Did you know that just about half of all citizens in the US do not pay any income tax? April 15th is simply just another Wednesday this year for a lot of people.
There was a fantastic opinion piece in the Wall Street Journal a few days back on how it is bad for democracy to exempt half of the country from paying taxes. Here is an expert from the piece written by Ari Fleischer:
“Picture an upside-down pyramid with its narrow tip at the bottom and its base on top. The only way the pyramid can stand is by spinning fast enough or by having a wide enough tip so it won’t fall down. The federal version of this spinning top is the tax code; the government collects its money almost entirely from the people at the narrow tip and then gives it to the people at the wider side. So long as the pyramid spins, the system can work. If it slows down enough, it falls.
It’s also what’s called redistribution of income, and it is getting out of hand.
A very small number of taxpayers — the 10% of the country that makes more than $92,400 a year — pay 72.4% of the nation’s income taxes. They’re the tip of the triangle that’s supporting virtually everyone and everything. Their burden keeps getting heavier.
In addition to exempting almost 50% of the country from income taxes, today nearly every other social cause is given a loophole — or a preference — in the tax code. Want to buy a hybrid vehicle? You get a tax break. Do you own a solar water heater? You get a credit. Want to give to charity? You get a deduction. Own a house? There’s another tax deduction for you. How about college savings, certain medical costs, and retirement savings? Yes, yes, and of course yes. Did you move, pay alimony, or “provide housing to a Midwestern displaced individual”? More deductions, credits and exemptions there too, if you qualify.”
My question is this… If you get something for free are your more or less likely to be appreciative and cognisant of the sacrifices others have made to provide that item for you? Or are you more likely to appreciate and respect the item if you had to work hard to acquire it? I think the latter.
My view is that ALL AMERICANS SHOULD BE TAXED even if just a little. Some wealth distribution is healthy for any economy, but when it gets to be this out of balance where almost 50% of us pay nothing yet we continue expect to be given things while the country spends money we don’t have and spirals deeper into debt, I think things should be changed.
To answer the question above: Should everyone pay taxes, even kids? The answer in my book is yes.
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{ 11 comments… read them below or add one }
Yo, thanks for that link and info! Def. good to learn more on my side
Absolutely not. Are you honestly suggesting that all people should be taxed just because we can legally tax them? And the purpose of this is to make them more appreciative of what they have? By taking some of what they have away??
No one should pay taxes, ideally. You should keep what you earn and pay for what you take (no handouts, even to the deserving). Since there are some things that can sincerely be called public goods (public defense, state-level education, highways), I accept that taxes are a necessary evil. Still, it is unethical to charge a higher tax rate to those who make more money, expecting them to eat the cost of providing for the poor. But we don't fix that by taxing the poor more, we fix that by taxing everyone less, and at an equal rate.
I made a little self-employment income as a kid – about $30/month from writing my own newspaper and selling it on the counters of stores in my small town. I didn't file taxes on that money, although I now that my irregular income from that (I didn't put out an issue every month, just whenever I felt like it, of course!) probably would have been under the limit for needing to file taxes anyway.
But, I wish my mother had sat me down every year and helped me file tax forms for it, anyway. It would have been a useful lesson, and I always knew in the back of my mind that grownups paid taxes when they made money, so it was probably "wrong" not to be paying taxes on my newspaper's earnings. Filing taxes, or at least seeing the rule that said that you had to make a certain amount to pay taxes, would have put my kid mind at ease.
(It's funny because, now I make a ton of self-employment income and have to pay taxes on it… but my mother covered my tax bill for me this year. How come she didn't do that when I was six?)
Your link led me to a different article. I found Fleischer's piece here: http://online.wsj.com/article/SB12395826042301226…
Her article is interesting and think it might work for there to be no deductions or credits. I just don't like your interpretation of it at all. When you say kids should pay taxes, do you mean income taxes? Even babysitting money is considered taxable income, so technically, they already do. Or do you mean that kids should just pay a flat amount, $1000 per child or something? If so, how are they going to pay for it if they have no income? Instead of doing that, couldn't you just say there's a $1000 per-child tax penalty for parents, since they're the ones who'd pay it anyway?
Also, I'm not sure that Fleischer even meant that children should pay taxes. What she said was "everyone in American [sic] would pay income taxes — everyone" which to me means every wage earner, including illegal immigrants, the poor, and child earners who, like I said, already pay income taxes on their petsitting/lawn-mowing money.
Thanks for catching the bad link. It should be fixed now.
I look at this as an arguement for a flat (more "fair") tax, but honestly I haven't read it in as much detail as Ry.
Hi Kris, I agree with the some of your comment but still think that everyone should be taxed for the necessary cost of basic public goods (your examples of defense, sate-level education, roads, etc). My worry is there is a growing percentage of people in this country that consume basic public goods like everyone else except they do not pay for these goods. Worse yet is that this group often times consumes more than public goods through entitlement programs. If everyone had to pay (aka earn instead of entitled to) more people may become involved in demanding a more frugal and lean government.
The kids part was something that came out of my head. I am hearing more and more "I am entitled to this good or service" and less and less "lets go out and make things better or earn this through hard work and smart ideas". Maybe its because I am reading Atlas Shrugged now, but was thinking when I added kids above that it may be helpful to teach at a young age that earning basic services is better than being given basic services. Too much Thomas Payne for me today maybe.
While I don't agree with taxing children (how do you tax a 5 year old who has no income?) I do agree that we should all be taxed the same amount. We are all using the same good and services provided by our government, and we should all have a vested interest in maintaining these services.
Flat tax makes sense to me… and it could lead to more equitable taxes, not to mention the added insurance of a tax law that is relatively easy to understand. Although a LOT of tax lawyers would be out of business!
Jerry
Couple of problems with this argument. You focus on income tax rather than payroll tax — everyone who works pays tax, but when we file we get different parts of it back (and only parts). Also, have you tried to support a family on a minimum wage job working 40 hours a week? It's actually fairly impossible; as long as we have a minimum wage that does not equal a fair wage, asking everyone to pay taxes takes food off their table. Related to that, the focus on what people pay rather than what people have left after they pay taxes is misleading — if you look at the amount of money that top bracket has remaining (percentage wise, not dollar wise) after taxes compared to the lower income brackets, progressive taxation makes a lot more sense. Someone once explained it to me as: taxing a rich man's yacht and a poor man's dinner. The argument of 'fair taxes' only works when everyone is paid 'fairly' to begin with — i.e. enough that they can work similar hours a week and still pay the bills. Then riches can come from choices people make rather than poverty coming from choices they have no control over.
Ari Fleischer's (George W. Bush's press secretary from 2001 to 2003) argument is a classic case of statistical manipulation. 10% of the popular pays 72.4% of the nation's taxes! Oh no! Could it be because 10% of the population earns 50+% of the nation's wealth? It doesn't seem so bad when you put it in perspective.
While there is something to be said for simplifying the tax code by imposing a flat tax, the concept completely misses the boat from a practical viewpoint. Taxing 15% of a $200,000 income is entirely different from taxing 15% of a $20,000 income. I don't understand how anybody could call that fair and equal when it's absolutely clear (from a practical viewpoint) that the $20K income earner is penalized much more heavily than the $200K income earner.
Ultimately, a graduated tax structure is the only way to go. I believe Bill Gates should pay more taxes than me, both in dollar and percentage terms. He happens to agree.