my employer pays and I do not pay the gasoline taxes that my employer pays for the vehicles they use.
Taxes paid by the employer are not paid by the employee.
And there is no way in the world that you can convince me that if that 7.65% tax paid by my employer were repealed that I’d get it back in my pay check.
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@Chris: “Ethan – Your really think it’s fair for an 18 y old high school student making under 10k a year to pay the same amount as the CEO of Bank of America who makes 28 million a year. I bet you do if your the CEO of BofA.”
The default position ought to be that two people receiving the same services should get the same bill. That is what we call “fair” most of the time. In fact, we tend to call the alternative “discrimination”. So I think that if we want to depart from that, we must have a reason. And not a fuzzy one, either. What services does the Federal government provide to the CEO of BofA that it doesn’t provide to the 18-year-old high school student? (Start the taxes at 21 or 25 if you want, btw)
If there are any services in that category, great. Don’t bill the 18-year-old for them. If some are provided proportionally, then bill proportionally. Our current system doesn’t avoid this because it’s difficult, but because it is based on the principle that *it doens’t matter*. Our current system says that there is nothing we can’t tax for; there is nothing outside the scope of government; if 51% of the people can be enticed to vote for a thing, then it is just that we should tax to provide it. There is no other principle in play in our current government that I can see.
Full disclosure – I am not the CEO of BofA. Nor am I an 18-year-old high school student. In fact, I was never an 18-year-old high school student, because when I was 18 I was working for a living. But yes, I had the same opinion about taxes then.
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@116-Nathan, not addressing everything you wrote, but here’s a few thoughts:
>>Roads can be paid for 100% by gasoline and property taxes, ensuring that only those who USE the roads have to pay for them.
Everyone uses the roads. The goods we buy (food, etc) arrive on roads. Unless you live on your own land not tapped into any utility grids where you make all your own food and tools then in some way you can not get away from having directly or indirectly utilized the roads that help push down the costs of the goods you receive since their transportation costs are less than if they’d been carted down by mule. If the prices of basic goods go up then the poor will be left with even less money–assuming they can still make ends meet at all.
>>Police departments can be paid for by LOCAL taxes like sales and property taxes.
You didn’t mention how to pay for schools. The same way? Rich neighborhoods will have good police departments and schools and poor neighborhoods will have ill-equipped, under-paid officers and poor schools (understaffed, can’t attract and keep good teachers, no extracurriculars).
>>Nope, but that’s the great thing about charities … they’re efficient. I’d be willing to wager that for every 3 dollars fed into gov’t support systems, only $1 actually gets to the people who need it. Whereas in a REAL charity, that ratio gets a LOT closer to 1:1.
They’re erratic. During times of greatest economic stress when their services are most needed donations go down. Even during good times their income stream can’t be assured. If you look on charity navigator, there are a lot of charities that don’t get anywhere near to 1:1. The ones that have a ratio near 1:1 are labors of love. My dad does work for a charity where the board chairman paid for his travel on his own dime (*past tense because he died during one of those trips). None of them takes any salaries and 99% of the money goes to the kids.
Without systematic programs there will be more people (unable to navigate the patchwork of charities) who will fall through the cracks. To expand charities beyond the current scope of the people who do it as a passion to large enough to serve those would have been helped under the government program, then you will need to start offering reasonable salaries. The efficiency will not be 1:1.
In addition the government funds research that no one else is willing to (largely unprofitable). Government research grants allows those with the interest and ability to make discoveries that help all people or just to expand our body of knowledge. In the past science was the realm of only the well to do who could fund their interest in their hobby. Science is a lot more expensive nowadays than it used to be too.
>>So yeah, eliminate social programs at the federal level. I’d be more than happy to take 1/3 of what I get back and send it to charities. Some people might take the whole thing and donate it. Really rich people might invest that money, which helps the economy, creates wealth and new jobs. Some people might blow all that money on new cars and clothes … but even that is GOOD for poor people. It creates new jobs at car and clothing factories.
>>The point is, we ALL benefit from being able to decide where we want to spend our money, even the poor. When the rich spend money, poor people cash those checks.
And poor people will stay poor as poor people grow up with their parents never around working multiple poor jobs, don’t get sufficient nutrition, go to their poor schools, drop out early to help their families make ends meet… There’s only so much bootstrap to pull on. If you start out low enough in the hole you’ll never get out. Right now society offers a (sufficient) patina of equal opportunity. Your vision will be patchwork of some more equal than others. Its already luck of the draw to be born in this country, but then it’ll become luck of the draw to be born in the right neighborhood in this country.
Aside from all my major quibbles, its a lovely utopia you’ve painted.
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@Chris
By your logic should the 18 year old pay less per unit of electricity than the CEO? How about less for a burger at McDonalds? Should he pay less for the same make/model/year of vehicle simply because he has a lower earning power? I have to agree that two people should pay the same amount if they receive the same services.
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@Chris,
Ethan makes a good point. This is a common logical fallacy that has evidently permeated our culture … that if you MAKE more, you should OWE more.
Problem is, that sounds remarkably similar to a quote by a guy named Karl:
“From each according to his ability, to each according to his need”
And by perpetuating that idea, we’re handicapping ourselves from unknown potential in prosperity. I know it grates against our emotions, but letting rich people keep the money they earned (or won, or inherited, etc.) is a GOOD thing. Whether they start new businesses, invest the money, spend the money, those of us lower than them on the income scale get to benefit from their money … WITHOUT having to steal it from them.
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@Jim, #135: You are correct in one element: if that 7.65% were repealed you would not see any of it, because you wouldn’t understand that it was yours to ask for. You would have to be aware of it to bargain for it.
If your employer is willing to pay you $30K in wages and $5K towards your pension and $5K towards your health insurance and $10K towards taxes they’re compelled to pay on your wage base, then they value your labor at $50K. They’re willing to pay $50K to get that job done. The fact that you only NOTICE $30K as your wage doesn’t matter one whit, except in how hoodwinked you are about how taxed your labor is.
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I do not think it is fair for one person to pay 50% of their salary in taxes while someone else pays less than 1%. The more you make, the more you can afford to pay in taxes so the more you should pay.
I also love that your quoting the left leaning socialist Tocqueville. Tocqueville also observed, “Americans are so enamored of equality that they would rather be equal in slavery than unequal in freedom.”
- Alexis de Tocqueville – Democracy in America, 1840
I wish this were still true? Is it?
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Des – Were not talking about burgers or electricity. Please stay on topic.
Nathan – Conservatives LOVE quoting Karl Marx don’t they? Too bad they never actually read anything by him. Jesus said it first….
And all that believed were together, and had all things common; And sold their possessions and goods, and parted them to all men, as every man had need.
Acts 2:8
“And by perpetuating that idea, we’re handicapping ourselves from unknown potential in prosperity”
No. Were handicapping the CEO of BofA’s future prosperity. And I don’t feel the least bit sorry for it.
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@Ross (121):
What is legally mine is determined by the right of property and the law of contract. If I contract with someone to provide labor in exchange for a good or service, then upon completion of the requirements of the contract I have legally and rightfully earned that good or service.
The rest of your comment is a quibble on patent and intellectual property law, and is unrelated. But here’s the Randian take on it anyway, completely addressing your concerns:
http://aynrandlexicon.com/lexicon/patents_and_copyrights.html
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@barnetto #137
In the same sense as all my clients “use my computer” since I’m a web developer. But I don’t charge my clients a “computer usage fee” … I build it into the cost of the service I provide. The same way a gas tax would be absorbed by food suppliers and built into the cost of food. And all the while, we don’t have to forcefully take money from anyone’s paycheck and watch it navigate the federal bureaucracy.
Let the people decide how they want to pay for schools. That’s what freedom is. I’m not opposed to state-funded public education. My beef is with the “one size fits all” crap that comes from DC.
Charitable giving was $306 Billion in 2007. That’s $1000 for nearly every US citizen. Honestly, if just 1/3 of that actually reached people who needed it, I don’t see how $100 Billion couldn’t help every person in need. You act like American is a third world country where everyone is in a soup line and lives in cardboard boxes. The fact is, our definition of “need” is just a little bit off.
I live in South Carolina, one of the poorer states in the US. And where I live, if you need something, there is a charity of some sort within 30 minutes that can get you what you need.
I do not believe that. You fully underestimate the compassion of your fellow man. You’ve got far too little faith in people. I’ve never met a person who, if given the opportunity, would not help a person in need. Unfortunately, we’re currently able to just dismiss people in need, suggesting they go find a local welfare office. Why help a person in need when the Government has made it quite clear that doing so is not our personal responsibility … it’s theirs.
For every 1 discovery or advancement government funds provide, I can give you 10 that the private sector, driven by profit and greed, has given us. You write as if, without the billions in Federal funds over the last 50 years, we’d be 30 years behind everyone else. It’s simply not true.
That vision of the, mostly fringe, cases of American culture, was the norm 150 years ago. Regardless, it’s entirely inaccurate. For a good example, look at Katrina ravaged New Orleans. When Government B.S. didn’t work, charities from around the nation drove thousands of miles, donated millions of dollars, and gave countless hours of their own personal time to help the people get back on their feet. When someone in this country is short on bootstrap, we pull them up enough to get them going. It’s what we do. And we’d do a lot more of it if gov’t didn’t constantly communicate to us that we don’t have to … they’ll take care of it. If there were no federal safety net, states would step up. And where states don’t step up, cities would. And where cities don’t step up, the people will.
There is no such thing as a utopia. People die. Some of old age, some of starvation, some get hit by a bus. No matter how much money you throw at society, some people will fall through the cracks. I’d just rather be FREE to help people in need, rather than be forced to do so.
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Wow…this article is a failure to provide the real facts. The author states that historically, the tax rate is relatively low. Um…yea, if your chart only begins on 1913. HOW ABOUT BEFORE 1913 WHEN THERE WASN’T FEDERAL INCOME TAX?
YOU ARE PICKING SAMPLES OF DATES TO BACK UP YOUR IDEOLOGICAL BRAINWASHING.
Wouldn’t it be nice if we could keep what we earn? Who has the right to take it from us if we worked for it and give it to some screw up sitting on his stoop?
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I love the library debate above. It truly encompasses the two sides of the tax-and-spend debate. To overly simplify, it shows the two primary values in the debate:
1. freedom
2. entitlement
Envision the push and pull on taxation and spending as a continuum. At one end is pure economic freedom, and at the other 100 percent taxation to fulfill entitlement programs. (At the 100 percent, entitlements would be absolutely everything, from food and clothing to movies and vacations.)
So in the library example, one side wants freedom to choose whether to fund the library (through voluntary contributions – whether in money, hours or goods) rather than being taxed for a government service that will only benefit a small percentage of the population.
The other side wants forced funding through taxation, because it feels entitled to the privilege of a library, even though most people in the community choose not to use it.
Most people in the population fall somewhere in the middle of the continuum. For example, many would tolerate a small tax for the library, but would prefer that it be funded primarily through donations. Others don’t mind a large tax for the library, and think extra donations would be dandy, too.
So each of us should ask a question of ourselves. Do we fall on the side of liberty or on the side of entitlements?
1. If you prefer liberty, are you willing to take full personal responsibility for the situation of yourself and your family – in good times and bad? This means a great deal of sacrifice, with emergency funds in place, moderate spending habits, insurance for every possible disaster, etc. No safety net included.
2. If you prefer entitlements, are you willing to eventually become one of the people who pays half or more of their income to the government? Are you willing to sacrifice personal choice in all services you receive, from education and housing to food and medical care? Are you willing to tolerate low-quality services and, sometimes, rationing? And when a political group you don’t like comes into power, are you willing to accept their choices as to how YOUR money is spent?
The answer seems obvious to me. I wish more people would choose liberty and personal responsibility. We would all be better off for it.
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@Chris (#142)
Not to be nitpicky (but ok, I’ll go there), if you are going to quote scripture, at least cite it correctly please. Acts 2:8 *actually* reads “Then how is it that each of us hears them in his own native language?” (unless you’ve already edited it by the time I post this)
Your scripture is actually Acts 2:44-45, and refers the Christian Church ONLY. The members of the Christian church *willingly* had all their things in common, and shared them among the members as needed. It was NOT a forced tax, nor did it extend outside the church (although they did tithe and offer alms, as Christians do today). We’re talking under 10,000 or so people, not millions in a huge nation, so the comparison is hardly equal.
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@Chris
There’s a difference between stealing from the rich to help the poor, and the rich giving to the poor. Jesus wasn’t advocating the former, and my guess is that you knew that.
Again, this is a common fallacy in reasoning.
First of all, if the ultra-rich didn’t exist, then neither would all the programs that their taxes fund. And forget about all the money they give to charity.
Second of all, the CEO of BofA won’t be around forever. that money won’t go to the grave with him. He’ll spend a lot of it on frivolous toys, invest a lot of it in the stock market, build some houses, probably start some businesses, and leave it for his heirs.
In doing so he will: send a lot of money to the businesses that make the toys, help stock prices go up which will help fund that 401k and IRA of yours, create jobs and wealth for hundreds and maybe thousands of construction workers and businesses, create jobs for people in his new businesses, and give the same opportunities to his children and other beneficiaries when he dies.
Yeah, screw him. He’s just a rich jerk, right?
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@Lesley (146):
GREAT SUMMARY! Thank you for laying it out there plainly! JD, I nominate that post for the dark grey background!
I also wholly and without remorse choose the premise of liberty.
@Chris (142) et al:
Rand also addresses something she calls the “tribal premise”. In this case, premise is meant in the logical, rational sense: A statement taken as fact, upon which further statements are built. I’ll let her words do the rest:
http://aynrandlexicon.com/lexicon/tribal_premise_%28in_economics%29.html
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Brenda – Your right. Point conceded.
Nathan – You not going to convince me that everyone regardless of income should pay the same dollar value in taxes. Sorry. I’m not trying to screw the rich. They should pay their fair share like everyone else. You want to talk percentages than I’m with you. If everyone pays 10% of their income in taxes that sounds fair to me. Everyone paying 5k in taxes regardless of income????? I call that socialism FOR the rich.
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