Sometimes we, by which I mean Americans generally, remind me of the children of successful entrepreneurs. We have been given an awful lot without having to work that hard for it. This warps one’s perspective and creates an awful sense of entitlement.
This article out of USA Today reinforces that notion.
Amid complaints about high taxes and calls for a smaller government, Americans paid their lowest level of taxes last year since Harry Truman’s presidency, a USA TODAY analysis of federal data found.
The cries of “taxed enough already” are echoes of the child who has so damn many toys it’s just such a burden being asked to pick them up. Our prosperity is the result of abundant resources clawed at great effort from the wilderness and native peoples. It is the result of sweatshops, ingenuity, hard work, and thrift. It is the result of the blood, sweat, and tears of our ancestors.
It’s true enough that many of us work fairly hard and have contributed in some measure to the overall bounty. But, I get the sense that our individual efforts are the tip of the iceberg. If we’d been born in, say, Somalia, is there any doubt that a similar level of individual effort would have left any of us far more impoverished than we are in the U.S.?
We need to get our financial house in order. We need to stop sending good money after bad. But, we also need to tone down the incessant whining about the level of taxes in light of the fact that, historically (not to mention comparatively with respect to the rest of the world), they’re pretty low.
You’re right, the argument is incorrect, as our CURRENT tax rate is low compared to what we’re getting.
However, I think everyone understands that someone is going to have to pay the bill when the party is over and other countries get tired of buying our debt.
If we don’t reduce spending AND increase taxes now, we’ll be forced into a situation where we will be forced to do both at a much more drastic level. We’ll be taxed at historic highs and get almost nothing for our tax money, since we’ll be paying off debt just to keep the government buildings from crumbling.
Yes, imagine we’d been born in Somalia. Why, though? Arguments like that are so silly… we WEREN’T born in Somalia.
Imagine you ride a unicorn to work. Why? Because I feel like saying you should.
Your argument is like saying people should relax about getting cancer because life expectancy is much higher now than it was 50 years ago, so we should have some perspective. Reality is harsher than hypotheticals.
You missed my point, J. The purpose of the Somalia thought experiment is a control of sorts, the purpose of which is to distinguish that part of one’s condition attributable to one’s personal effort and that part attributable to the environment into which a person was lucky enough to be born.
Lots of us – myself included to a large extent – like to think we are self-made. Our accomplishments are the product of individual determination. But, the fact is, if we were born into a wilderness, most of us would live stunningly impoverished lives despite putting forth the same, exact level of effort that now leaves us in relative comfort. The conclusion we have to draw from this is that a lot of our relative comfort is the product, not of our individual effort, but to of the society in which we are lucky enough to operate.
It’s not about perspective. It’s about comparing inputs and outputs.
We certainly do have a nasty sense of entitlement. I also agree that tax rates may be lower than they should.
Still:
“Federal, state and local taxes — including income, property, sales and other taxes — consumed 9.2% of all personal income in 2009, the lowest rate since 1950”
That 9.2% figure seems awfully suspect to me. Here in Indiana, we pay 7% sales tax. We also pay a 3.4% state income tax. Therefore, Indiana taxpayers are taxed at 10.4% on our discretinonary spending. It is higher in big population states like Illinois, NY, NJ, California, etc. Yes, housing) is mostly exempt from tax (except for real estate taxes), but can our tax burden, including federal taxes, really be only 9.2%?
Additionally, I don’t think it is fair to take out social security taxes in the comparison. If we had Social Security in 1950 (we did), why do we not compare the 3% rate (capped at $3,000 in income) in 1950 to the
present 15.3%?
My last quibble is that I would like to see the estimate broken down by income bracket. Due to the lowering of the top income tax rate, it is very possible that our current taxation is regressive, which means that the majority of people saying they are taxed enough already might have a reasonable claim.
Unicorns are mythical beasts. Somalia is by all accounts of which I am aware, a region, if not quite a nation. Short of some major progress in genetic modification, you’ll never ride a unicorn to work. Screw up the environment, economy, and society badly enough, the Somalia scenario is a real possibility.
Adjusted to take into account future taxes based on our unsustainable debt binge, tax freedom day is in late May:
http://www.taxfoundation.org/taxfreedomday/
Is it really the case that a 40%+ average tax burden is too light? Other, non-federal countries have a lower top line tax burden but we make up for it in larger tax bites at lower levels of government.
TMLutas,
My point is that taxes should be this:
(amount spent by the government) + (payment towards debt that gets us debt-free in 30 years) / population of US = tax per person average
If you think taxes are too high right now, I’m not going to debate that, but you’ll have to show how we can cut enough items to achieve the formula above.
I’m not a fan of editing the constitution lightly, but I do think that an amendment that requires a balanced budget should be passed. Before any new law can be passed, that taxes that will pay for it must be taxed.
Again, the level of taxation vs public services is a separate one to the idea that we can’t be the “world’s greatest superpower” while also being the “world’s largest borrower of money”.
And you’d have to be dumber than the writers at USA Today to actually believe it. I was going to take the time to debunk it, but Daniel Rothschield at Sometimes Right has already done a reasonable job.
Please check here: http://sometimesright.com/2010/05/usatoday-low-tax/
In short, if you’re not counting state and local taxes, fees, our burden of corporate taxes, and considering the deficit, you’re not getting anywhere close to an accurate picture of our current and future tax burden.
I am one of the people that’s Taxed Enough Already. If you don’t think you are, then I’ll happily let you pay mine.
I don’t usually look for worthwhile economic analysis from USA Today – unkindly known as ‘My Weekly Reader’ for grown ups.
Looking over the article, I still don’t – and I don’t find that description as unkind as I used to…
So, historically, how does today compare to other periods of American history in terms of taxation as a percentage of income?
Doug, let’s use GDP, which is probably the better statistic. Part of your answer can be found here…. http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=205. The answer appears that it has not moved much at all.
As you may note, the graph above only discusses the federal component. As you might be able to guess from hearing about all of the states with budget issues (California, Michigan, Illinois, New York, New Jersey, etc.), state and local taxation is rising as well, and has been on an upward trend since WW II. In 1945, state taxation was about 5% of GDP, now it is about 10%, that change is much more significant (but vastly overlooked in decision making) than the federal change.
Interesting. I’m all for state and local government being a higher percentage of the overall tax burden because I feel like we get more out of our tax dollars at that level, but that should probably come with a reduction in federal spending. Another factor to consider is what percentage of federal taxes are going toward servicing the interest on the federal debt – tax dollar spent for which we are not receiving a present benefit.
So, what’s your point, Doug? That in order to erase the general sense of entitlement, we need to better fund our entitlement programs by hiking the tax burden?
Yeah, that would show us.
Mike, it would show us what these programs actually cost. Maybe once we’re paying the full bill instead of putting it on the credit card, we’ll decide that some programs need to go away.
Doug, great comment about keeping taxes local. I wholeheartedly agree.
While the debt is approaching very high levels of GDP, in today’s low interest rate environment, the amount of interest (as a percentage of GDP) being paid on the debt may not be as high as we paid in the 1980’s. I have not found any websites providing such information though.
I am not convinced that the present day tax rage is necessarily a function of ‘amount owed’ by any individual. Rather, it is more likely a manifestation of tax distribution that has so many individuals at odds with our system and representatives. Despite the beautifully choreographed campaigns that are waged and the fairly operated processes by which our two choices are made for us, genuine grass roots opposition is building because a significant percentage of the electorate does not feel they have any representation in how tax dollars are actually spent. Some of this has been touched on in posts above this one, but for clarity, please allow me to elaborate.
Those who clamor about the amount of their taxes are maybe not so fixated on the number of dollars they pay; but perhaps on the share they pay and the manner in which those dollars are spent. I am sure I could argue that most, if not all of those who feel they are ‘Taxed Enough Already’ would gladly sacrifice even more IF they had a very solid belief that they were only paying a fair amount compared to their fellow citizens and that their dollars would absolutely reverse the wasteful trend of the past 40 years. My personal belief is that most, myself included, would be eagerly willing to pay even more if they felt that they were actually contributing to eliminate waste, debt, and entitlement abuse. If everyone were carrying their share of the burden and all felt that the course was correct, we wouldn’t be having this conversation because we would all be busy making it happen. I have no doubts about that.
The practical among us, however, know that; A)overwhelming debt burden and entitlement spending is not going to change so long as the two parties who share power can only achieve office by promising free shit to the masses and B)as long as those two parties are the only choices, nothing will change in the present commercial/political/celebrity environment. The productive can no longer chose D or R for there to be a course correction of this ship of state. Since all that won’t fit on a sign, “Taxed Enough Already” will have to suffice.
You’re right, Brad; if we all just agreed on everything it would be easier to govern.
In the meantime, though, I don’t trust you guys any more than I do the Republican or Democratic parties.
Because, to begin with, I’ve watched this attitude for almost fifty years now, and if it isn’t aligned with the Republican party it’s been doing a pretty good impression. Oddly, when Reagan quadrupled the national debt after using it as a platform for sixteen years, I don’t recall any tax protesters. When Bush II wrecked the economy–with a notable assist from the Smaller Government/Less Regulation philosophy–and incurred record deficits, I don’t remember seeing a lot of people playing dress-up revolutionary. It’s always “entitlements”; it’s never how much we spend on NASA, or why we need a dozen aircraft carriers, or how much interest on the Debt we pay for high-tech weapons systems in search of a mission.
(Similarly, from my little perch in Marion county, it’s interesting how the Grassroots Property Tax Outrage ended right when Mitch Daniels’ major rival lost the mayoral race, not when taxes came down or the problem was solved for all-time by Constitutional amendment. It’s also curious how a 1% cap turned out to be precisely the level of taxation the protesters imagine to be fair.)
Y’know, Alan Watts once asked, “Where does your fist go when you open your hand?” Fist is an action disguised as a noun. When I pry open the fist of Tax Outrage I don’t find a genuine concern over paying one’s fair share for a just and forward-looking society, and I don’t find a steely-eyed look at the real causes of deficit spending. I find the same old partisan politics of the last fifty years in a new dress it thinks fools everyone. When y’all’ve got specific solutions I’ll listen. In the meantime I can think up the problems on my own.
Thanks to Doghouse Riley for his factual rant nailing partisan politics. I am still waiting for Democrats to complain about the tyranny of the Obama administration, and their plans to increase it.