This morning I listened to my local NPR station (as usual). There were two joint topics: Occupy Wall Street and tax reform. They were interwoven to some extent. The second topic mostly focused on whether the rich (>$ 250,000 and/or > $1,000,000) should pay a higher percentage of taxes than the middle class and working poor.
See, here’s the problem.
I’m taxed on what I work to earn. My income tax is removed from my pay whether I like it or not, including FICA withholding.
I’m also taxed on what I spend: sales tax (local and state). I get to pay additional taxes on other expenditure like tobacco (if I still smoked), gasoline (for my car, which I primarily use to get to and from my WORK), and other items with import tariffs.
If I choose to save money in a savings account, I am taxed on the interest I’ve earned (this is not an atrocious amount, given that right now my account is earning 0.05% interest).
I pay personal property tax on my car.
About 35% of my gross income disappears into a black hole that I’ll never see again. I have NOT ONCE gotten any of these “tax cuts” that the government keeps talking about. I’ve never been eligible. Year to year, my tax rate (percentage) has increased. I don’t get this money back, and if I do get some tiny fraction of it back, I’m not paid any interest–despite the fact that it’s money the government takes from me to use for other purposes. ‘Scuse me, isn’t that a loan?
If I owned physical land (property), I’d pay taxes on that.
When my parents die, I’ll have to pay taxes on their estate.
If I freelance tutor, I’m supposed to declare that income and pay taxes on it.
IF I RECEIVE A GIFT I’m supposed to pay taxes on it.
And… best of all… you have to declare your INCOME TAX REFUND on the next year’s taxes. That’s right. You’re taxed AGAIN on income you’ve already PAID taxes on.
So, should we increase the taxes on the rich? I honestly can’t say that I think that’s fair. Which is odd. I don’t realistically think I’ll ever BE rich. I don’t earn a million dollars a year and I don’t even earn a TENTH of that. And, oh, yeah… I am a Ph.D. But, no, seriously–it’s simply unfair.
I’m not an economist–and I don’ t want to be. But it seems like the most fair option is a very simple one. Close the loopholes.
I favor a simple, straightforward flat tax. But it won’t work–because “it unfairly targets the poor.”
The logic there is that 10% (or 15%) of a poor person’s income represents a bigger burden to them than it does to someone who’s earning more money.
Simply put–if you earn $10,000 a year, that $1000 affects you more than the $5000 someone earning $50,000 a year would pay. In reality, both hurt. Would someone earning a million dollars notice $10,000 a year in taxes? Maybe and maybe not. But at least I could say that it’s FAIR, even if it sucks.
I try not to complain too much–I support NASA, and the NIH, and the NSF, and other government programs. Some are crucially important (military). I try to pretend my tax dollars are going to those programs I care about even though I know most of it doesn’t. Some programs I’m against–but I have no options there; I’m forced to take the good with the bad. To some extent, that’s okay. It just bothers me that what, about half of my income vanishes into taxes? Didn’t we have a revolutionary war over this type of thing once upon a time?
The tax code is broken. Start by fixing it. CLOSE THE LOOPHOLES.