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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?

By Karen Datko Jan 8, 2013 4:22PM

Image: Taxes (© Thinkstock/SuperStock)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:

Jan 16, 2013 6:41PM
I'm middle class...I pay enough taxes, this article conveniently touches only on Federal Income Taxes, SS and Medicare. I also pay federal taxes on alcohol, gasoline, phone, investments and other items as well as paying property taxes, state taxes and sales tax to name a few. I think Government as a whole has figured out how to tax enough. They don't seem to know how to cut spending which is the first thing an American family does when faced with a financial crisis. They sit down at the dinner table and figure out what they can cut back on. Possibly modify Congress' pay to a lower base salary with a bonus if they keep the fiscal budget in the black. I'm sure it was missed by many during the heat of the fiscal cliff but Congress voted themselves in another raise. Nice Job a$$clowns. 
Jan 16, 2013 6:41PM
Why would we want to give the very people who got us into this mess more money?
Stars, and the rich from other methods should pay a lot more instead of giving each other three hundred thousand dollar  cars just because they can.
Jan 16, 2013 6:39PM
I have always maintained the problem is revenue not expenditure.  Politicians are more than willing to vote for measures that cost money and just as willing to vote for measures to reduce revenue.  Cowards all; perpetually trying to buy votes, perpetually unwilling to pick up the tab.
Jan 16, 2013 6:39PM
Let them take a big pay cut they make way to much money doing nothing
Jan 16, 2013 6:38PM
No, not all should pay, just the author of this article Karen Datko.
Jan 16, 2013 6:37PM

Paying more in taxes only feeds the monster to become a bigger monster.

It used to be said that limited $$funds was the only thing that could keep government spending in check - but the last 8 years have proved that wrong - government spending just keeps going up whether they have they income or not.

And I don't believe for a second that overall taxes are less now than years ago.  When you consider:

 - state tax increases

 - sales tax increases (CA just raised it to 9%.  Used to be 2-3% in the1950 - 60's.)

 - more states now charging state and sales taxes than ever before.

 - new business taxes

 - new business fees

 - new personal fees charged by government agencies - such DMV vehicle registration fees, court costs added to traffic tickets to name just a few  (fees are taxes)

 - Costs of inflation that automatically increase taxes - such as Sales taxes, Property taxes and personal property taxes which same states charge on vehicles and boats.


Where will it all end?  Seems like we could be paying 100% of our income in taxes and it still will not be enough.  Government HAS to treat it's own operations like a business - where if you do not have the income to support your costs you go out of business.  It is their spending which is out of control and we should not have to try to continue to fund their wastefulness.

Jan 16, 2013 6:36PM
Sometimes I wonder if the individual's who write these articles have any concept of basic math.  I have "X" number of dollars coming in.  If you take money out, then I have less to spend.  If I spend less, the economy slows down even further than the crawl it is already at.  Slower economy means fewer jobs which means less tax money coming in.  It's basic economics.  You can't keep taking money away from people who earn and spend and then act surprised when the economy stalls out.  You can't expect the "middle-class" (whatever definition you're using) to continue to bleed money to the government.  Eventually, the money well will run dry.
Hell no....we are tax poor right now ........geeeeee
Jan 16, 2013 6:34PM

Do any of these surveys take into consideration all of the hidden taxes that are paid by the middle class. I received an auto insurance bill today with a mandatory ten dollar surcharge from the state.

How much more does a person pay for cigarettes, gas, and other overly taxed items that weren't so heavily taxed twenty years ago.  How about all of the added fees for licensing and permits that are passed along in higher retail costs. I can't even imagine how many taxes we pay and don't even realize we are paying them. Any one who believes we should give a little more to the government should take a look at the per diems and all the other perks they give themselves.

I own a business in the socialist state of New York and I am making less money.  Am I supposed to feel sorry for the congress that just got a raise because they haven't had one since 2009.

Jackie Chan was right on the mark.

Jan 16, 2013 6:34PM
Just flat out poor fiscal management. Why should we bail out the people who made these decisions. How about we get the Senators, Congressmen, Presidents and CEO's of companies like Enron, AIG, GM, Bank of America, Citibank, etc, etc, etc. to bail out the federal debt; after all they are the most complicent in creating it. Why Mr. Obama stopped the mandatory work for welfare is beyond me. Why should I be responsible for such poor fiscal decisions. If these folks pay was directly attached to their financial decisions perhaps they would exercise greaterr care and responsibility for the choices that they make much like the middle class does every day of their lives. Do away with the handouts and people become more productive ...period. A person receiving "free" money gets use to being unprtoductive.
Jan 16, 2013 6:33PM
For the last 38 years I have worked and I have paid my taxes, I have paid into SS and I have no real problem with that except fot the fact that when it is time for me to retire will there be any left for me? I keep pushing back my hopeful retirement date because I have other obligation I have to pay ( my daughter's schooling) I watch people that live on the Gov't Dime manipulate the system and teach their children to do the same, our Gov't also gives money to foreign countries that take our aid and spit in our face. We have our own legislator that have been caught not paying or cheating with no repercussions what so ever. I think it would be only fair if the individual that get Gov't assist have a portion taken out and given back to the Gov't as a tax, it simply amazes me that when I was unemployed ( 4 months) I got unemployment benefits that I have been paying into for all these years at the end of the year I had pay income tax on it. If you try to do the right thing you get penalized if you manipulate the system you are rewarded, What's wrong with this picture?
Jan 16, 2013 6:32PM
No, Teflon O'Bama and his administration did the spending-send him the bill...
we should all pay 50%  we need to take care of  the black man in this country  long live the negros
Jan 16, 2013 6:31PM

Why shouldn't we be asked to pay a litle more? Simple answer, the federal gov't isn't responsible witrh what we give them already why would they be with more money/ absolutely not! If congress wouldn't agree to  funding wars and bailing out greedy bankers we wouldn't be in this mess. The gov't spending is the problem, let them pay more! This is BS, just a story to make us feel guilty so we'll agree to give you greedy s.o.b.s more money, shame on you!!

Jan 16, 2013 6:30PM
I'll pay more,...........when I see the spending cuts and shrinkage of the federal government FIRST. And not until then. 

Our politicians never ever seem to get around to cutting the wasteful and unnecessary  spending after taxes are increased.  Its always been this way and will probably never change.  Politicians, for the most part, are whores and liars.  And, that's a compliment.
Jan 16, 2013 6:29PM
What is middle class these days?  In California, a family of four making $50,000 is barely enough to rent a 2 bedroom apartment these days. 
Jan 16, 2013 6:28PM
As long as the rich, like Romney, can legally get away with paying less than 25% of their income in taxes, the middle class should pay nothing in taxes.

Tap the rich first, then, and only then, ask the rest of us to pay more taxes.

you got to be kidding? please someone tell me they are kidding.  When you have two people working and you pay more in federal tax that one of those makes, something is wrong..... Literally I am working only to pay federal tax. May I suggest that the 1) quite giving tax refunds to people that don't work or don't pay any taxes. 2) bring our military come home 3) cut foreign aid and other "grant" type programs.  If they government was as accountable as you and I have to be regarding our money, we would not be trillions of dollars in debt.  When are we going to make them accountable?
Jan 16, 2013 6:26PM
In  order to fix  the bureacrats ALL people must have SKIN in the game. We need a Constitution Amendment that sets a flat Federal Income Tax. Period.
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