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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 6:52PM
absolutely not,no,nodda,start cutting all goverment pay across the board by 20%,next cut aiding foreign countries by 40%,eliminate poliititions fringes at federal and state levels at 50%. This alone,for a few years,will level out.
Jan 16, 2013 6:51PM
The problem with paying more taxes is that it is never used to reduce the deficit, but rather to fund more spending by the Federal government.  We have doubled the food stamp program in the last four years, under Obamacare, medicaid is expanding, we are  still funding many countries with foreign and military aid, we are paying billions in interest on our debt and on and on.  Not one democrat including the president has made any serious proposals to reduce the debt.  Our future is bleak unless this debt crisis is solved.  We will all have to pay our way out including the 47%.  We can start with ironclad deficit reduction measures first.
Jan 16, 2013 6:51PM
If you give the government a raise they will just start another program. The tax payers know best how to spend their hard earned money not the President or Congress. Our President needs to adopt a pay as you go policy. Cut up the credit card !!!!   
Jan 16, 2013 6:49PM
History has proven over and over that if you give a politician a dime, he/she will spend a quarter. The idea that they will reduce spending along with increasing taxes is folly. In other words, In other words, no, we don't trust the politicians and bureaucrats to reduce spending. The California governor just proved it again, with his budget.
Jan 16, 2013 6:48PM
I know it will never happen, but how about this. Every politician  that comes to the State or to DC gets one term, while you are in office you are afforded free Room and Board, meals and a vehicle and medical. when your term is over you go back to your respective life before you served, you get one year of the things you received while you were in office to help you transition back into your private life. No Life time pnsions, medical no becoming a lobbyist, If you can effect change great! if not you go back to your life and you give someone else a shot. I know, I know it will never happen. 
Put all the bums back to work on civic improvement projects to earn their dole.  If they won't work deport them to Africa.
Jan 16, 2013 6:42PM
Heck no we should not pay more taxes. The Government needs to spend less money. A lot less. They should cut welfare for one thing. Actually end welfare all together. There are way too many freeloaders sucking the county dry with welfare. Romney was right to have the guts to call out the 47% of lifetime freeloaders. Actually I think the number he quoted was too small. Get the lazy a**es off the couch and get them to work. even if it is to pick up trash off the streets or pull weeds. They could paint over all of the graffitti that their ****ing spawn has tagged during the night in between car jackings and drive by shootings. They can pay for their durgs, booze and Cadillacs out of their own paychecks and not mine. What does EBT stand for  "Every Body elses Taxes".
Jan 16, 2013 6:42PM
Someone please tell me how can someone that doesn't work can get an income tax and who is the 40% that does not pay taxes? I pay my taxes and the people i know that are unemployed DO NOT pay taxes because they are UNEMPLOYED!!!! They also don't get refund checks at the beginning of the year.
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.
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