Should we all pay more taxes?
Would it be wrong to expect the middle class to pay higher taxes to help reduce the federal debt?
If I had a dollar for each time I've heard someone say that we're burdening our kids and grandkids with a huge federal debt -- Rick Santelli's recent rant about "all kids left behind" should count for a lot -- I'd happily give that money to the U.S. Treasury.
I'd be in good company. Last year righteous Americans donated a record $7.7 million -- over and above their tax bills -- to cut the nation's debt, CNN says.
It could use some help. With the federal debt at $16.4 trillion, the Congress has racked up a big stack of IOUs, which means we all owe this. You may disagree about how essential it is to reduce this large amount immediately, but we can all agree that the interest on the debt -- $220 billion in 2012, says U.S. News & World Report -- could be better spent elsewhere.
For whatever reason -- lack of political will is at or near the top of the list -- the president and Congress decided as part of the so-called fiscal cliff pact to raise income and investment taxes only on those making more than $400,000. (I'm not counting the 2% increase for payroll taxes for Social Security, which nearly every worker will pay. It was generally understood that the payroll tax holiday was a temporary stimulus measure that would end.)
Now President Barack Obama is talking about closing tax loopholes that favor the wealthy, as the next phony crisis -- votes on raising the debt ceiling and automatic and drastic spending cuts put off by the fiscal cliff deal -- approaches. Others believe the solution should be drastically shrinking the size of government.
Now, if you read personal finance blogs, you know that reduced spending is only part of the solution for restoring fiscal sanity in a household overwhelmed by debt. The other half is raising revenue. And that's where all the rest of us come in. Wouldn't a modest tax increase on the middle class -- not just the wealthy -- help the country? Surely more households could be taxed a little more without triggering another recession.
The idea surfaces from time to time but is hardly heard above the din of so many complaining about their tax burden.
"But in fact, most Americans in 2010 paid far less in total taxes -- federal, state and local -- than they would have paid 30 years ago," reported The New York Times in late November. "According to an analysis by (the Times), the combination of all income taxes, sales taxes and property taxes took a smaller share of their income than it took from households with the same inflation-adjusted income in 1980."
Since 1980, state and local taxes increased while federal income tax rates declined. If it doesn't feel that way to some old-timers, there's a reason. Adds The Times, "The average American in 2010 paid 30% more of income in payroll taxes (for Social Security and Medicare) than in 1980, even while paying 27% less in federal income taxes."
The Times says that those making more than $200,000 a year were the biggest beneficiaries of federal tax cuts over the years. But others with lower incomes also gained, so isn't it fair that more of us should pony up now?
Among those who agree are:
- New York City Mayor Michael Bloomberg, who suggested in 2011 that the Bush tax cuts be allowed to expire across the board.
- Former U.S. Senator (and NBA star) Bill Bradley, who said last summer on CNN, "The deficit is one problem (we face) -- and that requires taxes on a lot of people, not just the wealthy."
- Wrote David Callahan, a senior fellow at Demos, at the end of November:
"Only 13% of voters earlier this month agreed that income taxes should go up for everyone, according to exit polls. And only 33% agreed that taxes should be raised to help tackle the deficit.
"Now, it would be one thing if all these Americans against higher taxes also wanted to see spending cuts. But, of course, that is not the case."
He proposed that all the Bush tax cuts be allowed to lapse on Dec. 31. Then Congress could vote to extend them for other than the rich only long enough to get through the economic recovery.
If the Bush tax cuts had been allowed to expire for everyone, that would have raised federal revenue by $4 trillion over 10 years. The last federal budget was $3.7 trillion, with a deficit of $1.1 trillion. Letting the Bush tax cuts die would have helped fill the gap that's now being paid for with borrowed money.
What do you think? Should middle-class taxpayers share more of the tax burden -- now or in the future, once the economy is more robust? Why shouldn't they be asked to pay a little more? I'm reminded of a comment I once read about how paying taxes used to be considered a duty, a responsibility -- a privilege, in fact.
More on MSN Money:
You don't give an alcholic more alchol and expect them not to drink it and you shouldn't give a politician more money and expect them to do anything else but spend it.
I am with "Someone". Give me a GUARANTEE that the money will go to pay off the debt and that spending will be cut and I will pay extra taxes whether my tax rate goes up or not. Because there is turnover in Congress and the White House, an newly elected politician will have to agree to the contract before they can be sworn into office. Because most politicians on both sides of the isles are crooked as can be, I want to make two things perfectly clear:
1. I am not talking a meanless promise that they break day in and day out. I'm talking about a contract with severe punishment for breaking it (life in prison at Levenworth, exile, death, something serious). I want the promise so iron tight that it would be consider treason at the highest level, a trader to the United States of America. It wouldn't qualify for any type of Presidential pardon or anything else. The day you break it, you are done. No coming back. No appeals. No appologies.
2. This government is so messed up that when the government grows at 2% instead of 4% they call it a cut. Only a politician can spend 2% more than last year and then look you in the face and say they cut spending. So to make myself clear, I am saying a CUT. A real cut. Something with a negative sign on it. It can even be -0.1%. It doesn't have to be a big cut, it just has to be a REAL cut. The only way you can ever increase spending is to lower the tax rates back to my current level or lower. The higher you increase spending, the lower my rate has to go.
You give me that guarantee, I will write a check to the US Government today!
So as "middle class", we should pay more taxes...
1. No bailouts for middle class, only the RICH at GM and Chrysler got them AND multi million dollar bonuses too!
2. No "shovel ready jobs", yet BILLIONS spent on these phantom positions.
3. Mortgage companies and banks bailed out with BILLIONS of OUR tax dollars, yet almost NO gov't assistance on mortgage payments, while the execs at AIG got millions in bonuses for doing a bad job.
...Yea, all of that...
Karen, a little advice: In this "economic recovery", where UNOFFICIAL UNEMPLOYMENT remains at 27%, the american taxpayer's salary hasn't gone up in an average of 3 years, and these same taxpayers started getting appx 40 bucks less a week take home pay, thanks to your recently re-elected (thanks to the race and class warfare vote),lord and savior Noblaba,
Now is NOT the time to bring up this subject for debate honey...
A dis-satisfied customer and voter...
So I should pay for out of control spending so the democrats can seduce illegal hispanics and satisfy their afro american voter base to vote for the party of the ?
The present administration can't manage the fiscal mess they have created.
How about all those 'solons' in the administration propose a budget that is balanced?
The answer is they are too stupid to do so.
You sum it all up in the comment...."the last federal budget was $3.7 trillion with a deficit of$1.1 trillion", when does spending get under control so working americans can have confidence in their government? Out of control government is not a good reason to step on the gas. Also, wouldn't it be prudent to seek an opinion from someone that is in the $40-50,000 income range when making statements about who agrees with the issue? Government and all associated are making so much more money than the average american it's tragic, and the typical Senator or Congressman is so far out of touch with reality they have no ability to make good decisions. Give the average wage earner a decent income and reduce the unemplyment by 10,000,000 and then control medical, pharmacy, and legal expense and I think you would see the deficit issue go away.
I have a problem with your assumptions of just paying a 'little' more to help the government out.
How about the fact that 1st - middle class is a guess, no one really knows the number. We all assume that middle class is $50,000. But ask a struggling family of four who are buried in high prices, stagnated wages and oh, more taxes, what they would think.
Let us also not forget that throwing money after bad does not help the problem. First comes "cuts" then comes better management of funds .... then we can talk about asking the average hard working [often struggling] American to pay more in taxes.
We do need to pay more taxes but it needs to be a straight tax or a national sales tax. Eliminate FICA and Medicare taxes, they aren't used as a savings account and if you earn more than $113,000 you get to stop paying that particular tax. Nothing will ever get done, the pols just want to buy votes, and collect their outrageous pensions after a very short "career". Get used to being screwed America, the game is too rigged against you.
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