Let's talk Taxes... by Aggie Mitchkoski
It's gonna be that time of year again when we need to pay our taxes. All of us are going to be looking for the largest tax return we can get and to minimize what tax we need to pay. I love getting my tax return just like everybody else but, is that a healthy way for us to think? There's a great new book out called Ten Excellent Reasons Not To Hate Taxes. It is a compilation of 16 writers who have written essays about varying reasons why taxes are a good thing and even necessary for a strong democracy.
This is an especially important topic for all of us to pay attention to especially with Carla Howell, an American Libertarian politician. proposing the ending of state income tax in the next election.
"Massachusetts state government spending and taxes have doubled in the last 14 years. Your local taxes doubled to. It's coming out of your paycheck -- and your neighbors paycheck. And being the income tax in Massachusetts will give you and 3 million other taxpayers back an average of over $3600 every year. This $3600 a year increasing your take-home pay check means more family money to spend, save, and invest. And, statewide, it will create hundreds of thousands of new jobs."
This may sound wonderful but I ask you to take $3,600 and buy an education for your children, roads to get yourself to work, firemen and policemen to protect your home. It won't get you very far. This is a very dangerous proposition especially for state workers like us. This is privitization at its utmost. And if we are going to fight this battle next November, we need to be an informed citizenry. We have to understand what taxes do for us and who is paying their fair share and who is not.
This section of the Union Voice is going to be dedicated over the next year to sharing some information about taxes that you may or may not know. It is our hope that armed with some solid information, you will be better equiped to deal with individuals who keep chanting "cut taxes" as if that were a panacea for the troubles of our times. If anything, tax cuts have been the cause of much of the strife we are experiencing today.
Here's a part from the introduction. "Just what do our taxes buy us?for starters, taxes buy us freedom. They buy us civilization. They buy us prosperity. They finance America.it's easy to think that the benefits of living in America are just there for the taking, like the morning sun in the air. This is shallow belief gains currency when an entire generation of Americans has heard from their political leaders won overwhelming message -- elect me, and I will cut your taxes. Hardly anyone has the courage these days to tell you that paying taxes, like eating spinach, is good for you. Or that a diet of tax cuts financed with borrowed money will leave society weakened and burdened with debt."
The first chapter is about progressive and regressive taxes. It gives a thumbnail sketch of the Federal Tax System explaining that our Federal Personal Tax system is basically progressive. The more money you make, the more taxes you pay. The less you make, the less you pay. And if you are poor enough there are exemptions and deductions that relieve the tax burden even more. Of course, in the recent years, the progressive nature of our personal income tax structure has been eroded. Very significant loopholes have been given to the very wealthy. For example, capital gains - income from the sale of stocks and other investments - and dividends are taxed at a much lower rate than income for wages.
It explains that even though we hear almost every day that taxes are the problem for so many of our ills, our tax rate in this country is 29th in an annual survey done of 30 countries. That means 28 other countries had higher tax rates then us and only Mexico was lower than ours. Most of the other developed nations in the survey provided healthcare and higher education as benefits to their citizens.
Social Security and Medicare Taxes are regressive. They burden low-income people more than high income people. This is because payroll taxes, which these are, apply to the first dollar you make. They are also capped so people making more than $94,200 in 2006 do not pay payroll taxes on any amount over that. So high income people pay 2.3% of their pay to these taxes and middle income people pay 10/9% and low-income people pay 8/1% And while this is largest single federal tax we pay, the two programs they finance, Social Security and Medicare, are the two most of us will derive the greatest benefits from.
And then there's corporate income tax. This tax was designed to be highly progressive, the more money corporations make, the more they pay in federal taxes. This has been altered drastically in the 1970s and again in the 1980s. Corporations (with the wealth to hire tax attorneys) have become adept at avoiding taxes even the Alternative Minimum Tax (AMT) that was instituted to make sure corporations at least paid some tax.
President Bush's tax policy has been to cut back the most progressive taxes (i.e. federal estate tax.) In 2007, 37% of the benefits from Bush tax cuts went to the wealthiest 1% of the population, while the poorest 20% received just over 1% of the cuts. All these tax cuts have been the cause of our fiscal crisis. "Adding the $505 billion in interest on teh national debt attributable to the tax cuts over this period, the total cost of the Bush tax cuts will be about $2.36 trillion -- almost all of which will be paid by borrowing."
So, for me, the question is who is asking for these tax cuts? Is Carla Howell worried about the middle and lower income people in this state? Is our Federal tax system courtesy of President Bush looking out for us? It wouldn't appear so.
