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:
The 7.7 million in "donations" to pay down the debt, if my math is correct, amounts to about .0000475%. Imagine somebody leaves a $100 bar tab unpaid...and further imagine the next 10,000 patrons "chipping in" at this percentage to pay it off...in the aggregate, they would muster less than $0.50 towards the bill! Such benevolence will get us nowhere fast and as other commenters point out, the only solution is to drastically curtail spending.
you stupid the answer is tough. No politician will ever win on the cuts that have to be made. Romney said it with the 47% remark. There are tough cuts to be made and it is no one's fault but the citizens themselves. We vote them in! Get the politician out there that will run on cutting: medicare, Social security, and the free hand outs........ let's see how many votes he'll get.. We are a deadbeat nation... or should I say 2 generations.. SS was adopted in 1935, (fricking ponzi scheme now) and Medicare in 65. I've paid into all my life like most and where is my money???? gone? Ponzi scheme. It's time we own up and take care of bussiness
Grow up, Americans! We need to pay for those wars and we need to pay for our infrastructure.
Everyone wants things to improve magically. Sorry, no magic. We need to pay our fair share -- more taxes -- until we catch up with the grave losses of those ridiculous wars -- especially Iraq. Really, did no one in the Bush admin. study on the situation? Those are tribal countries who will never be democracies . . . and if they do, it will be an organic change, not one imposed upon them by a foreign power.
If you are a patriotic American, you will understand that a slight increase in taxes is our only righteous path. A small amount won't kill you, but it will help our country enormously. This is the first time in history that we've never paid for war, and indeed, by Bush/Cheney ,asked to pretend it wasn't happening.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
Different financial situations call for different credit cards. Here's how to know if a card is right -- or wrong -- for you.
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'