So, it's not generally in our nature, or this blog's nature (if it has one) to be controversial. So... I'll change that really quick with my opinion on taxation. Let me preface this by saying that I'm not an Obama fan, and I will not pretend to understand or support all sides of this issue, or all of Obama's economic stimulus plans. I am also certainly for smaller and less intrusive government.
That said, I hear a lot of people outraged by the idea that people over a certain income level (such as the $250,000) are or will be taxed at a higher rate. They say that this is unfair, that it's redistribution of wealth, or whatever. You are all entitled to your opinions, and I think I am as well. The main point I wanted to make was that fairness depends on the angle you look at it.
My opinion is, I think it makes a lot of sense for people who make more to be taxed at a higher percentage than those who make less. Why? Because higher taxes hurt the poor more than the rich. Essentially, if people make less, paying a higher percentage of taxes means less to spend on food, housing, other needs, etc. Another argument is that the poor don't pay taxes anyway. My argument.... we all pay taxes. Sales tax, gas tax, taxes on phones... and many others. These may not matter to many people... but they are still taxes, and they can still make life difficult for the poorest of poor. The point is, the poor feel the loss of whatever they pay more than the rich. I have a hard time describing this point, so here is an explanation I read online... perhaps it will be enlightening.
When you're drowning in debt, you have 3 options: Cut expenditures, increase revenues, or a combination of the two. If you were drowning in credit card debt, would you take a job that paid less money to get out of debt? Of course not! Neither can the government!
Wealthy individuals have the means to pay higher taxes so they are the target of most tax increases. It's basic math. A 5% increase in the top tax rate generates $500,000 in tax revenue from a person earning $10 million a year. Increasing the base rate by 5% only generates $500 from a person earning $10,000 per year. And someone making $10k per year would be clobbered by an additional $500 in taxes whereas someone making $10 mil can fairly easily pay the additional tax.
A "flat tax" is grossly unfair. To raise the same revenue as the current graduated income tax, you'd need to levy at about 25%. Only the wealthiest of taxpayers pay anywhere near that in net taxes.
A flat 25% levy would crush the typical single mother with 2 children struggling by on $17k per year. Due to the EIC and other credits, she has about $20k in cash flow per year and barely gets by. With a 25% levy (and no more EIC, Child Tax Credit, Additional Child Tax Credit, exemptions or deductions) her cash flow would plummet to less than $13,000 per year and she and her kids would quickly be tossed into the streets. How can anyone call that "fair?"
I'm in a 28% marginal bracket now and frankly it doesn't bother me in the least. My net rate is still around 16% or so. I well remember the days when I paid no income tax at all and struggled from paycheck to paycheck. The relative pittance I received in EIC payments made survival possible and I honestly don't have a problem with paying my "fair share" as my income continues to rise. But a flat 25% levy would clean my clock as well as that single mother's. Basically it would mean that nothing would be saved towards my retirement and I'd have to live on Alpo in my "Golden Years." What the heck is "fair" about that??
I have one other issue that I'll mention really quick... then I'll shut up. Then you can all deride me for my opinions. That is... I enjoy all of those conservative talk show hosts like Hannity, Glenn Beck, etc. I generally agree with them on most things. One thing I disagree with them on frequently is issues regarding the poor. Just yesterday I heard Glenn Beck saying that, essentially, in order to help the poor, we need to motivate them. If we were to cut programs, for example, the poor would be motivated to get off their lazy butts and work, and everything would be better. I am oversimplifying of course, but that is the point I get from him. This, in my opinion, grossly/ridiculously overgeneralizes the poor. Sure, some may be lazy bums. Many others, however, are incapable of doing better for themselves... or are in the process of bettering their situation.
My young family, for example, is poor. We have been poor since we got married. We have steadily improved our income and standard of living, and we will continue to do so, but we are still poor. This is despite our best efforts. I have worked full time (at jobs significantly higher than the minimum wage... which is another issue), been going to school, and all of that stuff. I, and we as a family, have not been lazy. But, you know what, we've enjoyed the assistance of several government agencies and resources.... and I've never once felt bad about it. We've still been poor... but it has certainly helped make things more manageable for us.
So... in conclusion... if you are one of the people I've described above. Open your mind a little bit. You don't have to accept what I say... but at least consider it and understand the other side. Sometimes equal is not always fair. Sorry for the ridiculously long discourse. - Andy
12 comments:
Equal is always fair. It just seems easy to say it won't matter to you as much, because you have lots of money. It might be true, but it is not fair.
FYI- I also am very low income, but I don't want people to be forced to pay for me. It's not right. That's what humanitarian organizations, charities and churches are for. I think people will be alot more willing to donate to these on their own accord, if they are not being ripped off by the government.
As for cutting programs for the poor... many of them breed a culture of laziness. Move to downtown LA and teach school for awhile and see the attitudes developed about education and work by third generation welfare recipients. It's the whole give a man a fish, versus teaching him to fish thing.
Andy, I love you, but I hope you didn't just kill what little blog audience I have. :)
yep... that was my plan. If nothing else, you can always just post some pictures of the boys to bump my thoughts down. :-)
I know we are probably on opposing sides some of the time and everyone has a valid right to their own opinion, but I agree with you whole heartedly on this one.
Like we all know, if we were living a higher law..we all would be taking care of each other anyway.
We all know there are people who abuse the system. They will get their judgment day. The innocent shouldn't have to pay for their sins.
Andy,
Well, said.... I agree with you completely... of course I am apparently the black sheep liberal of the family!(though actually politically independent/unaffiliated and I almost always vote Republican!)...
If you ever want to, we can talk about many additional aspects that support your assessment of taxation and your perspective on the condition of the "poor"... I could refer you to a slew of great books on the subject too...
Like you said, it is important for us to continually challenge our thinking and look at issues from different angles/perspectives... we don't want to be like a frog in the well...!
Thanks for the post...
Jon
When we are living the Higher Law and taking care of each other, it will be by choice... as it should be now. I have no problem with caring for one another. I do have a problem with forcing people to do so. Their hard earned money is theirs, no matter how much they have of it. I believe in people and I think they will CHOOSE to do the right thing with it, but not giving them a choice makes them stingier. At least I feel that way. The higher the taxes, the harder it is to part with money for lets say... fast offerings and in the end which one does more good? I believe the latter.
In my opinion... whether or not these programs should exist is a whole other topic for another day.
In a perfect world, yes, people would give. In the future, that is probably how it will be. However, history shows that the government programs came to be be because the private organizations/churches were unable to meet the need.
As for the culture of poverty argument made earlier, there are books about how that is a false theory. In general, people don't want to accept help and want to fully support themselves. Among my mentally ill clients, most of them would prefer to be able to work and get off of assistance, but are unable to do so. Like Karen said, there are always going to be the abusers, but those are the minority, not the majority. The majority have legitimate needs and require only temporary assistance.
I agree with the fish analogy, and many programs do attempt to teach self sufficiency. In general, they need to make improvements in this area.
As for the taxes... in general, those who pay the higher taxes hardly if at all feel the sting of their higher tax rate. Our taxation is progressive already. And in regards to giving back... the more charity they give, the bigger their tax break, so it seems like this would encourage them to give.
Andy,
Well said... once again I agree completely... I completely understand the comments from "The Bears"--sorry I don't know your name... In the second coming, "when we are living the Higher Law and taking care of each other, it will be by choice"... absolutely... but we don't live in that ideal world now. Capitalism will not be around in the second coming (it will be a Utopian society--united order), but for now we live in an imperfect world with an imperfect system which happens to be the best alternative we have for now. Christ's rule will not be a democracy (rather a perfect theocracy), though for now, in an imperfect world, democracy is our best alternative... eventually this will all fade, so the debate will be moot, but in an imperfect world, where the natural man reigns and is ruled primarily by self interest (hence why capitalism and democracy works), there is a role for government to step in to address the imperfects in the capitalistic market and protect and defend those who cannot protect and defend themselves... are there bad extremes, yes, and I am not for out of control government and huge increases in tax rates, but is there a role for it, absolutely. Are there programs that are ineffective and should be cut... absolutely, but that doesn't mean that you throw the baby out with the bath water. I personally look forward to the day when the righteous will rule and we won't have to worry about things like government corruption and corporate exploitation and such, but in the meantime, we just do the best we can in an imperfect world... my two cents, or maybe three cents...
Wow, Andy..you sure know how to stir up a debate! I make it a habit to stay away from talk of politics and religion with people I don't know well...even the ones I do! I hate contention. I can see both sides of things. Maybe that's why I'm unaffiliated with either of the major political parties and run in the moderate stream. Unfortunately, everything has pros and cons. It's hard to say what the exact process should be for anything. I do not envy those in these offices and am glad I don't make the final decisions!
With every debate, there will be books argueing both sides. I, therefor, can only go off my own experience and that has been the majority on government assistance abusing it.
While I am thankful for programs that teach self sufficiency, I think there are far too many that give handouts with no regulations. They need to be evaluated and done away with if not helping. The solution to every problem is not always to throw more money at it.
In Africa, the livelihoods of many small farmers and artisans are undercut by the charity the United States gives them. Why would people buy from villagers and support their own economy, if a big load of freebies from the US just came in.
While government assistance can be helpful, it can hurt to. More attention needs to be paid to the results.
As far as taxes go, I have no problem if rich people want to pay more. Apparently you have seen some statitistics I have not seen where they all said it was no skin off their back. Just make it voluntary... maybe a box they can check on their forms.
As for a flat tax, I am all for it. We would have more money to spend, because our income would not be dipped into and we would pay taxes on the things we buy. More control over my money. I decide where it goes. Sounds good to me.
You see the majority of people abusing it, because the ones who abuse it are far more visible, and get far more attention who use it the right way (thus stimulating the already huge stereotype). If I didn't mention it, I don't think anyone would think that we have or do receive some sort of assistance.
"The solution to every problem is not always to throw more money at it." It is, however, the solution (or at least a temporary fix) to some problems.
It is not statistics, it is simple math... as demonstrated in the example in my post. People who make less money are (should be) on tight budgets. They get a certain amount each month and it has to go to specific bills and there is generally very little left over. Taxing them at higher rate would only take the little bit of discretionary funds they have left, and probably even dip into the money needed for normal bills/needs. However, richer people (and certainly those over the $250,000 a year benchmark) have more discretionary funds and looser budgets. When I say they won't feel it, it is because if you have $2000 extra (or likely more), being taxed a little extra and having only $1900 extra will clearly not sting as much as someone going from $100 in discretionary money to $50 or $25.
A flat tax, again as demonstrated in the example, would mean that the poorer people would have LESS money... that the government would be dipping MORE into your money and giving you LESS control. As demonstrated... in order to institute a flat tax and maintain the same amount of tax revenue, for every few % the rich people's tax rates went down, it would have to go UP at least 2 to 3 (if not more) times that amount to make up the difference. Increasing the tax amount on the poor, as in the example, would SIGNIFICANTLY cut into the monthly budgets of the poor, if not completely destroy them. Why do the politicians/lobbyists always push flat tax? Because they're the ones who would benefit. The vast majority of Americans would be hurt financially by a flat tax.
So though your desires for less government involvement and more control over your money are certainly admirable and desirable, they are simply not congruent with what the reality of the flat tax would be.
One more thing I'll just throw out there of how the rich would benefit from the flat tax even more... lawyers.... tax representatives.... the rich can afford them and get out of a lot of taxes by finding loopholes, etc. So... if a flat tax was 20%, for example, few if any rich people would pay 20%. However, the poor who cannot afford clever representation would have to pay that 20%... so the flat tax would not be flat at all.
Andy andy andy...
I agree with Bears and with Andy. However, I side more with Andy.
I really don't believe the poor would be sustained if everyone was taking care of each other on their own. If most LDS wards only have 20-40% home teaching visits each month, that leaves a lot of people unaccounted for and unhelped. If that's a standard... how can we expect anyone to take helping others seriously? It's too heavy of a burden to put on the people who would do something about it.
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