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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 17, 2013 1:18AM
I am sure I will, I am a white heterosexual male, who is a veteran, I am married with three children and I am a Christian which in the eyes of the establishment places me in the most evil group of people on the planet. So if they can't terminate me then they will try and tax me to death.
Jan 17, 2013 1:06AM
If the government spends then they need to pay for it out of there own pockets, I think we are making the government more richer  and they are getting bigger while we all struggling and trying to survive the taxes every year and cuts from our paychecks! Obama keep spending! I will be out of this country in notime I refuse to pay for this defict you keep adding! stop the spending and start cutting!
Jan 17, 2013 1:06AM

If we are going to have an income tax, then all income from all citizens should be taxed, at the same rate, no deductions.  Simply take it off the top, done, no muss, fuss, or accountant.  10% is plenty.  I prefer the notion of consumption taxes.


A huge percentage of peple these days pay zero, most of them poor or lower middle class.  They consume the highest percentage of entitlement services. 


Next, if we want change that will be lasting, eliminate witholding.  Businesses should not be unpaid tax collectors.  If folks had to write a check every month to the IRS there would be a march on Washington to run these corrupt powermongers out on a rail.



Jan 17, 2013 1:01AM
In my humble opinion, the answer to reducing our national debt is so obvious it amazes me that Congress can't see it:  DRASTICALLY REDUCE THE NUMBER OF ACTIVE MILITARY PERSONNEL AND GIVE THEM JOBS REBUILDING AMERICA'S INFRASTRUCTURE!   Yes, people, give our military something safe and constructive to do right here in this country instead of inhumanely offering them up as human sacrifices to foreign fanaticism and warmongering. 
Jan 17, 2013 12:57AM
We have a graduated tax system that has allowed the rich to get rich fair for at least 12 years. We have a GOP that has increased the size of government as it said it wanted less government. A former President that was the first to go to war without financing it. What we need is yes less spending by  BOTH parties. Using the graduated tax system to put us back on track to reduce the deficit.  If reducing taxes on the rich produces job WHERE THE HECK ARE THEY? This does not work. If you raise the taxes on business the  incentive to not pay more taxes is to increase cost, this would be done by more workers or more staff or higher  pay. After  all taxes are paid after profit not before. we also must cut subsidies to the already rich. We can fix SSI by having the total of your pay be subject to paying SSI and having a cap on what is paid out later. After all if you made millions of dollars for years do you really need to be paid SSI? This may sound like taking it all from the rich but remember we all pay the same rate at the same stage of income.
Jan 17, 2013 12:57AM
The 1st conversation has to be on controlling runaway spending. If they get that right, most people won't be as resistant to higher taxes knowing that their money is being wisely spent. It doesn't matter how much tax is collected if spending is always more than what is being collected.
Jan 17, 2013 12:56AM

You have got to be kidding. I mean, I get that MSN is a huge liberal banner carrier. But seriously? If the people truly knew how much money  our beloved feds confiscate from us there would be blood in the streets tomorrow. The federal government needs to quit

expanding under the pretense of helping those less fortunate when all they are really doing is playing a lethal game of I'll scratch your back if you'll scratch mine just to stay in power. It is so blatantly obvious to anybody but morons. Of course, morons make up the majority part of the Democratic Party.

Jan 17, 2013 12:55AM

To solve the problem ... the feds will tax GAY MARRIEDs double ...

Jan 17, 2013 12:54AM
It's all BUSH'S FAULT ... If Barney "the Queer" Frank and the DEMOCRATs hadn't forced WALL STREET to give out home owner loans to the low lifes that did not have any collateral and could not afford them when "W" was president ... the USA would not be in for crap now.
Jan 17, 2013 12:51AM
It's all Bush's fault ... If the unemployment rate wasn't 4.6% when "W" was president - OBAMA wouldn't look so bad now ...
Jan 17, 2013 12:49AM
If you are reading this forum ... you have too much money at the end of your taxe$ ... and need to be paying more of YOUR FAIR SHARE ...
Jan 17, 2013 12:48AM
Let's look at retirement benefits.  How about all politicians recieve retirement benefits similar to the middle class.  That should relieve the deficit of quite a bit right there.  All of these studies the government funds that make no sense.  Giving money we don't have to other Countries.  This really makes no sense.  I do not have a degree, but I can see corruption.  The Lottery system seems to be flawed as well....the schools were really suppose to benefit but our teachers remain underpaid!  City taxes continuously raised to build new schools.  I see people who make minimum wage.  How are they suppose to live?  Housing, utilities, food, gas to go to their job!  They sit on "Capital Hill", come on down here where real people work.  Let me choose your "middle class" job!
Jan 17, 2013 12:44AM
Sure makes sense. With the number of present taxpayers paying just a wee bit we could eliminate the debt in a fairly short time. Nevertheless the amount that we spend on so-called defense is so extreme that cutting that substantially would not affect the safety of the country. Much of the weapons that we are producing are obsolete anyway.
Jan 17, 2013 12:42AM
In the late 90's, taxes were 20% of GDP and federal budget was 20% of GDP and the budget was balanced.  Then we had the Bush tax cuts and increased spending.  Go back to the taxes we paid then and cut expenses to what they were then, adjusted for inflation. 
Jan 17, 2013 12:37AM
Why doesn't Congress and the rest of the DC politicians start by voting themselves a pay cut and reduction in perks and benefits. Then we can talk.
Jan 17, 2013 12:35AM
If you want to see who is responsible for the debt look in the mirror.  No matter what party you belong to as long as the same people get elected year after year they will continue to do the same things. No one wants to raise taxes except on other people. Everyone wants spending cuts except when it is something they care about. We are all to blame as long as we keep voting them in power. 
Jan 17, 2013 12:35AM
we are paying in more tax's  ,,,, what is the should we part ?  wake up .
Jan 17, 2013 12:33AM

It's time that all the people take a look at our government and the way things are handled.  First thing there needs to be a budget amendment that we have a budget every year that is fully funded with no borrowing, no ear marks in bills, we need to put term limits on Congresspeople and Senators to eliminate the stalemates of political upping on each other.  Get the issues settled timely as in past so we can be looked at by other nations and be PROUD to be an American.

Jan 17, 2013 12:28AM
If anyone believes that paying more taxes will solve our problems needs to go straight to the insane asylum. Obama would just use it to play sata clause for more votes. For most working folks the tax rate is allready over half your wages after you pay income, SS, property, medicare, sales, state & local, gas, dog license and the list goes on and on. What needs to happen is to lock our politicians up and put sane people that dont have an ego to feed in charge. 
Jan 17, 2013 12:28AM
Karen....really?  More taxes on the middle class?  That's your answer?  Wow....unbelievable!  Socialist much?
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