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 8, 2013 6:36PM
In 71 of the past 82 years, our federal gov has spent more than it's collected.  We have a serious problem in DC that goes way beyond partisan bickering. This immoral, egregious practice of fiscal irresponsibility is unacceptable.  It's about time that we realized that Dems and Repubs are not part of the solution to the problem. They are, in fact, the embodiment of the problem.  It's time to get our fiscal house in order, and to accomplish that, we have get rid of the stranglehold the 2 major parties have over our political process.
Jan 9, 2013 10:08AM
How about spending less.  That's a new idea right.
Jan 8, 2013 5:27PM
If the extra money raised went to paying off the debt then fine. The problem is the more $$ Obama and his crooks have the more they'll spend. Or should i say waste.
Jan 8, 2013 8:01PM
we are paying already plenty, our government has to cut down on waste and the bureaucracy is out of control and overstaffed
Jan 8, 2013 5:57PM
I wouldn't mind paying more if they would quit sending it overseas, and giving it to people who live off the government including the public union workers who retire 16 years earlier than those pf up paying their salaries.
Jan 8, 2013 6:05PM

You don't give an alcholic more alchol and expect them not to drink it and you shouldn't give a politician more money and expect them to do anything else but spend it.


I am with "Someone". Give me a GUARANTEE that the money will go to pay off the debt and that spending will be cut and I will pay extra taxes whether my tax rate goes up or not. Because there is turnover in Congress and the White House, an newly elected politician will have to agree to the contract before they can be sworn into office. Because most politicians on both sides of the isles are crooked as can be, I want to make two things perfectly clear:


1. I am not talking a meanless promise that they break day in and day out. I'm talking about a contract with severe punishment for breaking it (life in prison at Levenworth, exile, death, something serious). I want the promise so iron tight that it would be consider treason at the highest level, a trader to the United States of America. It wouldn't qualify for any type of Presidential pardon or anything else. The day you break it, you are done. No coming back. No appeals. No appologies.


2. This government is so messed up that when the government grows at 2% instead of 4% they call it a cut. Only a politician can spend 2% more than last year and then look you in the face and say they cut spending. So to make myself clear, I am saying a CUT. A real cut. Something with a negative sign on it. It can even be -0.1%. It doesn't have to be a big cut, it just has to be a REAL cut. The only way you can ever increase spending is to lower the tax rates back to my current level or lower. The higher you increase spending, the lower my rate has to go.


You give me that guarantee, I will write a check to the US Government today!

Jan 9, 2013 1:29PM

So as "middle class", we should pay more taxes...

Let's see: 


1.  No bailouts for middle class, only the RICH at GM and Chrysler got them AND multi million dollar bonuses too!

2.  No "shovel ready jobs", yet BILLIONS spent on these phantom positions.

3.  Mortgage companies and banks bailed out with BILLIONS of OUR tax dollars, yet almost NO gov't assistance on mortgage payments, while the execs at AIG got millions in bonuses for doing a bad job.


...Yea, all of that...


  Karen, a little advice:  In this "economic recovery", where UNOFFICIAL UNEMPLOYMENT remains at 27%, the american taxpayer's salary hasn't gone up in an average of 3 years, and these same taxpayers started getting appx 40 bucks less a week take home pay, thanks to your recently re-elected (thanks to the race and class warfare vote),lord and savior Noblaba,


Now is NOT the time to bring up this subject for debate honey...


Just saying...




A dis-satisfied customer and voter...


Jan 8, 2013 8:25PM
I would pay a little more taxes over 5 years if 1) the federal govt, has to reduce its spending by 30% over 5 years and then keep then balance their budget every year. 2) actually give true numbers for inflation, GDP and cost of living and 3) all past presidents, and representatives/govt employees must get the same medicare and more golden parachutes.....oh yes no more life security for all the families or free stamps tired of this. They decided to sign up for public service....for what to rape our country?
Jan 8, 2013 7:06PM
Spending has to be cut.  I cannot buy Keynsian arguments.  No one in Washington, DC has seriously considered spending cuts; only reduced spending in relation to a previous fiscal year?  Then the follow up is a "crisis" budget gap that the media will sell to the public.  No more revenue talk without spending cuts.
Jan 8, 2013 8:19PM

So I should pay for out of control spending so the democrats can seduce illegal hispanics and satisfy their afro american voter base to vote for the party of the ?


The present administration can't manage the fiscal mess they have created.

How about all those 'solons' in the administration propose a budget that is balanced?

The answer is they are too stupid to do so.

Jan 9, 2013 1:04PM
It doesn't matter how much we are taxed until our out of control spending is changed. Only a fool would send money to the government and expect to get it back...EVERYONE should have to pay FEDERAL taxes and it should be a flat rate! That way everyone has some skin in the game. Someday we will have to pay for what the potiticians have given away to buy votes and the only ones thay are able to get thet from will be the responsible people who have worked and saved, then they (Govt) will steal from. That is why they want to take guns away from us instead of addressing the actual problem of personal responsibility or lack of...Government steals $1 for the hardworking puts 60 cents in the congressmans pocket and pays some dimwit govt employee 40 cents to distribute 10cents to some breeder that thinks the govt helps to buy his vote! Yes, that is how you spend $1.10 for every $1.00 you take. The worker or contributor is responsible and too tired from work to have more children, but the breeder whose only goal is to consume more has more children to get more and therefore breed more Democrat voters
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"
Jan 8, 2013 8:05PM

You sum it all up in the comment...."the last federal budget was $3.7 trillion with a deficit of$1.1 trillion", when does spending get under control so working americans can have confidence in their government?  Out of control government is not a good reason to step on the gas.  Also, wouldn't it be prudent to seek an opinion from someone  that is in the  $40-50,000 income range when making statements about who agrees with the issue?  Government and all associated are making so much  more money than the average american it's tragic, and the typical Senator or Congressman is so far out  of  touch with reality they have no ability to make good decisions.  Give the average wage earner a decent income and reduce the unemplyment by 10,000,000 and then control medical, pharmacy, and legal expense and I think you would see the deficit issue go away.

Jan 16, 2013 12:29PM

I have a problem with your assumptions of just paying a 'little' more to help the government out.


How about the fact that 1st - middle class is a guess, no one really knows the number. We all assume that middle class is $50,000. But ask a struggling family of four who are buried in high prices, stagnated wages and oh, more taxes, what they would think.


Let us also not forget that throwing money after bad does not help the problem. First comes "cuts" then comes better management of funds .... then we can talk about asking the average hard working [often struggling] American to pay more in taxes.

Jan 9, 2013 10:10PM
Most of us would have no problem paying more in taxes IF THAT MONEY WERE PUT TO GOOD USE AND NOT WASTED.  First, our gov't needs to prove to the American people that it can be trusted with our money....then we can talk about giving the gov't more money.
Jan 10, 2013 1:04PM
Cut spending in absolute dollars to 2008 levels, then freeze for 5 years.  After that allow to rise by same percentage as gdp rise.  No more phoney baseline budgeting where you want 10% more, but will take 6% and cry that this is a 4% cut in spending.
Jan 8, 2013 6:30PM
The short answer is 'no.'  Most of us don't benefit from huge tax loopholes.  Close those loopholes and we can talk.
Jan 16, 2013 6:14PM
we pay more than enough taxes as it is. how about backing the dollar with something of actual value.
Jan 8, 2013 7:54PM

We do need to pay more taxes but it needs to be a straight tax or a national sales tax. Eliminate FICA and Medicare taxes, they aren't used as a savings account and if you earn more than $113,000 you get to stop paying that particular tax. Nothing will ever get done, the pols just want to buy votes, and collect their outrageous pensions after a very short "career". Get used to being screwed America, the game is too rigged against you.

Jan 8, 2013 5:36PM
In my view, those individuals and organizations who benefited most from the run up in debt over the past 30+ years ought to pay the lion's share of tax increases necessary to pay it down. This means defense contractors, corporate agriculture, mining, oil drilling, and other resource extraction enterprises,  the very well-to-do,  as well as various consultants and contractors who have gotten wealthy off the federal dole. The middle class benefited very little from the borrowing binge over the past 3+ decades. 
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