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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 6:33PM
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.
Jan 16, 2013 6:25PM

Everyone is paying more taxes; although we were assured that there would not be a tax increase on the middle class. Anyone who received a paycheck after the first of the year will notice a tax increase. I don’t know about everyone else but one hundred dollars a month is an increase to me, I feel for families who have children to feed. The unfortunate thing is the dishonesty of the president he has proven time after time that you cannot count on his word.  When will the people in our government understand that honesty is the best policy? He will say whatever he is required to get what he wants, and has proven time and time again that he is dishonest and lack integrity.  

Jan 16, 2013 6:25PM
How about this idea ,.. on our tax form there is a check block to donate to the Presidential Campaign , what if we would have one to donate ,let's say $ 5 to a fund to pay off the debt , and only be used to pay off old debt ?  Surely every tax payer could give up $ 5 and then maybe it would slow down this raise taxes issue ??
Jan 16, 2013 6:24PM
If I thought things were equitable and we were all working together, I'd say yes like I used to. But it seems that more money goes out the window or to the needs of foreign influences than to developing our country. So no, not now. I cant trust the government anymore.
Jan 16, 2013 6:24PM
Stop giving the drug addict more free drugs!
Jan 16, 2013 6:23PM

Wouldn't be bad if thats the reason everybody is paying more taxes...

But thats NOT The Reason..

Taxes are going UP for Everybody, rich and oblamo can spend More money...

One of the things oblamo is good SPENDING TAXPAYERS MONEY..

The guy hasn't passed a budget for the last 4 years..?

Jan 16, 2013 6:22PM
Liberals want someone else to pay for all of their great ideas.  Unfunded Federal obligations exceed $100 Trillion!  That is more than twice the net worth of this entire nation.  Think about that.  Take everything from everybody (not just talking income taxes here) and we only have half of what the liberal politicians have promised.  If you think this is merely an oversight, your are sorely mistaken. 
Jan 16, 2013 6:22PM
Our Government has lost their minds.  They are inefficient and wasteful because their job preformance isn't measured by their abiltiy to cut waste.  They want to use every dime allocated to them so that their budget does not get cut and so they can ask for more.  Teh exact opppsite of private business.  So, no one in govenment has any idea how to save money or be more efficient!  And the result is they always spend more than they take in.  They are a cost center that goes over budget every year and get raises and great benifits!  It's insane!
Jan 16, 2013 6:22PM
Simple answer? No. At least not until the Federal Government gets serious about getting spending under control.
Jan 16, 2013 6:21PM

I wouldn't mind paying a bit more in taxes to help reduce the deficit.


But not if Obama is going to spend it on one of his wasteful programs.

Jan 16, 2013 6:19PM
The demorat politicians spent so much of the debt buying votes, they should personally pay on the debt with their estate and apply their pensions toward the debt. Then tax the parasites, call it a 'worthless tax' , the longer on welfare, the higher the tax. Bring back King George and only a tax on tea.
Jan 16, 2013 6:18PM
ALL should pay federal taxes! Otherwise you don't vote. We have reached a point where the lazy and irresponsible have realized they can vote themselves handouts on the backs of future generations and those who actually work hard and pay federal taxes and they know which party will provide this. Maybe just maybe, if everyone had some "skin" in the game and realized that every time they wanted to increase taxes it would cost "them" for a change they might be a little more careful about how that money is spent...We as a nation have subsidized generations of breeders who otherwise would have starved and died out by there own hand or learned to pull themselves up and provide for themselves and then we could truly help those who are elderly or disabled. Instead we subsidize gas, food, phones, rent, ect. to many able bodied people... all so they will vote"D"
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