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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 7:20PM
I find it funny how people blame dems when it was the repubs who still have not paid for two wars they backed but did not pay for so if you want to blame a party blame Bush, do you realize Bush deficit spending was like 5.7 trillion compared to Obama's 1.6, Also you want to cut food stamps but how about subsidies for big oil and farmers and the fact that people like MItt pay a smaller % of taxes than middle class. That is not to mention foreign aid to places like China and Africa. So for you dumb a$$ repubs lets see you deny and spin this as everybody else's fault but yours, even though we are still paying for two wars that were unnecessary at best!
Jan 16, 2013 7:19PM
what we need is everyone to pay their share.  there are to many people that are not paying anything.
Jan 16, 2013 7:17PM
Maybe Queen Obama should stop wasting our tax dollars by jetting around the world on airforce one shopping.
Jan 16, 2013 7:15PM

Food for thought!  A couple of states have figured it out.  Legalize and place the same taxes on Cannabis, maybe more taxes, then we have on alcohol.  Keep the two separate thereby creating, another agricultural crop, both large & small distribution businesses, construction to build/remodel space for sales, jobs, even government agencies to police and monitor these business’ etc..  Most likely would reduce the amount of illegal smuggling of Cannabis into our country by drug cartels/lords.  In fact why give all that money to the drug cartels when we could keep it in this country.  I don’t think Cannabis is going away anytime soon, alcohol never did. 

Jan 16, 2013 7:12PM
Regardless of how much money the Fed takes in the Government is still going to spend every dime of it plus a Trillion Dollars more every flippin year...It's a lot easier to spend the tax payers money than it is to be responsible with it.
Jan 16, 2013 7:11PM
Please don't kid yourselves They will Tax more&more. They feed like pigs and no one can or will stop them.Look at the last Election. The Public electoral &popular vote went for it.
Jan 16, 2013 7:10PM
reduce spending        we are very wastful
Jan 16, 2013 7:09PM
I am not opposed to higher taxes when absolutely necessary if the government is acting fiscally responsible.  If we don't stop with the "give aways" in this country we are in for total ruin.  By "give aways" I don't mean Social Security & Medicare as the recipients of those programs paid for them throughout their entire working career.  I am talking about 3rd & 4th generation welfare recipients, free cell phones, food stamps for illegal aliens,  etc. etc. etc.  We need to get the dam Democrats out of office. 
Jan 16, 2013 7:09PM
I think we need to expand the tax base rather than raise tax rates.  A small national sales tax on consumer goods (not including food or health care) would tax everyone and be a lot more fair than the current class warfare/tax the rich mentality.  Also, it would generate tax revenue from people who currently have income that is not reported.
Jan 16, 2013 7:09PM
This nation will be judged on how it treats the poor and the elderly.
Jan 16, 2013 7:09PM

There is no amount of taxation that will cover the debts of this out of control Government, which has run up such a massive debt that it can only be paid through inflation.


By paying more taxes, we only delay the day of reckoning.  Let's have it now - tighten our belts and hope for the best.  NO MORE TAXATION!

Jan 16, 2013 7:07PM
Paying more taxes is like putting gas on a fire in the hopes it will put it out. The problem is the bleeding hearts want to just give all our money away and care more for animals and nature than humans. Liberals and over population are the two biggest problems both equally as bad and both are motivated with the best of intentions.
Jan 16, 2013 7:06PM
I've said it before:  eliminate all taxes and deductions, then add one single flat tax on income of 15 to 20 percent.  Phase out Social Security and go to private accounts.  Reduce government to its basic responsibilities.
Jan 16, 2013 7:06PM
It is not should we all pay more taxes,it is we all will pay more taxes! Our elected federal government has squandered taxpayer money for more than 40 years extending the reach and size of federal government by spending more than taxpayers can or want to afford.Our elected government confabulated wants into absolute needs to get re-elected and we voters colluded with the something for nothing "government money" charade as long as somebody ANYBODY else ie the rich,the young,business,banks,big oil...foot the bill.
Jan 16, 2013 7:06PM
The government spends the govenment pays for all there own debt!
Jan 16, 2013 7:04PM
why Obama don't stop all big money VACATIONS that he take and the WIFE TOOOOOOOOOOOOOO
Jan 16, 2013 7:04PM
I think all the bush and Obama tax cuts should be phased out over five years with the exception of the marriage penalty fix.   The reason that was there was because otherwise marriage is discouraged.    In addition the percentage of income subject to social security tax should increase at five percent over inflation indefinitely.       We were fine until all the discounts happened and the percentage of income subject to social security tax fell below 90%.     
Jan 16, 2013 7:03PM
Our constitution and our court system is based upon "equal justice under the law".  Okay, how about equal tax rates under the law...FOR everyone.  Rich, poor, middle class, etc.  If everyone has a chip in the game, then everyone cares a little more.  Right now we have 50% of the freeloaders in this country paying ZERO.

Flat tax on all income.

Jan 16, 2013 7:01PM
I wouldn't mind paying a little more in taxes if our Govt and current administration made significant spending cuts.  For every dollar they raise taxes, I'd like to see a $5 dollar reduction in federal spending.  We can start with Foreign aid.  Billions of dollars we send overseas to other countries while we have millions of homeless, whom may are Vets and served their  The current Adminstration will spend us into financial ruin, Obama is an empty suit, plain and simple.
Jan 16, 2013 7:00PM
How about anyone who thinks they're paying too little go to and donate what they think they should.. and the rest of us keep trying to make ends meet.

Government spending should be drastically reduced.. if not totally eliminated

I require no governing

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