How Much Do Taxes Matter To You?

Susan writes in:

I feel so helpless as a taxpayer, watching the ridiculous directions the senate, house and president are taking my country. Being self-employed, in the medical field and living in NY I feel like I have three strikes against me. As Emma Goldman, the famous communist said, “If voting changed anything, it would be illegal.” I am seriously considering relocating to my home state of Indiana, where Gov. McConnell seems to be making some very fiscally responsible decisions. I am, however, 58, and moving seems to be more of an issue than is was at 20. What sort of feedback do you get from other taxpayers?

Personally, I agree with Susan to a certain extent. However, my interest is mostly in local taxes, to tell the truth. I’m worried about roads. I’m worried about our local fire department. I just tend to focus locally on most of this stuff, without as much concern on the national level.

I’ll be honest: I get next to no feedback at all when it comes to taxes. On the occasions when I do get feedback about taxes, it’s usually in a form described by Susan – they’re angry at the government’s use of their taxpayer dollars.

In truth, taxes are where the rubber meets the road in terms of politics and personal finance. Without tax dollars, the government cannot run.

Few would argue that there aren’t benefits from our tax dollars. Tax dollars pay for roads, bridges, fire departments, and many other services that we simply take for granted every day.

Most would argue that some aspect of their tax dollars’ use doesn’t please them, too. There are endless arguments about public and private funding of various services that people use, and these arguments have been around since nearly the dawn of time.

But when push comes to shove and the tax bill comes due, it’s not looked at as a political issue for most people. Taxes are a bill that need to be paid – and it’s worthwhile to minimize that bill. People seek out tax deductions that are available for them, plan around tax-free holidays, and seek out ways to make purchases that avoid sales tax.

To put it simply, taxes are a personal finance matter for most people, not a political matter. They aren’t worried about where their tax dollars are going as much as they are concerned about minimizing how many dollars they pay out without getting in trouble.

Why is this? I think that for many people, the connection between going to the local polling place to vote and their wallet is too tenuous. Obviously, it exists, but for the most part, the thought processes that go into deciding who to vote for and the thought processes that go into voting are distinct. When they do overlap, it’s usually by people who see it as their goal to minimize taxation at the expense of provided services. That’s why you see tax protests but rarely see people advocating paying more taxes.

Is that a healthy solution? I’m not really qualified to say, but I do think it is a natural solution. It’s much easier to look at things from the perspective of “how does this affect me” than “how does this affect the world” when dealing with the affairs of everyday life, like paying taxes. Given the complexity of modern life, it seems that the political side of taxes is mostly focused on by people who are passionate about politics and largely ignored by people who aren’t similarly passionate.

I look at it much like I do environmentalism. Humanity’s impact on the environment is constantly in our face, from weather changes to trash along the side of the road. For some people, this lights them on fire and they focus intently on reducing their carbon footprint and minimizing their waste. For others? It’s basically a problem that doesn’t fill them with passion and they don’t worry about it too much in their day to day lives. Sure, if there’s something simple to be done, they’ll do it, but they’re not going to start living ultra-green to do it.

I think this is largely driven by the media. A few years ago, being green was “cool” and lots of people were focusing on the environment. Now, frugality seems to be “cool” (at least to some extent) and the media’s giving that attention and thus lots of people are thinking about it. In a few years, it’ll be some other cause that people can take action on with little steps and feel good about themselves for doing something positive. Maybe it’ll be taxes. Or maybe it’ll be something we don’t even foresee, like some sort of local food revolution. It’s very hard to tell.

In the end, though, taxes, for most people, are just another bill to pay. Sure, it’d be great to have a smaller bill, but if that means losing some service they rely on or value, they’re not too interested, and the details are something for people in Washington to work out.

What do you think? Are taxes just another bill to pay, or is excessive taxation something you’re interested in fighting with larger steps (like moving to another state, protesting, or getting politically involved)? I don’t think there’s really a right or wrong answer here at all.

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224 thoughts on “How Much Do Taxes Matter To You?

  1. Indiana Resident says:

    Let me be the first to point out there is no “Gov. McConnell” here in Indiana, and the decisions being made here are being called anything but ‘responsible.’ Perhaps more on this later, I’m off to stand in line for some government cheese.

  2. Alice says:

    I think it’s unfortunate that you’ve chosen to post such an inappropriately political post. Surely you could have broached the subject with out the unnecessary jab about our government.

  3. I certainly do not like “excessive” or ever increasing taxes, especially when so many governments from local on up to federal do not
    seem to have a problem spending money (many times on seemingly useless things), even when most families are tightening their belts.
    So I do try to minimize what I pay, with before tax deductions, etc.
    But taxes are a necessary part of our society.
    Another way to look at it is if you make more money, you pay more taxes- so maximizing your income, which is a good thing, will result in you paying more. We all feel nickeled and dimed, but if you are paying taxes, you are are probably better off than someone who isn’t, in general.

  4. Michael says:

    I’d say this rough draft needed a few revisions before it was published.

    Taxes are mostly a burden on us. They return pennies of benefits for every dollar taken. That’s before considering the opportunity cost of surrendering our money to the government. And it’s before considering the social cost of teaching people to depend on only the government to fix a pothole, catch a criminal, put out a fire or drive to the hospital.

    You are wrong to say there is no right or wrong answer. Shoveling money into a fire is worse than saving it, investing it and using it to charitable ends. Supporting waste and corruption is not just as valid as opposing it. I’m sure you were thinking of naive, uneducated taxpayers who mistakenly think their money helps poor people. I agree those people have good intentions, but that doesn’t make their misunderstanding of government spending correct.

  5. Trudy says:

    I agree that taxes are necessary but the very frustrating part of paying taxes for me is knowing that there is a lot of waste that occurs within the different governmental authorities that my dollars go towards.

    A quick example from yesterday that I personally can attest to is the disposal of over 100 new binders because some employees did not like that stickers would not stay on the covers well. Instead of devising a solution, the binders were just pitched out.

  6. Nick says:

    @RC

    I think that is more or less right, but sometimes government is maybe correct to spend money when other people are tightening their belts. The incentives for government spending can be very different than individual spending.

    Doc. Krugman had a good op-ed in the NY Times yesterday giving some reasons why government spending and “big government”, which many Americans fear, is not always a bad thing.

    http://www.nytimes.com/2009/08/10/opinion/10krugman.html?_r=1&em

  7. Ross says:

    Governor McConnell? I thought our Governor was still Mitch Daniels? He’s doing a good job as far as taxes go, but the public schools are suffering due to his influence. I would rather see other services reduced long before education. Either that, or privatize all education…

  8. Couldn’t agree more. I was surprised when I first learned about how fervently people work to lower their tax liability. People don’t seem to consider for a minute that they should pay what’s expected of them, because that’s how our society works. Now, I disapprove of much of our government’s spending—-what we spend on military and defense is an absolute joke-—but I know that without my taxes, we can’t cover Medicare or Medicaid for the disabled and elderly, can’t help get people off the streets, can’t prevent bridge disasters like the one that happened in Minneapolis a short while back. In Switzerland, it’s said that everyone pays too much in taxes—but you never see a homeless person living in the streets.

    Course, people would be less prone to “avoid” taxes if we had a simpler tax code. It’s easy and fair to justify avoiding taxes if you can find “legal” ways of doing so.

  9. I’m sorry Trent, but I think you are way off base here.

    You seem to try to cater to everyone here “taxes are a necessity, yet I can understand why people think they are overtaxed, yet they are a necessity…etc.”

    Here’s the thing – Taxes could be cut drastically. Taxes have become excessive. We have the highest corporate tax in the world. That affects everyone because businesses refuse to base here. We have a minimum wage that destroys low paying jobs and encourages capital investment instead of investment in human labor. We have $3 billion that was just redistributed to the lucky people who bought a new car this month…instead of a few months ago.

    I’m sure volumes of books could be written about the wasteful spending that our tax dollars go towards.

    Honestly, I don’t think you answered Susan’s question. Susan, you should move. You voted at the ballot box but more and more people are voting with their feet. Just look at California – people are hightailing it for Nevada, which has no income tax. You can’t avoid the federal government, which arguably is the worst when it comes to taxes, but if moving is a viable option, GO FOR IT! Vote with your feet, its more effective than the ballot anyway.

    Trent – sorry if I came off strong, I just have strong feelings about the misuse of tax dollars : )

    -DC

  10. Eden Jaeger says:

    I’ve never considered moving to another state because of taxes. I can’t say I’ve ever made a voting decision based on taxes either.

    Obviously, I want to see my tax dollars put to good use so when I see foolish spending (or spending on programs I don’t agree with) I’m not thrilled about it. I’m definitely in favor of paying my fair share and supporting a small level of government and community services. It’s the frivolous spending (like an $18 million dollar government website) that bugs me.

  11. Deborah says:

    I consider taxes mostly a personal finance issues but the rubber hit the road when I witnessed Katrina.

    I believe in citizens paying taxes for support of vital services and am pretty angry when such services fail. I feel like we have no recourse when expected services fail.

    People complain that we pay more taxes than benefits we receive – perhaps that is true until we get older and need Medicaid. Or a family member needs extensive social services. Taxes, in my view, are somewhat like insurance: we likely pay in for years (perhaps forever) and not really see a financial benefit to us personally.

    Except of course, well run municipal and social services help society run.

  12. Shannon says:

    FYI the governer of IN is Mitch Daniels.

  13. Abby says:

    I don’t mind paying taxes. Never have, never will. Most of the things that our tax dollars pay for are essential, and we take them for granted. Trash collection anyone? Parks? Firefighters? For every example of wasted binders – and yes, it happens – there are dozens of cases where the government gets something done that the private sector would never bother to do.

    Military service allowed my father – and plenty of other friends and family members – to eventually secure good jobs. I’m a community college and public university graduate. My kids take part in programs hosted by our local Parks & Rec department. On my tuition alone, I suspect I’ve yet to repay what I received.

    If there’s a problem, I think it how very little most of us are involved in government. We don’t understand how we can participate and help shape decisions. Yes, it’s tough to do so on a federal level. But many of us live in towns small enough that we can have a big impact on decisions made locally. My grandparents voted, attended town meetings and took part in their worlds. Until recently, I didn’t know who represented my ward in our town – honestly, I wasn’t sure which ward I lived in!

    Taxes are an easy target, but I think that’s based on an imperfect understanding of how much it costs to maintain safe, healthy communities. I think RC is exactly right – if you’re able to pay taxes, you’re not that badly off.

  14. John says:

    I believe the tax issue is intentionally made into a class issue by our government. As a family of four, we pay practically no federal or state taxes. To make this possible, there are people, like Susan, who are making up the difference by paying more than her fair share.

    Yes, I would consider moving to pay less in taxes, but we’re underwater on our house and our options are limited because of this. But really, are the taxes really going to be that much lower in another state? In our situation that is very doubtful. For someone like Susan, it may save her a lot of money.

    What we really need to start thinking about is a tax protest where we stop paying our taxes en masse and starve the government of its funds. That would really shake things up.

  15. Nick says:

    I think an area of personal finance and taxes that people often over look is the amount of tax withheld from their paychecks. For a very long time I just left it at what it was and hoped for a refund every year. Sometimes I would get huge refunds and sometimes I would owe a whole bunch of money. Depends on the year. But that is not a saavy way of doing it. You want to get as close to zero as you can. You don’t want to owe anything and you don’t want a refund either. The reason being that those huge refund checks are dollars you could have invested, making you money instead of the government. Time to take a deeper look! Thanks for the post!

  16. Gen Y says:

    So Michael (#2), you’d rather we didn’t have any police, fire dept, road crews or ERs? That seems to be what you’re advocating. I have to rely on the government to catch criminals because if I did so myself, I’d get in trouble with the law for being a vigilante.

    Do you know how to patch a road? Suture a gaping knife wound?

    I don’t think Trent is wrong; taxes are a sort of necessary evil. I am all for paying higher taxes if it means my kids’ school district has more money to keep teachers on and bus routes moving, or for the local public transportation, or the public library. I do not agree with how the federal government uses our tax dollars either, but advocating collapse of the country just because you think it’s going down anyway is far from a suitable solution

  17. Mike says:

    The government does not produce anything of value, so the only way they can generate revenue is by stealing/confiscating it from the population.

    Just think how bloated and inefficient the government handles money. They don’t need to worry about profit/loss because they don’t stand to lose their business and live in the streets if they go over budget, not like a private person/business. When they go over budget, they just borrow more and more. They even asked Congress to raise the debt ceiling again. How rediculous is this system??

  18. Mike Piper says:

    “That’s why you see tax protests but rarely see people advocating paying more taxes.”

    I know I’m a strange fellow in this way, but I sent emails to multiple representatives in my state government (IL) asking for an increase in the state income tax.

    It didn’t work.

  19. Megan says:

    Trent, I think if you lived in a high-tax state such as NY, NJ, or CT, you might actually have a firm opinion on this subject.

  20. Sarah says:

    I agree with Abby a bit… I don’t mind paying taxes, I can budget them into my personal finances.
    I mind how the government is spending my money.
    I will admit, I don’t know much about how much it takes to run the community or participate much. But, for example, I think many share my philosophy of debt free living – why not the government?

  21. kelsey says:

    No one likes paying taxes, but I’d rather pay more taxes and have better schools and social services.

  22. Kirk Kinder says:

    I think most Americans have completely lost perspective when it comes to taxes. I read many of the comments where people said they don’t mind paying taxes. They point to roads, firefighters, police and trash as the reason to pay them.

    Certainly, we need to pay enough taxes for these essential services. However, the vast majority of our taxes goes to useless services at the federal level. Most of the agencies really don’t perform a needed service. Or, if it is a needed service, they do it so ineptly that we would be better having that money in our pocket. Look at FEMA. It has been shown that the charitable groups that went to N.O. and Miss. provided more help to those citizens than FEMA. And, it will always be that way. Even our military is bloated. We spend 50% of the world’s defense dollars while we only have 5% of the population. We could cut our spending in half and still spend 3X as much as our closest competitors.

    I am all for paying some taxes at the local level where I have a say in the process, which is how the Founding Fathers intended. But, sending money to DC is a waste.

    We have failed to recognize that everyone provides about 40% to the government when you factor in federal and state income taxes, sales taxes, social security/Medicare, and the various license fees. Our founding fathers broke from England over a 10% tax. Just imagine if you got an extra 20% in your paycheck each month. Your standard of living would rise considerably. Plus, you would spend the money much more effectively than a bureaucrat in DC. Hopefully, you might save the 20%. If you did that, you would have no problems with retirement. You wouldn’t need social security as you would have ample assets even if you invested in a low equity portfolio.

    We need to take action as the government will be taking more of our money in the coming years. Taxes have to rise. So I think this is an issue I hope pops up on financial and political blogs because it is critical. Thanks for getting the discussion going.

  23. Tom says:

    I’m glad I live in Texas. A state with a large economy and no personal income tax. Proof that it can be done.

  24. Mike C says:

    I don’t mind paying taxes. For the last ten years every year I have paid more taxes than the previous one. Every year my income has grown, and so have my taxes, and my after tax money too. Yes, I would have more money if I paid less in taxes, but I prefer looking at the bottle half full.

    Also I don’t mind people that pay less taxes than me using services that are paid with my taxes (from social services to medicaid or social security). I am happy to see the taxes helping other people.

    Now, a completely different story is how the taxes are used, and what is better for the economy. I believe that lower taxes are better for the economy: more money in the hands of the citizens means more growth. More growth means more jobs. More taxes also mean more services run by the government, and government run services are conotrolled by politicians. Politicians act according to their own political interest, which may or may not be aligned with their voters’ interest. More power in the hands of politicians can lead to more corruption and demagogy.

    When I consider taxes for my vote I don’t think of the short term effects on my next year’s tax bill; instead I take into account the long term effects into the economy, as what is good for the economy will be good to me and my family.

  25. Immortal3 says:

    Susan loses all creditibility because she doesn’t even know who the Governor of her “home state” of Indiana is. Mitch Daniels is the current governor of Indiana.

  26. Jaye Sunsurn says:

    A lot of infrastructure projects are a ‘You need to be this high to get on the ride’ sort of problem. You need a lot of potential money in order to make it happen. Which is where governments can make use of public coffers to make sure things happen. But because the larger amounts of potential funds people want a larger slice of the pie where they can get it, and more people want slices. Whats a $100 when you have $10 million in the bank? And yet how one handles the small amounts like $100 is how they end up being able to wisely or unwisely spend for the larger but essential projects. The one thing that helps stop the craziness is transparency, when the people providing the money behind the paycheques (ie the people) can scrutinize the books, it helps keep people honest… but the convoluted bookkeeping that happens, as well as the public and then the private books people end up using.. such scrutiny becomes difficult and impossible to do. So we focus on where WE can do the best we can, finding every damn loophole to make sure they don’t fiddle too much with our particular dollars by legally finding a way to not give them as much. We feel its too large for ourselves to get a handle on. So we tend to fight back in this fashion, or go further and find illegal ways to hold back the money.

  27. kev says:

    I’m generally pretty happy with the way my government distributes my tax money, and I think I get excellent services in return.

    I don’t agree with everything they spend on, but then, who does? Seriously, there’s no way they can please everyone. Even the politician you prefer is going to do things you don’t like.

    If everyone withheld their taxes because they didn’t like this or that, then everyone would withhold their taxes, but for different reasons!
    There’d be no fix, because nobody would ever be happy, and it will only be a matter of time before you’re all on your roofs, shooting at anyone who comes near your house.

  28. Michael says:

    Kelsey, you’d do better to focus on education instead of schools, and a good society instead of social services. You’re fixated on government services as a solution and they don’t even solve the problem!

  29. Snowy Heron says:

    We will always have taxes. That is the price we pay for national security, roads, schools and parks. That part I can handle. It is the taxes we pay that allow congressmen and senators to live like kings at our expense, that I have a problem with. So often it appears that they are just trying to take money out of my pocket so that they can give it to someone else who will vote for them, or even just give it back to me so that I will be grateful for their generosity! Unfortunately, there are very few people on Capital Hill that have integrity and fiscal common sense. All these jokers want is their private/government jets to fly them around, and their junkets all over the world to do “research” on stuff, and the deals that somehow or other put money in their own pockets. And this involves individuals in both parties. If we don’t want these jokers in office, we have to do a better job on election day ourselves.

  30. Jessica says:

    @ “The government does not produce anything of value, so the only way they can generate revenue is by stealing/confiscating it from the population.”

    – Libraries are not of value?
    – Road infrastructure not of value?
    – Justice system not of value?
    – Public education system not of value?
    – Product and food safety testing not of value?
    – Child and elder protective services not of value?
    – Veterans and disabled medical services not of value?

    I guess you must be an uneducated person who eats no food and flies below 1000 ft to get around, lives off the grid and has no parents, siblings or children.

  31. Meghan says:

    I’m with Mike Piper–I’ve sent letters asking for tax increases.

    Why? Because I think that we as a country have a duty to provide services for the less fortunate, and I think that it’s best if those services come from the government. Rehab; housing for homeless people; health care for the poor, elderly, and anyone else who isn’t able to get it through their jobs; food banks stocked with healthy food for people who are having a hard time; a solid education with up-to-date materials in schools that don’t have holes in the ceilings and mold in the walls…

    I think that these services should provided to all residents (yes, even the dreaded “illegals”) of the country, and think that a failure or unwillingness to provide this sort of safety net for the populace is immoral and a violation of basic human rights.

    Relying on “charity”–which often means “church groups”–for this sort of thing is ridiculous. People should be able to access help without having to listen to religious tracts, without having Jesus laced through it. It’s also a horrible passing of the buck, in my opinion, because it positions social services as optional, as things that aren’t important enough to guarantee. We’ll just hope that the church down the street doesn’t have some crisis [fire, legal issues, roof torn off...] that leaves them unable to provide services. Surely it’ll be fine.

    I’m certainly not saying that I agree with everything, or even most things, that our taxes are spent on, but it seems like when there are budget cuts, social services, scientific research, and educational services are the first places to feel the pinch. I think those are things worth whatever we pay for them, and I’d be happy to pay more to see the programs expanded.

  32. Rosa says:

    When I was younger I was on date in London and the dude was showing me how to get around the turnstile on the train; I told him I grew up in a place with little public transit and I was happy to pay the fare. I still feel that way.

    Maybe our city is unique, but I see quite a few “happy to pay more for a better community” signs around here.

    There are a lot of things I wish the government didn’t spend money on – the wars in Iraq and Afghanistan are an easy and large example, and I’ve been active in the anti-war movement – but when there are local tax shortfalls and they close schools and cut library hours, I let my local and state representatives be heard – and I step up my charitable giving to try to shore up some of the gaps.

    I appreciate that my grandmother had Medicare to provide some in-home care so I didn’t have to quit my job and go live with her in her last years; I appreciate the public schools and parks keeping neighborhood kids engaged and healthy; I appreciate the emergency shelters being open when people are freezing to death on winter nights; I appreciate the interstate highway system and the Post Office. I don’t mind supporting them at all.

  33. Andrea says:

    @Mike Piper, I too live in Illinois and begged my state reps to raise taxes. We are facing horrifying service cuts.

    A friend of mine is a library director in Indiana and Mitch McConnell’s fiscal policies have gutted her budget. So yes, move to Indiana, as long as you don’t like books.

  34. Anne says:

    Really good post, Trent. I think you’ve articulated very clearly the broad “people’s” view of taxes.

    I’m one of those crazy people who really do not object to paying my taxes. I’m on the lower-middle income level so I don’t pay nearly so much as people who make a lot of money. But this also means that the taxes I do pay have a very real impact on how I live my life. I believe there are plenty of stupid things that are funded in part by my tax dollars. But there are even more things that are of benefit to me – often intangible benefits. I agree with Poster # 5, Deborah. Paying taxes is very much like a form of insurance. I really hope I don’t ever need to cash in on it but I recognize that my premiums help to pay other claims. There are many other things our tax dollars pay for on a national level: Homeland security and environmental protection come to mind as great examples. Not everybody agrees with how they operate but it’s pretty clear they’re necessary. No government, program, or politician is going to make everyone happy. Just as the stock market performs best when opposing parties are in power in the White House and Congress, so it is that opposing and diverse view points make for better government. Perfect system? Not by a long shot. Pretty terrific system? You bet. I’m happy and lucky to pay my taxes. And if I want more say – I need to get involved.

  35. Dan says:

    It’s alarming how much ignorance accompanies the anti-tax, anti-government argument. No one pays 40% of their income in taxes. Anyone who thinks that does not understand what MARGINAL tax rate means. Higher taxes will not kill growth. All the Republicans said that our economy would be destroyed if Clinton raised taxes. He did and we still had growth. In the post WW2 years we had the greatest period of economic growth in our history and our top marginal tax rate was 90%. The ignorance is so galling that the commentor says she wants to move to Indiana because she likes what “Governor McConnell” is doing. The Governor of Indiana is Mitch Daniels. I live in Illinois where the Democrats control everything and there is rampant corruption. Yet the standard of living is a lot higher here than it is states where Republicans (equally corrupt) control everything. I’m sure people in CA and NJ bristle at the higher tax rate, but they aren’t flocking to Alabama.

  36. Juli says:

    @Mike Piper and Andrea. I live in IL and am very upset by increasing the state tax. If you’d like to send in more money, no one is stopping you.

    The state wastes money! My SO deals with a lot of state money in his job at a muni. engineering company. You’d be shocked. And instead of readjusting the budget when tax revenue decreases, they threaten to cut the services most visible and important to everyone. That’s total BS.

  37. MM says:

    I expect the “omg I pay too much in taxes folks” are similar to the ones I know in my life: a combination of lack of empathy, imagination, experience and memory combine to make people think they don’t use government-provided services, never have benefited from them, and could totally run things better themselves. Personally, my family was on food stamps for a while when I was a kid. It meant we didn’t starve. My friend’s family was on Welfare when she was little. Same. When I lived with my grandparents, they were on Social Security and free government foodstuffs, and the government paid for my school lunches. Various members of my family were in the military, then went to college on the GI Bill. Now my kids go to public schools and are getting a good education. I drive on roads that are always under construction (which is annoying, of course) but they’re safe. We have enough of a police force that crime isn’t nearly as bad as it could be. Our local firefighters are trained and equipped. Meanwhile, right now both of my Senators are working on a bill that means our friends next door who are paying through the nose for health care can get the treatment they need for a little less. Friends and family members work as government employees and contractors. Every dollar we pay in taxes, and it’s a lot more than my parents or grandparents ever did, is spent on salaries, American-made equipment, and lots of other things that *gasp* make the economy run.

    I get wanting to minimize your personal tax bill. But I’ve seen plenty of countries where there’s no taxes and little government, and I have no interest in my country looking anything like them. (As for the previous example, you could not pay me enough to live in Texas.)

  38. Sam says:

    From a hedonist/utilitarian point of view, I can absolutely see how people could advocate MORE taxes. But I do agree with your statement that taxes are just another bill that needs to be paid, and we might as well do what we can to reduce that bill.

    I understand Susan’s frustrations what with being someone who’s self employed in a very controversial field right now.

    However, make sure she knows that My Man Mitch (Mitch Daniels) is still the governor, before she moves back to Indiana ;)

  39. Kevin M says:

    I have to laugh at statements like this from Mike (#8):

    “The government does not produce anything of value, so the only way they can generate revenue is by stealing/confiscating it from the population.”

    So I guess we won’t be seeing Mike driving on the roads to work, the grocery store or to see the doctor? When his home catches fire, we won’t have to send the fire department to put it out. If Mike gets robbed or his car is stolen, the police won’t need to investigate. I could go on, but I think it’s clear the government provides value.

    For me, taxes are another bill. I do everything I can legally to reduce that bill of course, but I do see value in paying it – even if there is a lot of waste. I do vote, but haven’t gone farther than that yet – i.e. contacting a congressman/Senator or getting involved in protests.

  40. RR says:

    Dan, you are incorrect. I can personally attest that after accounting for ALL taxes (Federal, State, Local) there are people out there paying approximately 40% (easily) of their income in taxes.

    Perhaps you meant no one pays 40% of their income in Federal taxes?

  41. George says:

    “We have failed to recognize that everyone provides about 40% to the government when you factor in federal and state income taxes, sales taxes, social security/Medicare, and the various license fees.”

    Somebody’s dreaming if they think the American tax rate is 40%, even considering fees.

    For example, we’re a single income no dependents couple and I have an 80th percentile income (e.g. 80% of the population has lower income), live in a state with personal income tax, yet my total tax bill in 2008 was 27% of income. If I were in the 60th percentile (about as low as I can maintain my current standard of living), then my tax bill would have been about 25% of income.

    That 27% tax bill includes federal income tax, state income tax, SSI, Medicare, property tax, 911 tax, federal telephone access tax, electricity tax, fishing license, park usage fees, car registration, and drivers license. There is no sales tax in my state. I’m not eligible for IRA or 401(k) tax deductions. I have not included federal, state, and local fuel taxes because I don’t know what the rate is.

    The people who are worse off, taxwise, have significantly higher incomes (e.g. individual income of $150k).

    Trash collection in our area, like cable TV companies and electric utilities, is a publicly granted monopoly. It is NOT paid for with taxes.

  42. George says:

    The argument that the government wastes money is rather lopsided. Private industry also wastes money, but you seldom here about it or recognize it.

    Example 1 – top professional athletes are paid multimillion dollar contracts and the end result usually is that the ticket price to see them perform (on an hourly basis) is more than the median wage. Tickets for a ballgame at Fenway Park are $100 for the crappy seats?!?

    Example 2 – CEOs are paid multimillion dollar bonuses even when their companies performance is an utter failure (GM, Chrysler, any number of banks). Are there products any cheaper or better or do you continue to use them?

  43. J.D. says:

    So much misinformation in so few comments! sigh Just a few comments:

    Kirk Kinder (#12) wrote: The vast majority of our taxes goes to useless services at the federal level.

    What are useless services? What is useless to you may not be worthless to me. And what is worthless to me may not be worthless to you. The facts are: In 2010, 63% of the discretionary Federal budget ($901 billion) will go to the military and national defense. Only 37% of the budget ($520 billion) will go to non-military programs. If we really want to reduce taxes, the big gains will come from cutting military spending. We could argue for days over whether this is a good thing or not. In fact, people have been arguing about it for decades. But the fact remains that most of our budget goes to military spending. In fact, we spend nearly twice as much on national defense as we do everything else combined.

    Dan (#23) wrote: No one pays 40% of their income in taxes.

    Bullshit. I think many people do. Here in Oregon, the state tax rate is 9%. If you earn $400,000 you’re in the 35% Federal tax bracket (just barely), meaning about half of your income is taxed at 33% and the rest is taxed at a variety of rates. So, with State and Federal alone, someone earning $400,000 is close to 40%, and that doesn’t include property taxes or city taxes or anything else. (Oregon has not sales tax.)

    I’m not saying that *many* people pay 40%, or that it’s wrong that high-income earners pay 40%. I’m just saying it’s bullshit to say that nobody earns that.

    As with many issues in this country, taxes are one where there are too many people who voice opinions as facts instead of looking at actual facts. The data is out there. Read it. Use it to form your opinions. Don’t believe what the talking heads tell you, whether they’re on the Left or the Right.

  44. ShootDawg says:

    FYI: Indiana’s govenator’s name is Mitch Daniels.
    No clue who McConnell is, maybe the senator from Kentucky.

    Taxex – like politicians, unions, etc. Good for some things, bad for other things. :-) Can you get any more general than that?

    Locally, property taxes were significantly cut, which all the homeowners loved. Yeah they say.
    Now that the local city/county does not have that revenue, they are expected to maintain status quo… But, if they need to start charging for services, such as trash collection, that is just another tax the people say.. no kidding… where did they think it was being paid for to begin with.

  45. Michael says:

    “Nobody’s stopping you from sending in more money.” Well said. My fellow citizens of Illinois don’t do that because what they want is for me to send in more of my money. They would rather see me forcibly lose my money than spend their own. How selfish!

  46. J.D. says:

    Haha. I fully admit that I have a contradictory statement in my comment (#30). I say “I think many people” pay 40% in taxes. And then a few sentences later I say “I’m not saying many people pay 40%”. I admit the error before anyone has a chance to call me on it. :)

  47. KC says:

    I recently moved from Tennessee to North Carolina. TN has no income tax, 9.25% sales tax (where I lived), fairly low property taxes although real estate taxes were about average. BUT…crappy roads, abysmal public schools, below average colleges and universities and corrupt local and state governments. Crime was through the roof and there was no money for police protection.

    In NC we pay income tax (which is a big deal for us), a 3% car tax (we just bought a new car in 07), similar property taxes and soon to be a 7.25% sales tax. In other words we pay higher taxes in NC. For my family its close to $8k more a year. BUT…safer highways, good public schools, very good public colleges, less government corruption, and low crime. In other words the quality of life is much better. In TN I was looking at a $15k/year private school bill, in NC I can send my kids to public schools. I really thought paying these extra taxes was going to bug me, but when I see the benefits of it I’ll gladly pay them for the higher quality of life.

  48. Gwen says:

    I for one am very worried about paying higher taxes. Especially when I see so many people using home-based businesses to get out of paying ANY taxes at all (even getting a fat rebate instead), while I continue to pay taxes.
    My husband is starting graduate school this fall so we will be moving to a high-tax state, New Jersey, for the next five years. But you can be sure that when his schooling is over and we are looking for jobs living in a low-tax area will be on the top five of our list.

  49. Kevin says:

    Kirk (#12) nailed it. Potholes, garbage collection, and fire trucks are just the high-visibility consequences of paying taxes. They seem prominent because you see them every day. However, the truth is that the VAST, VAST MAJORITY of your tax dollars go to programs that are literally thousands of times more expensive than your local municipal services. Things like the military, Medicare/Medicaid, Social Security, and interest payments on the enormous pile of debt the US is carrying. If you could see a pie chart of how your tax dollars are spent, “garbage collection” would be an invisible sliver.

    Furthermore, I’m not sure the opinions you’ll attract here will be very objective, considering that roughly half of all Americans don’t pay any income tax at all. I’m sure those folks feel the current tax levels are just fine and dandy, no complaints. Those of us who DO pay taxes, however, are buckling under the weight, and are shouted down as “greedy” and “selfish” when we protest yet another plan to send us the bill for expensive new programs (bank bailouts, Cash for Clunkers, nationalized healthcare).

  50. Hannah says:

    Taxes are a membership fee to live in the United States.

    Sure, there is waste, but we are better off with waste in our prosperous society than we would be living in anarchy with no government. At least that’s what I believe. So sure, I wish I could choose (for example) for my taxes to go to hard working public servants rather than losers living off public assistance. That’s why I vote for people whose ideas fall in line with mine. That’s all I can do, and I am happy with that.

  51. dagny says:

    Most people pay taxes in order to avoid a more severe form of slavery like imprisonment. If I don’t pay what’s demanded, they will send men with guns after me. Sounds like the “Sopranos”? Big government is simple a more polite form of organized crime.

  52. spaces says:

    I’m pretty impressed with the level of civility here. I was somehow expecting more of the DONT TREAD ON ME crowd.

    IMO … Most Americans have very little control over their tax bills. While some folks have the ability to manipulate their federal tax deductions to some extent, most do not. Importantly — the POOREST Americans do not have the ability to significantly affect their tax bills. Tax manipulation is really a game for the rich, or for those who have the luxury of being profitably self-employed.

    Most taxes paid by most folks come in the form of social security taxes, sales taxes and property taxes. If you’re an employee, you pay SS tax, period. If you purchase things at retail, then you pay according to your state’s law, with very, very little wiggle room. Property taxes, likewise, don’t have many gray areas: While you can fight the value put on your property, you pay a percentage based on the value of your home (or your landlord does, and it gets passed through to you in the form of rent).

    I find it extremely disingenuous of folks to talk about lowering taxes without recognizing that, as JD put precise #s on, the VAST majority of federal spending is the military. Saying ‘If there wasn’t so much useless spending on blah’ is like saying ‘If you didn’t waste so much money buying coffee.’ True to a point, but not an area where there’s very much success to be had, particularly not when in excess of 60% of your budget goes to a single category.

    FWIW, I live in a southern state. The services aren’t very good and the schools are horrible, and the political culture can only be described as cruel to those who, for reasons of their own making or completely beyond their control, need assistance. I’d happily pay more taxes if it meant we got better services. My first child is not yet 6 months, so the southern state is OK for now. We hope to move to a state with a better education system and a more progressive political culture. If that means more tax, then that’s A-OK with me.

  53. It’s interesting that where government is concerned, most people are concerned with the taxes they pay or the benefits they receive (or expect to receive) and there is so little concern about the big picture. A couple of points in that regard…

    Most of the tangible benefits of government, especially beyond social security and medicare, come at the local level. That’s where police, fire protection, schools, roads, parks, libraries, etc, are funded. This is also the most efficient level of government in terms of balancing tax revenues with expenditures, and where our “voice” is most likely to be heard.

    The power of government comes not from taxes, but from spending. People will quibble about the taxes they pay, but are usually silent in regard to spending programs they favor, regardless of how large or bloated the programs may be.

    Thus at the federal level, taxes will fund only 50% of spending, the rest will come from issuance of debt. Yet there will be more concern among the citizenry in regard to taxes than to the size of the debt that’s funding an equal portion of spending.

    Financially, this is a pervereted win-win for the American people. We get all of this wonderful government spending at 50 cents on the dollar, so not many will complain too loudly about the way the government runs it’s finances–which is the core issue.

    Now here we sit on a personal finance site, usually discussing the need for thrift and living within our means on a personal level, but see no need to impose such restrictions when we behave collectively, such as with government.

    So why is this OK? Why does no one think this is a big deal? Isn’t it supposed to be “our governemnt”? If we can see the need to keep our finances in line on a personal level, why does this somehow not matter at the public level? Why are we so singularly focused on taxes alone?

    OK, maybe I’m going beyond the scope of the original post here, but I think most of us understand that taxes are never just about taxes.

  54. Sarah says:

    Gosh, I hope everyone who is railing against the uselessness of government is not on Medicare and doesn’t have any parents/grandparents who are, either.

    I am in an upper-income bracket in a high-tax state and the fact is, I don’t pay enough taxes. The impact on my lifestyle (especially in the last few years, when I was making even more money) of another few percentage points in marginal tax rate would be minimal: fewer days on a Paris vacation, fewer books bought, fewer clothes in an already adequate wardrobe. The impact on other people’s lives of that money, properly applied through government services, could be great.

    I am happy to pay taxes so that the hungry can be fed, the naked clothed, the widow and the orphan protected, those who are sick and in prison visited. The free market doesn’t accomplish these things and never will.

  55. Kevin says:

    @Hannah (#37):

    “Sure, there is waste, but we are better off with waste in our prosperous society than we would be living in anarchy with no government.”

    Why are those the only two options? Why don’t you consider *getting rid of the waste* a valid option?

    How much could your taxes have been cut if the US had kept their nose out of Iraq? How much could 3,000 soldiers have contributed to our society if they hadn’t died needlessly in the sand half a world away?

    How much could your taxes be cut if the US wasn’t paying $500 million PER DAY in interest on the national debt?

    How much could our taxes have been cut if we hadn’t spent trillions rescuing capitalist corporations from the consequences of their mistakes?

    Hannah, I’m just saying you can cut A LOT of waste without society necessarily collapsing into anarchy.

  56. Tyler Karaszewski says:

    Sure, I’d love lower taxes. I paid over $40,000 just in income taxes for 2008, and I guarantee I didn’t get $40,000 worth of benefit from the government for it.

    But there’s nothing I can do. Even if I wanted to get politically involved, I could make almost no difference, and any effort that I joined, even if it succeeded, would have almost certainly succeeded without me. The opportunity cost of showing up to political meetings would be greater than any benefit I could get from working towards lowering taxes.

    I’ve resigned myself to trying to do the best I can within the system, rather than trying to reach out and change the system, because I’m convinced that it’s a net win for me that way.

  57. alex says:

    Emma Goldman was an anarchist.

    Taxes are not just a bill to pay for me. I think they are immoral in principal, and none of the uses are worthwhile to me, as everything they can provide would be provided better in the private sector.

    I am a tax avoider. I dont pay income tax at all.

    Neither does Dave Gross at sniggle.net/experiment (if you want to learn how).

  58. tightwadfan says:

    Americans are ridiculous about taxes – we pay the lowest taxes of any wealthy nation yet complain nonstop about high taxes.

    I have lived in a high tax, high service state (MD), located next to a low-tax, low-service state (PA). No contest for me there, I would rather pay more taxes and have better schools, roads, libraries, parks, police, etc. Other states I have visited with no income tax (TX and FL) are definitely places I wouldn’t want to live or raise children.

    I did live in a state (NJ) with an extremely high property tax, and lowish income tax, and it was a dump. I don’t know if the tax money was being siphoned by corruption, or what was the cause, but if NY is similar I could see why residents are upset.

    I am happy to pay my taxes – it is the price we pay for a civilized country. The only things that infuriate me is when our taxes are used to subsidize private businesses or the rich. And yes, the DoD wastes an incredible amount of money, more than any other government agency I have seen. Most of it goes to overpriced contractors.

  59. spaces says:

    Hey alex — Why you freeloading on the (government-built, etc.) internet, then?

  60. alex says:

    I read through the comments and thought Id address one.

    – Libraries are not of value?
    The private sector would create this.
    – Road infrastructure not of value?
    Same.
    – Justice system not of value?
    No.
    – Public education system not of value?
    No. The public education system is horrible and abusive towards children, I cant believe anyone would ever let their child into these places.
    – Product and food safety testing not of value?
    No. If something was wrong with the private sectors food (without the FDA), people would test it, out of habit. If something was wrong everyone would make a huge fuss and they would have to take it off the market because no one would buy it.
    – Child and elder protective services not of value?
    No.
    – Veterans and disabled medical services not of value?
    (with no military we’d need no veterans….)

    Here’s the thing: the private sector would do ALL of these and BETTER.

    “I am happy to pay taxes so that the hungry can be fed, the naked clothed, the widow and the orphan protected, those who are sick and in prison visited. The free market doesn’t accomplish these things and never will.”

    Are the hungry fed? Most are definitely not.

    The naked clothed? Clothing is so cheap in America that the only way you’re naked is if you want to be that way.

    The widow and orphan protected? How is the widow protected now? LIFE INSURANCE. I wouldn’t call going into foster care “protected”.

    Those who are sick visited? My mother wasn’t visited when she was in the hospital. How does the gov accomplish this?

    Those who are in prison visited? How does the gov accomplish this? Also, isn’t it that the person is in prison because they did something wrong (according to the gov), but it’s a reward if they get visited.

  61. alex says:

    @ Spaces: Freeloading would be sitting in the public library using their internet. I’m at home with my Comcast wifi. It doesnt matter who created it.

  62. Kevin says:

    @Sarah (#40):

    “Gosh, I hope everyone who is railing against the uselessness of government is not on Medicare and doesn’t have any parents/grandparents who are, either.”

    Of course people who are taking more from the system than they pay in are happy. What kind of nonsense logic is that?

    The problem, Sarah, is that we can’t ALL take more out than we contribute. For every person who costs more than they’ve paid in, there are healthy, hardworking, law-abiding, responsible taxpayers who pay far, far more in taxes than they’ll ever see in benefits. THOSE are the folks who are complaining.

  63. Bill says:

    If everyone wants all these services we need to pay for them. Really pay for them not issue more debt. The gravy train will end, we can only carry so much debt before it will bankrupt this country. On the other hand when we start defaulting on our loans to other countries. Having spent 60% on the military will look brilliant.

  64. alicia says:

    People are starting to wake up now and realize that the govt is wasting a lot of their tax payer money. If you’re frugal and cool, you know that wasting money is a crime. People today want responsibility from their govt. Being told by a politician that you the tax payer must sacrifice and pay and then see your elected officials go out and buy 6 new super duper jets to trot them around the globe just ain’t cutting it anymore.

    The TARP has ladden every single tax payer with $80,000 per person more debt. And there ain’t no end in sight. As a New Yorker also, if the health care bill is passed, I am looking at a 60% tax burden. That leaves me with just 40% of my hard earned money to cover my other bills. What kind of quality of life will that be for me and my family (who also will be burdened with heavy tax bills)? In NY, not only do we have to worry about what Obama levies against us, we also have a mayor and a governor who need increased tax revenue. Do you understand our predicament? We’re getting hit from all angles.

    I wish moving to another state was the answer. But most new taxes coming our way are federal. So, there will be no escape except to leave the country. If we are going to be taxed like a socialistic society, I might as well return back to my native country. At least the food is better!

    If the US govt keeps on laying tax debt on it’s people, eventually there will be a revolt. The media won’t be able to adequately hide it anymore. You can mock the tea parties all you want, but underneath it all, there really are some honest Americans who are mad as hell and they’re not going to take it anymore. I foresee a revolt coming in the very near future. Taxes ARE a very big thing. You should not minimize it. It ain’t just another bill. Yawn. It’s a very BIG deal.

  65. Sarah (40)–”I am happy to pay taxes so that the hungry can be fed, the naked clothed, the widow and the orphan protected, those who are sick and in prison visited.”

    This comment made me a bit uncomfortable. I wasn’t going to comment on it, but Alex (46) did, so I’m not the only one who has an issue with it.

    You’ve made a loose bibical reference equating the government with the fulfillment of biblical prophecy (Matthew 25:34-45). I think that’s dangerous ground to tread on.

  66. mcharlie says:

    Ok normally you have a lot of good things to say but i’ll be honest, this is the first article of yours that made me wonder what you are smoking.

    Takes are NOT just something that must be done. Taxes are NOT just another bill. Have you forgotten one of the major reasons USA was started? To get away from the excessive taxation of england! How far we’ve come from our original intent. Taxes were only intended to be a TEMPORARY solution to fund wars and other emergencies.

    As far as the services provided by the Govt. Many of these could be more efficiently solved by the free market if the Govt would take it’s hands out.

    As far as the binders throwing out comment, it’s very relevant even though it seems small. I work IT for a Govt agency. During the administration change we were told literally to spend every single cent we could. They told me to design a network that would cost as much as possible. As a business owner on the side it went against everything i believe in. I submitted my plans only to be told, it doesn’t cost enough, make it bigger. Are you kidding me?! I just watch an organization drop well over a quarter of a million on something WE DID NOT NEED!!

    This is the mentality of the Govt right now. It’s the mentality of a spoiled rotten teenager whose parents bought them their first car. No sense of accomplishment, no sense of responsibility. They didn’t slave to earn the money so It’s ok spending it. If they trash the car “mommy/daddy will just buy me a new one”

    If you view taxes as “just another bill to pay” then you might as well just lay down and let anyone and everyone take advantage of and have their way with you. This is a very dangerous train of thought.

    Just a reminder. Everyone in this country at some point started as an immigrant. Even our founding fathers. Everyone started off as a free thinker who was tired of their govt or country taking advantage of them. What causes a person to betray their country, leave their family, friends, life, culture etc for an unknown? Tyranny. Why do people come here? To escape the tyranny of their old country. To come to a land where opportunity still exists, but not just any land or any opportunity. The BEST land of the BEST opportunities. We have forgotten who we are. We are the best of the best, the ones who were strong enough to want more for our lives and families. Our founding fathers beat all odds to do what they did. Our immigrant parents (i dont care what nationality you are) beat all odds to do what they did and now we are destroying all they’ve created. Seriously people. it’s time to wake up. Show some appreciation for what your ancestors did. They live on through you, act like it.

  67. katy says:

    I know I will get flamed for this.

    My husband and I have no children. I don’t want money to go to schools. And I don’t want to pay for gay marriages/domestic partnerships either.

    Flame away.

  68. J.D. says:

    Hm. I’ve done more reading on the budget, and I realize that while the numbers I provided earlier are correct, they only account for discretionary spending. Fascinating. More next week at GRS…

  69. Andrea says:

    @poster #23, Dan, oops! You’re right! Mitch Daniels, not McConnell. My friend just calls him “Mitch” or “Somebody’s Man Mitch” so I assumed the original poster was right about his last name, though it didn’t sound quite right. My face is red.

  70. Ally says:

    I am a homeowner in a “high tax” state- lovely Connecticut. Overall, I am happy with the services received for our taxes here, especially on the local level. We have great schools, tons of town services, well-maintained roads, services for the elderly and less fortunate, great police & firefighters. There are very few “low tax” states in this country that I would find desirable to move to. And I would be perfectly happy with a tax increase to fund national healthcare (a single-payer system, preferably) because I view it as a right and necessity for all citizens, rather than a privelage for those lucky enough to afford it. Interesting that Megan #10 suggested those living in a “high tax” state would sing another tune… my state is also one of the wealthiest in the union (it was THE wealthiest, not sure if it still is) so I am living very comfortably and really don’t have much to complain about. Want to move to a “low tax” state becauce you can’t stand paying taxes? Good riddance!

  71. Rosa says:

    @Kevin #48 – I know, personally, a LOT of people who get more in services than they pay in who are anti-government services. The biggest Libertarians I know all went to public universities and public schools, and there are plenty of anti-tax old people who pull from Social Security and Medicare.

    They just think everyone else’s services should be cut.

  72. Dan says:

    @J.D.

    Someone who is makes 400k surely doesn’t have 400k in taxable income. Even if they did, 400k in taxable income (assuming single and no kids) comes out to an effective tax rate of 29.42%. You add 9% to that and you’re at 38.42%. Statistically, most Americans underreport their income, wealthier people more so than average earners according to the IRS. Furthermore, it’s hard to imagine that someone making 400k a year doesn’t have any deductions. No mortgage interest? No charitable donations? No health care benefits from work? No business expenses? No 401k contributions? No spouse or kids? By the time a 400k/yr earner’s accountant prepares his return, that person is probably paying under 30% his income in taxes even including Oregon’s 9% tax rate. Your reaction proves my point that people do not understand how income tax works. Everyone parrots this notion that when your rich the goverment takes half your money, but when you crunch the numbers it’s just not the case. You write:

    “taxes are one where there are too many people who voice opinions as facts instead of looking at actual facts. The data is out there. Read it. Use it to form your opinions. Don’t believe what the talking heads tell you, whether they’re on the Left or the Right.”

    I couldn’t agree with you more. I encourage you to take your own advice.

  73. Personally I think we need to strickly balance taxes with spending, then we can have an intelligent conversation on the whole thing.

    Until then, all we’re talking about is everybody’s pet doctrines.

  74. katy says:

    We live in NY. My husband works and we can’t get insurance for decent rates. but welfare mothers and their children sure do get everything for free…welfare, wic, food stamps. they have big screen color tvs and cell phones and ipods and all the rest too.

    Ugh.

  75. Andrea says:

    @katy, how is marriage equality going to cost you anything? I can understand being selfish enough to not want to pay for education. I think it’s very very wrong, but I can at least understand how you think that would save you money, though you’re not considering the cost to society of people being even less educated than they are now. But marriage equality — how does that take money out of your pocket?

  76. Joanna says:

    Let me help out the argument that Mike (#8) made earlier, b/c it doesn’t appear that people are getting it. What he is saying is that the government is not creating a good / service that would earn it money, which is why it must tax. Spending money does not count as “producing something of value”. Spending money for something that’s able to be sold (e.g. what a private company does) does produce value. If my husband sells his services/goods to provide for our family, he’s producing something. If I spend that money to ensure that our family is clothed/fed, I’m DOING something that’s important for my family, but I haven’t PRODUCED anything.

  77. Sarah says:

    In Ohio, it’s a little easier to “move to reduce your taxes.” Every city and village in Ohio has an income tax. Columbus just increased theirs to 2.5% from 2% and each city varies widely. Currently, I’m deciding with my family whether or not to purchase a rental property. I can tell you that where we purchase this property will depend on taxes… my local rate is 2%, but my relatives is 1%. We would probably never buy a rental in Columbus (unless it was a prime location near the University) because we’d pay 2.5% of our net income to the Columbus versus 1% somewhere else. Also, Columbus has no NOL carryforward for business profits, so if we lose $50,000 one year and earn $50,000 the next, we still have to pay $1,250 in year two even though our net over the two years was zero! Local taxes make a huge difference. If I lived in NY, I’d be getting out of there ASAP. Ohio might have relatively high taxes, but the cost of living is very low, which means a lot more to my bottom line.

  78. ahrenlw says:

    One way that taxes affect my personal finances is by causing me to give less. I would love to give away large chunks of my earnings to causes I believe in, but I find it hard to justify doing this, when ~40% of my salary (including sales tax, registration fees, etc.) is already being taken from me and given to a variety of causes about which I’m mostly indifferent.

  79. trb says:

    Whoa, Alex @46, slow down.
    - A private system of libraries would have to charge, and only the wealthy could afford it. Public libraries leads to equality of information in the US.
    - A private system of roads = same result; public roads lead to equality of access.
    - The justice system couldn’t be replicated privately. Most people think it’s a good thing to have fair trials and lock up people who are problematic for society. A public system provides more consistency than a private system would allow. Equality of justice.
    - Public education is fantastic in my home state of Iowa. We’re kicking the pants off most private schools in other states. Your statement is incredibly uneducated (no pun intended). Private schools in the state are good too, but many residents couldn’t afford them. Equality of education.
    - Food safety might be handled privately, but the FDA allows us to catch many problems BEFORE they happen, and before the long-term negative effects can manifest. Otherwise random companies start up, sell bad product, and disappear before people get sick. Equality of security.
    - Medicare and Medicaid are around BECAUSE the private sector couldn’t take adequate care of the young, elderly, and chronically ill. Equality of health care.

    It’s true that the federal government leverages the wealthy to cover the poor. And it’s true that the federal government has no fear of national debt, so they leverage the future against the present. But they do things that the private sector can’t, or wouldn’t, because it’s not profitable.

    I’ll pay for equality over anarchy any day.

  80. Jim says:

    The vast majority of federal spending goes to military, social security, medicare and paying debt. The majority of state and local spending goes to public schools with most of the rest paid to roads, fire and police. All of those things are useful and valid services that are worth paying for.

    The USA’s total tax bill as % of GDP is at the low end of industrialized nations.

    Exactly how much should be paid and which programs you like or dislike more is a matter of personal opinion. Campaigning or voting for or against taxes or spending on certain areas is a personal decision.

    Minimizing your own personal tax bill via tax planning and deductions is good financial sense.

    Some people DO pay >40% in taxes. But less than 1% would be at that level. e.g. expanding on JD’s example, if you were making $500k then you’d just about hit the 40% mark combining fed + state + soc. sec. in Oregon (worst case as a single filer with basically no deductions).

  81. Dan says:

    @Joanna

    Roads produce money for the government. In many instances there are tolls. Furthermore, without that infrastrcuture commerce could not thrive the way it does. Thriving commerce generates more revenue via sales tax, income tax and corporate tax. Mike and others are suggesting that government always behaves irresponsibly. I would say that it’s been the way of our government recently, but this behavior is not inherent in government per se.

    @Alex

    If you think we’d be better off with the free market taking care of roadways, I think you should bone up on your history. We tried this in the 1800′s. It did not work out to well. In your scenario of no justice system to boot, it would be fascinating to see how this would play out. How does the intrepid entrepreneur who builds a highway make money? How does he ensure that people pay him for use of that road? Does he raise his own army? Are you talking about lords and vassals here? I’m curious.

  82. chacha1 says:

    “the vast majority of our taxes goes to useless services at the federal level.”

    Wow. So this commenter thinks the federal government should not provide national defense, national poverty security to the elderly (Social Security), or national medical-care security to the elderly (Medicare). Those three items, I believe, make up the majority of the federal budget.

    I think every one of us should actually LOOK at the federal budget before deciding that federal taxes are theft. It’s available online. Take a look at it. Yes, it’s shocking, but remember that every item is in there because some taxpaying citizen somewhere asked for it.

  83. Jim says:

    @Johanna, “What he is saying is that the government is not creating a good / service that would earn it money, which is why it must tax. … Spending money for something that’s able to be sold (e.g. what a private company does) does produce value.”

    What does the government do? :
    National Defense
    Social Security
    Medicare
    Build Roads
    Public Education
    Fire Protection
    Police protection

    You’re saying that if government didn’t provide these services then nobody would pay for them?

    Couldn’t the government charge for all these services? If there was no fire protection in your town then wouldn’t you pay someone to do it? If there was no army then would you pay a private security company? If there was no public school wouldn’t you pay for private school?

  84. Just from surveying the positions expressed in the various comments, it looks like GRIDLOCK on Main Street, just as it is in Congress. Once again, the status quo will rule the day.

    Looks like the “change” we hear touted every election season is just a pipe dream!

  85. Kevin M says:

    @trb – thanks for responding to alex and saving me the time. Your last line summed it up perfectly.

  86. Trent says:

    Kevin, that’s precisely my point. Most people tend to abstract the taxes they pay from philosophical conservative versus libertarian versus liberal debates. All sides make a thought-provoking case, in my opinion. But very few people carry it to the point of protesting their taxes – for most, taxes are just a bill to be paid.

    What’s dangerous is when you decide that people who feel differently are not worthy of listening to and worthy of insult.

    I applaud all of you for keeping this civil. Awesome stuff, all around.

  87. Kevin says:

    @Andrea (#58):

    “How is marriage equality going to cost you anything?”

    I think the fear is that by extending full spousal rights to same-sex couples, they would be entitled to the survivor’s benefit portion of Social Security if their partner died. Currently, they’re not entitled to any spousal death benefits (aside from life insurance, obviously).

  88. rob in madrid says:

    This is a rather pleasant change from what I used to reading on the WJS website.

  89. Rosa says:

    @Kevin #64 – this is what democracy looks like. It’s slow. People don’t agree with each other, their interests conflict, there’s a balancing act between individual wants, structural needs, protecting minorities, interacting with the international world.

    The only way you get fast change is if you cut out a lot of people’s chance to be heard.

  90. Tara says:

    I’m totally disgusted with the way the US government handles our tax dollars. If we weren’t spending billions of dollars on useless wars, we could fund our Social Security system and provide decent health care for our people. As soon as I get my student loan paid off in 3 years, I am going to vote with my feet and move to Canada, where the taxes are not lower, but at least they are not wasted on huge military expenses. Taxes are definitely not just another bill for me – I feel strongly about not contributing to a system that I feel is morally wrong.

  91. I live in what is — for the area — a city with relatively high taxes. My mom, who lives in a town half and hour from here once asked me, “How do you stand paying all those taxes?” I answered, “That’s easy, I look outside and remember that I live on a paved road.”

    You see, she lives in the country where after years and years of complains, they still can’t get the road she and many others live on paved. The road is so bad, even for the area, that it made front-page news. Even the school bus drivers even got involved trying to get it paved, but to no avail. It is dangerous to drive down when it rains, it’ll make you nauseous and slow you waaaay down even on the best days, and it will take years off your car’s life. But I have none of those problems — except when I visit my mom.

    Of course, the other side of things is that, while my husband and I are trying to cut costs, we can afford to pay the taxes and still make enough progress on our debt. My mom, who is retired and lives on a very limited income, just couldn’t afford to pay our taxes here — even though they’re still nothing compared to what people in HCOLAs pay. And tax hikes everywhere — even when they’re “worth it” — squeeze out people on fixed incomes.

  92. Michael says:

    Sarah #40 – Just give some of your money to naked, poor and sick people. If you want them to have your money, do it voluntarily. If you don’t know any, you should ask yourself how a huge bureaucracy full of similarly removed people can help those people either.

  93. I think most of us agree that taxes are a necessary evil, although those of you that want to pay more are more than welcome to send it in.

    Most of us would never hold a gun to our neighbors head and demand he pay for something we want, but we will allow the tyranny or majority to do just that. There are certain infrastructure tasks that government really needs to do but I believe social services should be the job of charitable organizations. I know of people who get my tax dollars in the form of welfare but don’t even try to work. But if I was personally helping them and I knew they weren’t even trying I could cut them off. In government money is power and bigger budgets are more power so people always look to spend all of they budget and get a bigger one. We are just leveraging our future for present votes. It can’t last forever.

  94. Deborah says:

    I’m convinced that katy is trolling. She keeps posting more and more outrageous things (without further explanation of her thought process) when her previous posts go for awhile without comment.

    I think katy should be ignored.

    What are the rational arguments for not having publicly funded education? When the US did have mandatory public education, this helped grow our economy and provided for a more educated populace. Granted the US has lost ground in education since the 1960s, but privatizing education isn’t the way to address this.

  95. J.D. says:

    @Dan (#55)
    Guilty as charged, although I think your extensive arguments that $400k in income doesn’t mean $400k taxable are beside the point. Assume instead $400k taxable, okay? My point is that the previous comment that “nobody pays 40% in taxes” is wrong. There are people who pay this amount.

    This is an interesting discussion, and it’s prompted me to spend the past several hours digging around government websites in preparation for my own post about taxes next week. Mine will be more data-driven and less about the psychological/emotional aspect of taxes.

  96. Michael says:

    The thinking in this thread is so strange…it’s like nobody would do anything if we didn’t have the government do it for us. In reality:

    -we can’t afford good education because we have to pay for schools.
    -we can’t afford to support our grandparents because we have to pay for SS/Medicare.
    -we can’t afford to help our friends out of work because our employers lower our salary for unemployment insurance.
    -we can’t protect our neighborhoods because we have to pay for police.
    -we can’t afford to be healthy because we have to pay for medical costs and hospitals.

    This isn’t between taxes and services or no taxes and no services. It’s taxes and low-quality life versus no taxes and high-quality life.

  97. Taxed In NY says:

    We live in Upstate NY, my husband and I are both self employed. We too have been seriously considering moving to NC. We just can’t afford to live in NY anymore. We listed our house for sale and had no interest. Why? Because no one in their right mind wants to buy a 1000 square foot house with property & school taxes of $10k! We literally have to work 7 days a week JUST to keep the bills paid. We’re grateful we’re able to do that, but don’t want to do it forever!

    I have no problem paying taxes. I do have a problem with being GOUGED. We’ve owned this house for 6 years and in six years our taxes have more than DOUBLED!! Taxes are fine with us as long as they are fair and the money is used wisely, not wasted and not siphoned off by underhanded and greedy officials.

  98. Fenton says:

    I think both trb(#60) and Michael(#75) make excellent points.

  99. alex says:

    - A private system of libraries would have to charge, and only the wealthy could afford it. Public libraries leads to equality of information in the US.
    No, not “only the wealthy could afford”. I’m imagining library cards that cost $50 a year (like Costco), combined with donations and higher late fees, but it hasn’t really happened in the private sector (hard to compete with the government), so no one can truly know what it would look like.
    - A private system of roads = same result; public roads lead to equality of access.
    There is a difference between roads and streets. Roads take you between cities and towns, streets take you places in the city. Roads would be paid for with tolls, I assume (again, I havent seen it so I dont know what it would look like). Streets would be paid for by businesses and private individuals who want to get to their houses. They would be provided much like hallways are provided in hotels, you have to have someway to get to your room/their business.
    - The justice system couldn’t be replicated privately. Most people think it’s a good thing to have fair trials and lock up people who are problematic for society. A public system provides more consistency than a private system would allow. Equality of justice.
    The public justice system doesn’t work. I would rather deal with things privately with the person than have the state in my affairs. And does locking up “people who are problematic for society” (for the record, that could be ANYONE you dont like) really “work”, in the sense that they won’t do it again? Prison is a revolving door.
    - Public education is fantastic in my home state of Iowa. We’re kicking the pants off most private schools in other states. Your statement is incredibly uneducated (no pun intended). Private schools in the state are good too, but many residents couldn’t afford them. Equality of education.
    Public education is the state’s way of brainwashing children, honestly. That’s why I have a problem with it. I dont support private schools either, it’s the same thing with a different agenda. I am in favor of homeschooling/unschooling.
    - Food safety might be handled privately, but the FDA allows us to catch many problems BEFORE they happen, and before the long-term negative effects can manifest. Otherwise random companies start up, sell bad product, and disappear before people get sick. Equality of security.
    I agree with this for the most part, but I think there would be a private FDA-type organization that the businesses would fund, because not having been tested for certain things would be bad for business.
    - Medicare and Medicaid are around BECAUSE the private sector couldn’t take adequate care of the young, elderly, and chronically ill. Equality of health care.
    Survival of the fittest. There should be no equality of health care. (I understand most people do not hold this view. I do.)

  100. Michael says:

    Deborah #73, that is an outrageous statement with no proof. I don’t think you should be ignored, though.

    Public education in the United States has only helped to grow the GDP so far as it withholds a broad liberal arts education from students and teaches them to work for banks and factories. It’s a very, very poor education we receive in public schools. Anyone between, say, Socrates and John Dryden would be shocked at how little we know – and I am talking about the middle class, not just elites.

    Deborah, you need to learn that the purpose of education is not to make the GDP bigger.

  101. Deborah says:

    #75 –

    I think most people operate from a mindset of not wanted to do for others if it doesn’t directly benefit ourselves. The cost of educating one particular young person from age 3 through age 18 is prohibitive except for the very wealthy. Where can you hire various subject experts every year for 15 years? Much less, where can individual citizens pay for books and other materials.

    Some of this has to be paid via government and/or other public efforts.

    Most private industries benefit from taxpayer $$.

  102. Susanne says:

    I know people hate taxes, but they’re necessary. Our taxes here in the U.S. aren’t all that bad compared to what other people in other parts of the world (like Europe) pay. Personally, I’d be willing to pay higher taxes if it meant we could develop a decent healthcare system, create a stronger public school system, and shore up social security.

    Right now, the government is emphasizing more taxation on the wealthy. However, somewhere down the line, the middle class is going to have to pay more, too… I don’t think our government should pretend that’s not in our future.

  103. Deborah says:

    #78 – did you not read the part where I said “more educated populace?”

    If you think this is up for debate (that school children now are more educated than those in the 1800s) feel free to cite some published histories with evidence.

    I would like to see you support literacy rate differences between now and then to start.

  104. alex says:

    @ #78
    If parents want their children to go to school (again I would prefer homeschooling), they should think about that and save for that BEFORE having kids. Hopefully this would slow the “Hey Im pregnant and I dont have to pay much for this kid so lets have it even though we have massive overpopulation” attitude.

  105. Andrea says:

    Members of the LGBT community pay taxes too, and don’t have the opportunity to claim the same benefits and be protected by the same responsibilities and legal obligations as opposite sex couples.

    We pay taxes.
    We pay into social security.
    We contribute to society just as much as any straight person.

    Yet we are treated as second class citizens. We can’t file jointly and pay the fair amount of taxes for our families, whether that would turn out to be more or less than we pay filing singly. You’re right that our partners can’t collect social security if we die first. They also would not automatically get custody of children raised together — a second parent adoption, which is not available in all states, would be required for that. If, like many younger couples, a same sex couple has not gotten around to drawing up a will when one partner dies, the surviving partner may not inherit the house they bought together or the other assets of the deceased partner. A straight widow doesn’t need to worry about whether she will keep her house or her husband’s bank balance when she’s grieving her loss. Even with a will, more taxes would be taken out of the estate left to a same sex partner because the inheritance is not going to a legal spouse.

    This is just plain unfair. If there IS a net cost to society for the systems we’ve put in place to protect straight couples, the moral thing to do is to pay that cost for same sex couples just as we all do now with opposite sex couples. However, I believe extending the stability of marriage to committed same sex couples would actually improve the economy. There have been studies showing a boost to the economy.

    Here’s a report on the effect on the wedding industry in Massachusetts:

    http://www.wwlp.com/dpp/mobile/wwlp_ap_MA_economy_gets_bump_from_gay_marriage_200905171149

    This news article talks about other revenue for Massachusetts:

    http://www.csmonitor.com/2009/0527/p02s07-ussc.html

    As the Christian Science Monitor article mentions, monetary calculations don’t usually enter into the picture for this debate. Opposition really boils down to the fact that some powerful religions (though not all) are biased against LGBT people. But the government has no business enforcing religious bias.

  106. martino says:

    Taxes are ‘just another bill to pay’? So then, just like a regular bill, let’s say like the phone bill or the grocery bill, I have the option to seek out a lower cost alternative to reduce expenses? I can lower my tax bill just like I can lower my phone bill, my grocery bill, my vacation bill?

    I didn’t think so.

    Taxes come without any options. Some politician hands you the tax bill and you have to pay, no questions asked or suffer the consequences. If I don’t pay my property taxes of $1000, I will have my whole $350K house taken away. Sound fair to you?

    JD you chose a bad analogy.

    If you think the rich pay their fair share of taxes, look at the coast lines of Monte Carlo or the ski slopes of Switzerland. They’re chock full of the rich who will go to whatever lengths they must in order not to pay taxes. That’s how they keep their wealth. It’s the little guys like you and me who pay and pay and pay and pay.

  107. honestb says:

    To the letter writer – Emma Goldman was an anarchist, not a communist, which is sort of like being a libertarian except instead of being selfish and whining about the government redistributing wealth, it’s about blaming the government for being an obstacle to redistibuting wealth to where it justly belongs – the people who produce it.

    To Katy: Just because you believe that anti-welfare nonsense doesn’t make it true. Everyone I know on welfare is pretty hard up, and doing their best.

  108. Michael says:

    Deborah #79: Why do people need to be forced to help others? Did you know that voluntary giving was more prevalent when taxes were lower? Don’t you think people could restore their sense of charity and responsibility if they were allowed to have their resources back?

    Public school does not provide subject experts. The quality of education is low, not high. It wouldn’t cost parents much to give their children the equivalent of a public school education because it wouldn’t need to be very good. :(

    But with the money saved on public school taxes, state education program subsidies, teacher pensions, etc., most parents could afford a nice private school education. We would probably also see a return of charitable programs to help poor children go to good schools. Those have mostly disappeared, too.

  109. Chris says:

    In reality, government and taxes are never black and white like people want it to be, but shades of gray. There are things that government does quite well, and there are things government does not do well.

    The irony of it all is that we are all commenting on the internet, something that was initially funded by government research. How many of you use a GPS device in your car, guess what your tax dollars pay for, yep those satellites. The fact is there are tons of intangibles that most people take for granted.

    I sure don’t want the FDA being dissolved. The US has one of the more rigorous testing regimes of any country in pharmaceuticals. Those rules that say farmers can’t feed you cows with mad cow disease? Those are important to me as well. Have you read The Jungle by Rudyard Kipling? That should tell you how well the free market performed without rules in place.

    Susan is actually quite lucky in that she is self employed. If she has a a good tax person she can most likely pay minimal federal income taxes. Every self employed person I know pays little or no federal income taxes. People need to understand what marginal means.

    On the other hand, I don’t like the government choosing technologies either. Set the rules and then let the free market come up with it. Fund ethanol creation? No. Require fuel standards? Yes. Then let the market figure out how to do it.

    FEMA during Katrina, a fiasco, FEMA during Hurricane Andrew, got high marks, what is the difference, the administration in charge. OCC and Fed had done a pretty good job protecting us for 70 years and then all of a sudden in the last 8 it failed? Unfortunately that was an administration putting incompetent people in charge and telling them not to do their job. If you look at the history of many government services you will see many of them do a bang up job, and many of them plain suck.

    As an economic student, I learned when possible, the “Free Market” works best, when in reality, a competitive market works best. Unfortunately there are a lot of area where it does not work. Natural Monopolies is a good example. And where the “Free Market” fails, is where government should step in.

  110. Dana the Common Cents Coach says:

    FYI, Indiana’s governor is Mitch Daniels.

  111. Michael says:

    Deborah #81 – The literacy rate has fallen since then. You are confusing the ability to sound out words at an acceptable speed with the ability to comprehend ideas in books, synthesize/articulate arguments based on what’s been read, understand poetry and so on.

    It all goes like that. The goal of public school administrators push all students to meet a standard – even if it has to be very low! And almost nobody goes further.

    It’s too bad that nobody was measuring the ability of children to converse with adults or write poetry or translate Latin in the 1800s. The results were stellar compared to now.

    However, you might be interested in the difference between the classical and the technical, modern, inclusive school track in Germany in the 1800s. Ironically, most of the top German scientists graduated from the classical program.

    Sorry for rambling a big. My main point is that you are measuring how many students meet a uselessly low, modern standard. You should measure how many students today receive an education as good as students who were educated received back then. We know fewer students are well-educated today because the standards are lower.

  112. Rosa (69)–I appreciate what you’re saying about democracy. However democracy rests on an informed citizenry. Ours has the information availble but shows a definate preference to ignore it.

    If you look at the governments own numbers, they point to a looming crisis. We’re here talking about spending, about where money should go, as though we’re operating with a balanced budget. But a quick look at the numbers paints a very different picture.

    Now back to democracy. From time to time democracy comes face to face with a crisis. No matter what our doctrines or preferences, reality can’t be denied. Maybe in the short run, but never in the long run.

    We can say we need to fight this war, or alleviate that crisis, or end poverty, or any other purpose we choose, but how far do we go if the money just isn’t there?

  113. IRG says:

    To me, the issue isn’t that we have taxes–although I think the disparity issue is significant. Every rich person I know pays far less in taxes (I know because they brag about it!) than many average middle-americans. We needsome serious equity here when people with millions pay next to nothing and somebody making $60,000 as a family pays more.

    To me, the real issue is how they are used and the fact that we really don’t have a say in that. No, we don’t. Otherwise so many people would not be up in arms with the votes of the Senate and Congress. (Our political system no longer works. Period. Doesn’t matter the political party.)

    There is not a lot of transparency on spending and tons of waste. I have a huge problem with that. And I personally object to my taxes being spent on certain things, but I don’t have a choice.

    1. Paying taxes is not optional. So even people who object strenuously to how their money is spent still pay. (Yes, you can end up in jail if you don’t! You don’t have to be a celebrity).

    2. People DO have very strong feelings and many would not pay taxes if they could get away with it, to protest the government expenditures.

    The cry was once “No taxation without representations.”

    Well, that IS what we have now. But the bulk of America is too busy struggeling to stay alive and in a home to protest. But if everyone did, things would have to change.

    To Chris:
    Your comment about the self-employed paying lower taxes is absolutely NOT correct.

    I’ve worked for companies and for myself. I actually paid more in taxes when I was self-employed. Yes, you do have a lot of deductions compared to a staff employee. But that does not necessarily mean you pay less.

    A lot of people I know with corporate jobs have a lot of itemized deductions that I don’t (I do not own a house, nor could I afford to.), for example.

    You also forget that we self-employed spend a lot, when we can afford it, on health insurance and other benefits you are covered for when you work for someone else (or should be).

  114. Paul says:

    I think everyone agrees that waste is a bad thing, that government should not be spending frivolously. The problem is most people have different definitions of what frivolous is.

    I know of people who every year do not pay a certain percentage of their taxes because that is the amount that will go to the Dept. of Defense for military use. They do this in protest of war. And every year like clockwork they get audited and end up paying the taxes plus extra fees because they do not want to go to prison, but are just trying to make a point. Most would think this is counterproductive, but they feel compelled to do it in protest.

    Others feel it is frivolous to support welfare, food stamps and public healthcare. I feel that these are important things and have utilized the healthcare and food stamp programs for myself and my family while going through college.

    I now have a bachelor’s degree in computer science that I could never have gotten without the help I received. I’m 25 now, by the time I’m 50 I will have paid much more in taxes than I received in help over the past few years, but I know I will be helping someone else out with what I pay.

  115. Michelle says:

    If there was a company allowed to do what the government does (pay us or else!, can’t sue us!, different accounting standards, unimaginable debt, no alternative when services were wretched, etc) we would all be up in arms about it. If pushed, they would say “but it’s for your own good!” when really, they aren’t doing as much good as they say they are. Instead, we have “representatives” in such a company (the government) who don’t really represent us but that veneer keeps the system going because we think we’re protected and it’s all legit. I don’t believe that it’s legit and I wish there were choices besides living somewhere with such an awful company – everywhere you go there is a system that is set up to forcibly take your money, provide you with substandard services, put you and other people into unimaginable debt, kill neighboring companies, play by different rules than everyone else, and you can’t do anything about it but call the equivalent of a 1-800 customer service number and say “I don’t like this!” but nothing happens. When you do come out and try to get involved in the process you’re labeled a nut. I totally give up.

    I really am tired of those “gotcha!” comments – “oh the internet you’re using, where did that come from – the gov’t – gotcha!”

    Oh, where did that cloth come from you’re wearing? – the free market – Gotcha! What is that supposed to prove?

    I think someone would have created the internet. Someone/some PEOPLE in the government did. It’s not as if “the government” is some lofty computer somewhere – it’s a collection of people.

    I believe that most things happen DESPITE the government. I think we would have even more amazing technology and advances if there wasn’t so much bureaucracy and obstacles. In my mind, government causes more problems than it “solves” – and I can’t think of any problem it solves. The only good techonolgy the gov’t has come up with are processes/technology that is more effective at KILLING people in wars.

    Please give me an example of a “natural monopoly” that got that way *without* government help. I’m not going to hold my breath expecting someone to refute this. http://mises.org/story/2317

    If I didn’t have to pay taxes for schools, roads, etc, then I could use that money to find the BEST available options for schools, roads, etc. Instead, I have no choice. I have to pay and accept the closest geographic services provided by my taxes, OR pay taxes AND pay for alternative services (like private schools, or private security).

    Why can’t I pay taxes and have my money only go to things I support? I don’t want my taxes to go to wars or other wasteful things, but as long as I am forced to pay them I’d like a say to where they go.

    Anyone who thinks monopoly public education is a good idea should look up John Taylor Gatto.

  116. Becky says:

    If I could legally move to a country with higher taxes and more social support, I would.

    I make good money (about $40 K a year at a stable corporate job) and save a good portion of my income. And I find it very stressful to be one diagnosis or pink slip away from losing my access to decent health care. If someone in my family gets sick, I will lose my credit and my home, and I *have* health insurance.

    I am depressed that the U.S., one of the wealthiest contries in the world, is actually *debating* whether this real threat to its hardworking middle-class citizens should be of any concern to our government.

    I’m no freeloader, and neither is anybody else I know. The lack of social support in this country means that not only am I personally vulnerable, but so are all my family members and friends. The magnitude of our collective vulnerablility is more than I can cope with by myself, even though I am frugal, work hard, plan ahead as best as I can.

    In my mind, protecting the citizenry from this kind of collective vulnerability, by spreading the costs of that protection out over *all* citizens (and not just the ones unlucky enough to get sick) is exactly what taxation and government are for. In the 1200′s, good governments protected their citizens from maurading Vikings. In today’s wealthier, safer societies, I think good governments should protect citizens from illness-induced bankruptcy too.

    But I suspect that many Americans do not agree with me. That’s why I’d move if I could. Unfortunately, countries with more responsible social policies tend to have a lot of immigration pressure, so they’re hard for even the well-off to move to, high taxes notwithstanding.

  117. Claire says:

    There are taxes, then there are taxes. None of us can avoid the federal burden, but local & state are a different matter.

    Good for you, #13, Tom, who’s glad to live in Texas because there’s no state income tax. Did you know that studies have shown that when you combine income & property taxes in many locations across the country, Austin, at least, rates among the most expensive?

    We are Austin residents, about to retire, & are, like Susan, seriously considering moving to another state, in our case Colorado. Property taxes are a LOT less, & retirees’ first $40K of income is exempt from state income tax.

  118. Kevin M says:

    @ alex (#77)

    re: libraries – for some people $50/annually is a LOT of money – free is free.

    re: public justice – so you’re going to resort to some vigilante-type justice system? What happens if your definition of “wrong” differs from your neighbors? I guess we keep going back and forth, wild west style until everyone is dead?

    re: public education – sounds like you’ve been brainwashed a little yourself – WTF is “unschooling”?

    re: healthcare – I’m not even going to address this – your view towards the sick is downright appalling.

  119. Andrea says:

    My last comment is awaiting moderation, probably because I used a couple of web links in it, but before this discussion dies down I wanted to get this point out there:

    LGBT people pay taxes too, and deserve the same marriage rights and obligations as straight people have. We also deserve equal protection in employment both in civilian and military jobs — you can still be fired for being gay or trans from many jobs. We are full citizens, we contribute to society just as much as straight people, and there is no justification for unequal treatment.

    Think of it this way. If someone waved a magic wand to turn everyone straight overnight, and we all got heterosexually married, that would cost the same as enacting full marriage equality now. If that cost is too high, maybe there should be a quota on the number of straight marriages per year?

  120. Dan says:

    @J.D.

    There may be a little bit of hyperbole there, but I wouldn’t go so far as to call it BS. I think you’ll find as you research this that people who 40% of their income are very rare. Currently, the average effective federal tax rate for the richest 1% in this country is about 31%. This only excludes the state tax. Most state tax rates are not nearly as high as Oregon. Also, once you start getting into the ultra-rich (like 10 million/yr) the average effective rate is closer to 20% because of so much income being taxed as capital gains. My original comment was directed at comment #12 that said everyone pays about 40% to the government in taxes. It’s something I hear people say all the time as a given, but it’s just false. You’re right that there may be people out there whose effective rate does hit 40%, but it’s like finding a needle in a haystack.

    I do think your idea for a post sounds interesting. I look forward to checking it out. You’ve got a great website. Keep up the good work.

  121. J.D. says:

    Dan (#93) writes: My original comment was directed at comment #12 that said everyone pays about 40% to the government in taxes. It’s something I hear people say all the time as a given, but it’s just false.

    Ah. I think we’re mainly in agreement then. And both guilty of a little hyperbole here and there. :)

    I’ve spent hours now on this tax stuff today, and have gone down the rabbit hole of “what do we spend our money on?” I’m not sure where my post will end up. I want to get to the percentage people pay, but I’m afraid I’m going to have a mess of monster post on my hands.

    Can you point me to any sort of data regarding effective tax rates? If not, I’ll google it eventually, but I thought maybe you could save me some time…

  122. Dan says:

    @J.D.

    Here’s the site I was using for my info.

    http://www.cbo.gov/publications/collections/taxdistribution.cfm

    A lot of interesting stuff here.

  123. Dan says:

    @J.D.

    It’s not letting me post the link, but if you type in “Data distribution federal taxes household income”. The first google result is the page I got my stats from.

  124. psychsarah says:

    I agree wholeheartedly with Sarah and trb. I live in Canada and I’ll bet I pay a whole lot more (percentage wise) than most of you (Americans) in taxes. My bookkeeper at work shakes her head at the taxes she has to deduct from my paycheque, but I tell her, honestly, I would rather pay them and have the social safety net for the vulnerable people I work with everyday. I hear Michael’s point about giving money directly to those who need it, but that system is just as inefficient as the government doling out the help, just in a different way.

    I think it’s great that Trent has brought this to the forefront for conscious thought and consideration. I too appreciate the general civility and thoughtfulness of the majority of commenters.

  125. Fenton says:

    Excellent points Becky(#90). And I completely agree with you, Andrea(#92).

  126. Ms. Clear says:

    Becky’s comment (#90) sums up everything I would have said. I completely agree.

  127. Diana says:

    I mind paying taxes because I beleive the government is not maximizing the use of my money. A lot of what they do could be done better and faster in the private sector. I realize that a certain amount of money needs to be pooled together for certain services and this helps the greater good, but I also think that we have gotten to the point where our tax dollars are not being used to represent what the public wants them to be used for.

  128. Susan D. says:

    A bit off topic: The Jungle was written by Sinclair Lewis, not by Kipling. Kipling wrote The Jungle Book.

  129. Dan says:

    @Andrea(#92) & @Katy(#51)

    Legalizing gay marriage would not increase our taxes because it would actually save the government money. The CBO estimates that any increases in social security payouts would be more than made up for in other areas. For instance, gay people who are currently receiving government assistance would receive less once their filing status changes to married. The “gay marriage would cost us money” argument is just a tool bigoted zealots use to garner the support of people who would otherwise be indifferent.

  130. Rosa says:

    @Kevin #88 – well, I would say we should raise taxes. I do think we’re seriously overleveraged, mostly in terms of military spending and commitments, but also the combined costs of public and private health services are a big issue.

    The thing is, we *are* addressing it. It just takes a long time, because we have a lot of people and a lot of ideas. This is a big, varied country.

    And I agree with you that education is important. I just don’t think ignorance is as rampant as you think.

  131. Michael says:

    psychsarah #96 – how is giving money to needy people directly inefficient? If my neighbor needs $100 of groceries and I give her $100, doesn’t that solve that problem? How much would it cost the government to take that $100 away from me? How much would the social service agency spend to receive it and distribute it?

  132. J.D. says:

    Got it. Thanks, Dan. I have 13 pages from the CBO and other entities open in my browser already. What’s one more?

  133. Michael says:

    Continued…I suppose the argument is that people will be missed because some people have no friends, or some people only know other poor people. In response to that:

    1. How many people are missed under our current bureaucratic system because they don’t know their options or how to navigate through our impersonal system?

    2. If we all directly helped someone, wouldn’t we now have more people able to help others? Mightn’t charity spread into even very poor areas without enough personally-given assistance?

  134. Rosa says:

    @Michael – just the example you gave:

    Our food shelf negotiates all sorts of deals with grocery suppliers. They have access to free food from gardeners and food drives, and probably other sources I don’t know about. Also they are a place people can go for food who will NOT ask their neighbors – especially elderly people who are ashamed to take charity.

    So $100 to the institution gives a lot more people food than $100 to my neighbor directly. It also means that the food is always available, so when (as now) entire communities are having difficulty, there are resources there.

    The public food programs are that kind of program, writ large. But even my little local food shelf is mostly supported by government and corporate grants, not by individual donations.

  135. David says:

    Like the gentleman who inspired this article and all of the subsequent comments, I take a state’s tax burden quite seriously. I am an older, non-traditional student who will be graduating next spring, and a significant part of my future job search has been (intentionally) focused on those states whose tax burden is lowest. I am currently attending school in Oregon, where the state income tax rate is nearly 10%, which regardless of state-sponsored services, has major implications on one’s financial well-being, and as such, is a HUGE component of my deciding where to move after graduation.

  136. Michael says:

    You’ve got me on the negotiated discounts, but does it make up for the expenses of running the pantry? Gardeners can also give directly to neighbors. Food bought for food drives can also be bought directly for neighbors.

    I agree that many people won’t take personally-given charity but would rather have the government forcibly take the money and anonymize/depersonalize the whole matter. That doesn’t justify it. Perhaps if more neighbors were allowed the resources to help each other, receiving charity would become acceptable again.

  137. Matthew says:

    The mindset SHOULD BE that the government works for us, not the other way around. When you look at the government through that lens, this kind of wastefulness, negligence, insubordination, and carelessness is unacceptable… their employment should be terminated.

    Unfortunately, the mindset is becoming more and more that we work for the government and should be indebted and reliant on it for our personal welfare. Until we change that mindset, government will continue to take, bully, and impose to get what it wants.

  138. Andrea says:

    @Dan, I agree. If my earlier comment gets approved, you can see where I posted a couple of links showing marriage equality’s positive effect on society.

    Just playing devil’s advocate — if marriage did cost society more money than it brought in, everyone who pays taxes, including LGBT people, should have access.

    I was trying to be brief since my not-yet-posted comment is very long — sorry I did not make it clear that I actually don’t agree marriage of any variety is a net cost instead of a net benefit to society.

  139. Sandy says:

    It’s interesting that the point of how much government money “private companies” accept into their pockets. Naturally, I’m thinking about the military. They keep MANY people employed, through real estate (do you have several military recruitment offices in your town? We do.), farmers (military personnel stationed all over the world need to eat), health care (there are VA hospitals all over the US and the world, and they employ all levels of medical and support staff), media (how many well-made commercial have you seen promoting the military lifestyle, not to mention ads in mags and other print), industry (what would happen to “private” companies like Lockheed Martin, Northrup Grundman, Blackwater Security, USAA etc…were there no military (governmnet) contracts?), and I believe I’m just scratching the surface.
    I am personally quite happy to pay taxes for all the services I do receive from all levels of governmant. I’m happy to get my mail delivered every day. I’m happy that I see those orange barrels up…it means that my gov’t is fixing roads so that I can travel safely with my family. I’m happy that newborn and older children have advocates in the adoption/foster care system. I’m happy that my dad gets Social Security like clockwork, and that my widowed friends gets a monthly check to support their children as they grow. I’m happy that there is a security force 24/7 in my town, county and state at multiple levels. I’m happy there is the CDC to help stop diseases from spreading…and that smart people who actually believe in science are running the show there. I’m happy that the poor and elderly in our nation are taken care of for healthcare…I’d gladly pay more for those whose employers do not think it’s important to insure their employees, or are unemployed. I’m happy that there is public education, and that my kids get a very good education. I’m happy I can visit my public library, and order any book or DVD I want, and that there are wonderful programs that our family takes part in regularly for all ages. I’m happy that there is a public university system in my state, so that my kids can get a high quality education, without breaking the bank. I’m happy that the FAA regulates air traffic so that we can fly securely. I’m happy there is a humane society. I’m thrilled that there are national parks, state parks, county parks, and city parks, with opportunities for learning and recreation from sea to shining sea. I’m happy that the FDA regulates medications (my…I’d have a really hard time coming up with formulating my own drugs for cancer or diabetes , and making sure that they were safe should anyone in my family need them!). And I’m happy that we all are able to utilize all of these services and more for, what did JD say? Some 10% of the taxes we pay? I say we’re all getting a pretty good deal for what we pay.

  140. Corey says:

    A few people need to educate themselves on the healthcare proposals currently before Congress. First, the “public option”, in every form, will be funded by premiums, not tax dollars.

    Secondly, the aspects that will be funded by tax dollars (such as comparative effectiveness research, which rewards doctors for using more cost-effective medicines and procedures) all exist to LOWER the cost of healthcare, which threatens to bankrupt the federal government and is already bankrupting individual households. Not only that, but critics of reform who insist that a government healthcare program would cost them money would do well to consider the opportunity cost of the existing system, particularly as it relates to job mobility and entrepreneurship.

    If anything, those who consider themselves “fiscally responsible” should be advocating for an even stronger version of health reform than we currently are being presented with. The larger the government plan ends up being, the more opportunities there are for cost efficiencies throughout the healthcare system.

  141. Rosa says:

    Giving directly to the person in need puts the burden on them – shopping, negotiating, cooking, transporting. Even making good choices – I’m not giving $100 to my neighbor if she’s a drug addict, but I also don’t want her or her children to get diseases of malnutrition or be less able to cope with their challenges because of something as basic as food availability.

    There are efficiencies of scale in almost every endeavor – that’s one of the precepts of modern business. It applies to food distribution for no money just as much as to food distribution by Wal Mart.

  142. Andrea says:

    The national food bank network, Feeding America (formerly america’s second harvest), says on its website that each dollar you give to them translates to ten pounds of food for the needy. That’s a fabulous economy of scale.

    They take donations from the government, industry and private individuals and make sure it gets distributed to the right food banks in proportion to the need in those areas. That way, people get fed even if they don’t happen to live in an area where lots of their neighbors have extra food to donate directly to them.

  143. Nick says:

    Nobody likes to pay taxes. In a perfect universe everyone would chip in on their own accord to fund schools, roads, bridges and everything else. In reality no one wants to pony up for these things so we have to force ourselves to fund them. The alternative that many anti-taxers suggest which would be turn everything over to private interests would be a disaster. I don’t want to have to pay some exorbitant toll for every street that I use to get to work because Walmart owns the rights to the roads where I live. If people think that they are paying too much in taxes now, imagine what it would be like if greedy corporate America took over everything. In case you need a reminder just look back at the recent banking crisis. That wasn’t caused by the evil government, it was caused by greedy fat cats on wall street.

  144. prodgod says:

    #67 Kevin said: “I think the fear is that by extending full spousal rights to same-sex couples, they would be entitled to the survivor’s benefit portion of Social Security if their partner died.”

    Really? That’s like $250. Hardly worth denying equality over such a trivial amount, don’t you think?

  145. Dan says:

    @Michael (#108)
    Deborah #79: Why do people need to be forced to help others? Did you know that voluntary giving was more prevalent when taxes were lower? Don’t you think people could restore their sense of charity and responsibility if they were allowed to have their resources back?

    We need to be forced because we simply would not give it on our own. Non defense discretionary spending, social security and medicare cost 1.8 trillion/yr (and growing). Personal charitable contributions are about 200-300 billion/yr. We got a ways to go.

  146. prodgod says:

    I must comment on this notion of the self-employed paying little or no taxes. Ever hear of the Self-Employment Tax? We don’t have an employer paying half of our Social Security, we pay 100%, which ends up being a huge chunk of change and definitely brings us closer to the 40% mark.

    Don’t get me wrong, I love being self-employed, but I pay dearly for the privilege.

  147. Trent old boy, methinks you’ve hit the perverbial homerun with this post.

    There’s not a whole lot of agreement in the ranks here, but Trent’s got us all thinking about something which regrettably is often a surprisingly static issue.

  148. Judging by the # of comments this post has generated I think it’s safe to say that taxes matter in one way or another to most of us.

    -Gen Y Investor

  149. mcharlie says:

    @ #144 Dan

    You just proved his point. Remove the burden of it being unwillingly extracted out of us an people will begin to contribute on their own again.

    View my income as a container of water. If i want to contribute by giving others some of my water i can do that much more efficiently and willingly if i was allowed to remove the govt’s fire hose sized pipe that’s sucking out MY water from the bottom of MY barrel. All my time and effort are going into trying to fill a barrel that can never be filled. Remove this obstacle, and you will see people resume charitable contributions. Then and only then would there be even a remote chance of matching what the govt is stealing.

  150. Corey says:

    “Did you know that voluntary giving was more prevalent when taxes were lower?”

    Bullshit. Cite your source.

  151. Amateur says:

    @katy

    I know what you mean by the tax cheats in NY. Most of them are not in dire need, it is balant stealing in most respects with people running around purchasing groceries with their foodstamp cards, wearing designer clothing, tons of new electronic toys while living in a subsidized apartment with extremely low rent and virtually no responsibilities. This sort of welfare coming from tax dollars are meant to help the elderly, ill, and those who work extremely hard at min wage jobs and still barely make it.

    I do disagree about school and eoe marriage. You wouldn’t want uneducated savages (which exist already) run in hordes around the city and continue to use the welfare system. There are plenty of people who make it out of the slums through financial aid and a few handups. As for marriage, it creates a chance for those who wish to protect their family by means of inheritance/benefits an opportunity to do so, why would you oppose this? Do you not wish for families and its children to be protected regardless of how the family is constructed?

  152. katy says:

    I owe a big apology here to everyone.

    I’ve had to think on all the comments; I appreciate them. I have been acting out on what I see around me – but I do not have the facts. I’m acting out becauce I’m angry and have to shut up and look at that.

    Sorry.

  153. sueand says:

    #143 prodgod

    I think you are confusing the one time death benefit, which is now set at $255, with the survivor’s benefits which a widow or widower can receive monthly on the death of their spouse. That amount varies, and is based on the earnings of the deceased spouse.

  154. Sierra says:

    Protesting taxes is hard, dangerous work. I have a good friend who has been a war tax resister for many years, and that choice requires her to work exclusively under the table in a cash economy. She can’t own a home or any other visible assets.

    I support her political position: I am a pacifist and hate seeing my tax dollars used to fund a war I believe is wrong. But I’m not willing to make the personal sacrifices needed to put my money where my mouth is on that one. Instead I pay my taxes and also stay politically active, voting and corresponding frequently with my elected representatives about how I want my tax dollars used.

    It’s probably just as well. While I hate seeing my tax dollars used to buy guns, I’m happy to see them used to fund family planning services for the poor. I know there are plenty of people out there, also paying taxes, whose priorities are the exact reverse of mine. And we all rely on the same roads, hospitals and school systems.

  155. danielle says:

    I live in Washington, DC and we pay the second highest amount in federal taxes per capita in the country, despite not having voting representation in Congress. In addition, our state income tax is substantially higher than surrounding VA and MD. However, would I move to a VA or MD suburb because of this?

    Not a chance.

  156. David says:

    “#18 Mike Piper @ 9:04 am August 11th, 2009
    “That’s why you see tax protests but rarely see people advocating paying more taxes.”

    I know I’m a strange fellow in this way, but I sent emails to multiple representatives in my state government (IL) asking for an increase in the state income tax.

    It didn’t work.”

    Mike Piper, nothing is stopping you from paying more taxes than what is withheld in your W2. Why would you lobby to have your *neighbors* pay more, when they might not want to?

  157. kipflorida says:

    I would much rather pay for any service privately than have the government run it. With better competition, comes better service. Government intervention is the problem not the solution.

  158. Mike Piper says:

    David (#153)

    Because I’ve seen first hand what the service cuts in IL will involve.

    I’m willing to pay more taxes. In fact, my email stated that I’d be willing to shoulder twice the state income tax burden that I currently do. (6% instead of 3%.) But clearly my additional 3% won’t solve the problem. I think we all should pay more taxes if that’s what it takes to save many of these services.

    Do I deny that there’s wasteful spending from the state government in Illinois? Absolutely not. I’m sure there is. In fact, I’m sure there’s a lot of it.

    But in the short term, it’s difficult to solve the problem of wasteful spending. And something needs to be done immediately to raise funding for social services.

    I don’t see raising income taxes as the end-all-be-all solution. But I do see it as a better alternative than cutting services for the disabled, the elderly, homeless children, victims of domestic violence, etc.

    Regards,
    Mike

  159. Hogan says:

    Sure taxes are wasted by government but not all taxes. Private businesses waste your investment dollars but they don’t make the newspaper like government waste but nothing gets people fired up like government waste. So how do we define waste? It basically comes down to this–Rs scream and moan about spending and the deficit when the Ds control and Ds scream and moan when the Rs are in control. The level of anger towards government depends on your political offiliation and whether your team controls the checkbook.

  160. rb says:

    I too am taxed excessively. Look what we pay… state, fed, gas, property, corporate taxes, melorose tax, cfd taxes, cigarette tax, income tax, ALT tax, medicare tax, etc.
    I see my pay check shrink on one hand and see people abuse the system all the time. I am not “allowed” to report it or I’d lose my job. Illegal immigrants labor in the parking lots and go in the the ER to have the baby and now the infant is a US citizen and the whole family has reason to stay in the US and soak us all.
    I expect the politians to be as careful with tax payers money as I am with my family’s budget, but that would be un-American.
    This is not the change I voted for, thank you very much Obummer. What do they say, be careful what you wish for…
    The overspending and this administration is flushing this country down the toilet. I am ready to take my vote back and certainly won’t vote for a single politician who supports this excessive spending and ultimately the raise in taxes for people of all income levels.

  161. Troy says:

    Dan:

    You are wrong. 40% is about right, maybe even low.

    100K income couple, no kids, Missouri.
    2 cars, $250K home. both w-2 income.

    Effective tax rate for federal income tax is roughly 15% (25% marginal)assuming average deductions about equal joint standard deduction.

    Fica (SS/SSDI/medicare) is 7.5 employee and 7.5 employer. Many people forget that their employer matches FICA on their behalf. 15% total. Just because you don’t see it doesn’t mean you don’t pay it. Self employed DO see & pay it…FULL 15%

    State income tax about 7%

    So…Federal, state and FICA effective tax rates are already around 37%

    Then add local city and county tax. Personal property tax on those cars and Real Estate tax on that home. 4%-5%…and Missouri is cheap. These taxes are not income-dependent either. You could earn zero and still owe them.

    Already over 40%

    Then there is sales tax on everything you purchase. Food, fuel, alcohol,cigatettes, movies, hotel rooms, airline tickets, clothes, cell & TV excise taxes, utilities, etc. Everything. Generally 5-10% total city & county & state sales taxes on whatever it is. (here it is 6.25% total but it varies by county)

    now over 45%…approaching 50%.

    licensing taxes (plates, drivers, professional), levy’s, special assesments…the list goes on

    And the kicker…you have to pay taxes (income) on the money used to pay taxes (sales). After tax income is used to pay sales tax every day for everyone. Double taxation at it’s finest.

    I hope you are not a CPA.

  162. Shevy says:

    There has been a lot of interesting discussion, much of it well thought out (though by no means all).

    However, I’d like to comment in an entirely different direction.

    Trent, I’m suprised that you didn’t come to this post and this discussion with a clearcut, articulate, strong position. Why? Because you keep talking about being interested in going into politics.

    If you hope to have a political career these are precisely the kinds of issues where you need to really know where you stand and make that clear to your audience/constituents/etc.

  163. AnnJo says:

    Most people have no idea what their true tax burden is, because it is concealed and distorted.

    First, it’s spread out everywhere. Did you know that anywhere from 5-20% of your electric or phone bill is tax? 18-25% of your gasoline bill is tax? 10-30% of your mortgage payment is tax? 1-2% of the gross purchase price of your house is tax? Did you know that long-term investors can sometimes end up paying more than a 100% tax, when you recognize that inflation is a form of taxation?

    Second, there are the consequences of taxes: Are you unemployed? Maybe that’s because America’s extra-high corporate tax rate drove the company that would have hired you to low-tax Ireland or elsewhere. Maybe it’s because the “rich” people who would have hired you for any number of well-paying jobs had to devote that money instead to paying some college professor to teach Franz Fanon’s “Pedagogy of the Oppressed” to college students who pay their tuition with Pell Grants and federally guaranteed student loans, and are organized into cadres of “community activists.”

    Third, there’s the issue of freedom. At what point is a citizenry enslaved? Is it when government controls 20% of the economy, 30%, 50% or 70%? In 2006, we were at about 37%. Given what has transpired in the last year, I would guess we’re at about 45-48%. Once Obamacare is enacted, we will likely be at about 55%. At that point, it is pretty certain that we will be the servants of our government, and not the other way around.

    PS. I’m not advocating for zero taxes. I think about 5% of GDP for national defense and diplomacy(we are currently below 4%, I believe) and another 10% or so for mostly local services (education, criminal justice, public safety) would be just fine with me, and I’d pay that gladly.

    PPS. I have yet to meet anybody who said they were willing to pay higher taxes who actually sent in extra money to the Treasury, and that includes Warren Buffett and Bill Gates’s father. For anybody who thinks taxes are too low, send your checks to:

    Gifts to the United States
    U.S. Department of the Treasury
    Credit Accounting Branch
    3700 East-West Highway, Room 622D
    Hyattsville, MD 20782

    I won’t hold my breath waiting.

  164. Andrea says:

    Wow. If 151 Katy is really the same Katy as the previous commenter Katy, and not someone goofing on us, I am so heartened and impressed. Thanks for being open minded!

    As for you folks who suggest just sending extra money to the government, that misses the point. Well, several points.

    First, it’s Illinois’s budget that most of us here are worried about, not the feds.

    Second, I have seen tax forms where you can check off particular programs to donate your refund or add extra money onto what you owe as a donation. I have checked those boxes in the past, and many others must, or they would not keep printing them.

    Third, we have income taxes at all because we, as a society, want certain priorities funded, and we want everyone who benefits from our government to contribute their fair share. Those of us who wanted Illinois’s taxes raised aren’t just fond of paying more — we recognize that, while some spending cuts may be healthy, there is not enough reasonable cutting to be done that could make up the shortfall. The shortfall is over 8 billion dollars. We don’t have 8 billion dollars worth of lattes to stop buying. We have to raise revenue, or start throwing mentally disabled adults out on the streets.

    http://www.youtube.com/watch?v=yDiOO6HuojU

  165. almost there says:

    I think everyone should watch the late Aaron Russo’s documentry “America Freedom to Fascism” and come away with a different view on tax paying. Google it and watch the video.

  166. Kevin says:

    Martino (#106)

    “If you think the rich pay their fair share of taxes, look at the coast lines of Monte Carlo or the ski slopes of Switzerland. They’re chock full of the rich who will go to whatever lengths they must in order not to pay taxes. That’s how they keep their wealth.”

    IRG (#113)

    “Every rich person I know pays far less in taxes (I know because they brag about it!) than many average middle-americans. We needsome serious equity here when people with millions pay next to nothing and somebody making $60,000 as a family pays more.”

    You guys are dangerously confusing taxation of income with taxation of wealth. Wealth is not taxed. Income is. Someone who has had their income taxed their whole life, and has still managed to squirrel away $1 million, should not have that nest egg further ravaged by more taxes. They’ve ALREADY paid taxes, and that nest egg is what they’ve managed to hang onto. Why should they have that confiscated, too, just because they chose to save it rather than blow it on BMW’s and big screen TVs? Let’s not let jealousy drive policy.

    You can tax income, or you can tax wealth. But you definitely should not tax both. In regimes with consumption taxes, the government will eventually get their pound of flesh from that wealth anyway. A pile of money is useless. You can’t eat paper bank notes. You can’t drive a number in a computer. The person (or their heirs) will eventually spend that money. But to try and seize it, just because it looks like a big number (which is to say, more than YOU have saved up), is patently unjust.

  167. Laura says:

    My biggest issue with the proposed tax increases is this:

    My husband and I are approaching the income threshold at which most of the tax increase are proposed. We still have a couple of decent years before we get there…but its coming nonetheless. The huge tax increases being proposed are creating a disincentive for us to want to advance our careers. If we continue on this path, in a couple of years our take home pay (net of taxes) will actually decline fairly significantly. And it will take several years of increases for us to make that back up. That seems like a huge disincentive to me.

  168. julie says:

    Hi Trent,
    I will admitt that I get alot for my taxes,with a severly handicapped child the state gives my child a whole lot of help. What does bother me is how hard I had to fight and get a lawyer to get the help I needed to keep her home which is cheaper that 24 hour care for the government so that I could stay at work and keep her health care which is millions of dollars every year. And how school administrator have lied to prevent giving IEP required services, like air conditioning on the bus so that she does not seize and die. The accountability is dismal, if these admininstrator would do the morally correct thing it would cost the state less because they would not be all the law suits which most of the time they lose. They are just protecting $200,000 paychecks.

  169. Kevin says:

    @Laura (#161):

    “If we continue on this path, in a couple of years our take home pay (net of taxes) will actually decline fairly significantly.”

    I’ve seen people make this claim in various places on the Internet, but I haven’t seen anyone actually prove it. Laura, what you’re claiming doesn’t make sense under the marginal tax rate system in place in the US, and could only be true if you were currently claiming some very large deductions that you would no longer be eligible to claim if your household income were to climb above $250,000.

    Can you expound on your claim and prove that your net, after-tax income will actually *decline* if your income increases above a particular threshold?

  170. David says:

    Taxes to me are an unfortunate necessity. If I see soemthing that really sticks out, like a proposed tax increase for a specific purpose that I disagree with, then I do my due diligence and write my congressman, expressing my opinion.

    My taxes are rolled into my mortgage payment thru my escrow account, so I don’t even really see the bill.

    Maybe my head is in the sand on this, I don’t know…

  171. On that 40% tax bite issue that keeps coming up…sorry all of you who think that’s too high, but it’s about right.

    Total government spending in the US–federal, state and local–is in the neighborhood of roughly $6 TRILLION. Total economy (GDP) is something better than $14 TRILLION. Divide 6 trillion into 14 trillion, and you get a percentage a little higher than 40%.

    Calculating your tax percentage on your own income is completely meaningless. We all pay for government expenditures through known taxes and hidden ones, like the FICA match, taxes on utilities, and those built into the cost of everything we buy.

    Just because you don’t see it doesn’t mean it isn’t happening, and it sure doesn’t mean you aren’t paying it!

  172. Catherine says:

    I think that frugality and taxes is not a matter of paying less in tax (even though many people do seem to see it that way), but in trying to get a good value for the tax money spent (either for oneself or for others in the community).

    On the local level, I actually believe that we (our family) do not pay enough taxes. It works out to maybe about $250/month for our two-person household, which frankly is not enough to cover the municipal services and infrastructure that we use. And some may say that I could spend that money more wisely if I had it in my own pocket, but–really? I could rebuild the 20 feet of sewer and repave the 20 feet of street that run in front of my house, but that is not going to help *anything*. And I could hire private emergency services companies and put any kids I have in private school–but $250/month is not going to do all that.

    If you want services and infrastructure (which I do), you have to pay for them. And in many cases it is much more practical, cheaper, and more stable to pay for them collectively and publicly. It seems that everyone is trying to get something for free, but if we believe something is good, we should just be willing to pay for it, instead of trying to finagle some way of passing the tax burden off on someone else.

  173. Catherine says:

    A follow-up to my previous comment: I forgot to say that I am big supporter of income taxes and property taxes. These are big lump-sum taxes that individuals can expect and plan around. I am NOT very much in support of nickel-and-dime taxes like high sales taxes because eventually consumers get the squeeze put on them from all directions and it’s much harder for them to get a handle on their finances or to figure out why the true cost of living in a particular place. I also do NOT support sin taxes because there is an ethical problem with making our public ability to purchase things we think our good (e.g. paying for public schools) dependent upon the continuance of people’s purchasing/doing the things we think are bad (e.g. buying cigarettes). I would only support a sin taxes if the revenue were strongly restricted to alleviating negative results of the “sin,” for example, if casinos were taxed to pay for increased police presence necessary around the casinos.

  174. Beth says:

    I honestly don’t mind paying taxes. I think it’s a small price to pay for living in America. I could be living in Iran and paying much lower taxes, but frankly, I like the unparalleled FREEDOM I get for those taxes. FREEDOM is not cheap. You can ask American’s who’ve moved to France and they say although more of their paycheck goes to taxes, they get so much in return it’s well worth it. I’d rather pay taxes for most services than pay MORE to a for profit company for the same services. I’d rather pay MORE taxes, have LESS spending money for myself if it means sick babies get better nutrition. It’s not all about me and acquiring more stuff with my money. IT’s about being a good citizen and making this world a better place, so I pay taxes happily to help my community.

  175. Lenore says:

    Five years ago, I was working full-time, driving a brand new car, paying off a mortgage and juggling a few credit cards to support “the good life” as I saw it then. My career was HIV prevention, so I felt like I was giving back to my community for the fine public education I’d received from kindergarten through college.

    If I groused about taxes, it was tempered by my relative financial comfort and appreciation of public services. I didn’t relish supporting the “dregs of society” (criminals, crooked politicians, anyone capable but unwilling to work), but I was glad to help anyone in need.

    What I never, EVER expected was to become one of those statistics on the other side of the charity equation. After a long struggle with bipolar disorder and worsening work performance, I had to quit the job I loved and apply for disability income. I had always prided myself on being a self-sufficient professional, so it was a tremendous blow to my ego and lifestyle.

    Applying for Social Security is an arduous endeavor. Having seen AIDS patients who could barely sit up or keep a meal down denied, I knew just about everyone gets rejected the first time or two. Still it was devastating to be told NO after filling out lengthy applications (which always seem to get lost and have to be resubmitted) and getting evaluated by more than one psychiatrist.

    Without my family’s financial, emotional and practical support, I would never have made it through the process. Although I received food stamps and a few other kinds of assistance, I probably would have ended up homeless or dead by now. Given the severity and vast documentation of my condition, it’s ridiculous that it took almost two years before receiving my first monthly check. I’d paid into Social Security since age seventeen, but it was nearly impossible to get anything back.

    Taxes are as inevitable as government corruption, but it’s a voting citizen’s duty to keep the two apart. It’s foolish to underfund deserving programs but even moreso to ignore problems within them. I appreciate every dollar I receive from the taxpayers of this country and have no regret about taxes I paid while working. I still pay real estate and sales tax without begrudging it because I know it improves my community.

  176. Linda says:

    I think of paying taxes like I think of tithing to my church. I don’t necessarily agree with every spending decision they make, but there are some that I heartily support, so as I write my checks, I happily think of the money going to a staff member or program that I want to support.

    It’s ridiculous to me that people who don’t want to pay any taxes (or who are always wanting their taxes reduced) are generally people who also complain about inadequate national defense, law enforcement, infrastructure maintenance,etc. Just like people who say “keep the government out of my Medicare,” they’re all showing their selfishness and/or lack of understanding how things really work.

  177. Andrea W says:

    The government does a lot of things with my taxes that I find reprehensible. It spends money on a useless war we should never have engaged in, and which we cannot now easily disengage from without causing untold problems. It engages in corporate bailouts. It does not funnel enough money into genuine education (Michael is dead right on that issue) while spending oodles of money on useless test scores that states meet by adjusting the score-to-pass. It does not do enough to address homelessness or why so many people have given up and opted out of the system, or why dealing drugs is the rational economic decision because the only available jobs are on the level of pizza delivery person.

    BUT

    I live in a society that is composed of people with multiple perspectives who (funnily enough, whodathunkit?) do no all agree with me about the priority for our limited tax dollars. That means that while there are many things we spend money on of which I disapprove, there are many things that we spend money on that I wholeheartedly endorse, but that are on someone else’s list of abominations. That’s just part of living in a diverse society. We don’t — usually –get a government run *solely* to cater to one group or another, for which I am very thankful.

    One thing we can all agree on is that none of us like it when the government *wastes* our money. Cutting out genuine waste should be a priority. Unfortunately, what “waste” is is usually up for debate. I’d like to see a genuinely bipartisan set of committees really look at each program. Initially they would leave aside the question of whether that program should exist at all; those questions tend to become tangled with blanket ideology. Instead they should see if they can trim the genuine waste, and DO it. Involve the universities to see whether the program is doing what it was intended to do, or if there have been negative consequences. At the end, they can recommend whether the program should be continued as-is, continued with modifications and then reevaluated in four years (so start collecting data NOW), or discontinued. We do that with our budgets, except instead of programs, we assess bills. Do we really use that cable that sounded so good? What, the TV is only on 2 hours a week? chuck the bill, move to Hulu.

    Yes, it’s utopian, and there would be all sorts of practical problems. But constant reassessment is definitely needed, in some way.

    @the other Andrea: Dead right, woman. (I was hearing Neil Patrick Harris and “Proposition 8: The Musical” as I read your post.) If the goal is a stable economy, stable families, and the preservation of the sanctity of marriage, then it makes sense to allow those who want to marry and be stable to do so.

  178. Beth says:

    Further thooughts: As an American, I think we say a lot about our nation by how we let our weakest exist. I’d like to improve that. I’d like to be more respected and envied worldwide for our freedom and our high standards for everyone, even the weakest.

  179. DivaJean says:

    I call bullshit on many of the above posters.

    I laugh out loud at the righteous indignation of those who have their panties in such a wad over people they suspect are living the high life on welfare. If its so great and wonderful, why aren’t you going on welfare? Oh right- its great, but not good enough for you. (I use this same argument every time I hear the mythological story of the vagrant who begs for money that actually owns a mansion. My father in law once pulled up this old (and disproven many times over) chestnut in front of me and let me tell you, it was the last time he perpetuated the lie.)

    Taxes are necessary. Period. Not a “necessary evil” or some qualified commentary. As CITIZENS of a civilized country, they are needed for all the myriad of reasons other posters have mentioned. (Do I get extra credit for using the vocab word “myriad” in a sentence?- Heathers reference)

  180. Gerry says:

    Trent- You have sparked some interesting comments, but I don’t think anyone has touched on this: according to the USA Today of 5-29,30,31(weekend edition), the total tax bill for EACH household in the US has gone up in the past year by $55,000. That’s right- $55,000! Now, our Federal Government has so many programs and commitments that to pay for them all in the next 20 years, we need an EXTRA $546,668 per household today, to be set aside and earn interest, to cover the shortfall that will NOT be covered by taxes during the next 20 years. This does not include new programs added or to be added in 2009, which includes health care reform- another trillion. Trent- at the very least you should be criticizing this huge mortgaging of our future. Oh, and this does not include state or local taxes. We need to wake up and understand the numbers. Our nation is not as prosperous as our government thinks it is, unless we are all hiding a half million in the mattress.

  181. carmen says:

    Let’s go for some solutions. In the state of Cal. jobs are so very hard to come by. Why can’t the state provide training for the very things it has run out of money to pay for? Fixing roads, state parks, etc. It doesn’t all have to go to unions, does it? Unions used to be for the people, but are now part of the problem, not the solution. People need jobs, the state needs upkeep. Can’t it’s jobless be trained to fix it’s upkeep somehow?

  182. Esther Ziol says:

    A quote by Thomas Jefferson:
    “We must not let our rulers load us with perpetual debt.
    We must make our election between economy and liberty
    or profusion and servitude.
    If we run into such debt, as that we must be taxed in our meat and
    in our drink, in our necessaries and our comforts, in our labors and
    our amusements, for our calling and our creeds…
    [we will] have no time to think,
    no means of calling our miss-managers to account
    but be glad to obtain subsistence by hiring ourselves
    to rivet their chains on the necks of our fellow-sufferers…
    And this is the tendency of all human governments.
    A departure from principle in one instance
    becomes a precedent for [another ]…
    till the bulk of society is reduced to be mere automatons of misery…
    And the fore-horse of this frightful team is public debt.
    Taxation follows that, and in its train wretchedness and oppression.”

  183. nativenh says:

    Voting is one big thing we can do.
    Taxes, are an item affected by your vote.
    The federal govt originally had the roll of money, roads, and military defense.
    How far away from that original responsibility have they come.
    States on the other hand were to be likesmall nations and choose to set up their society as they saw fit. If you did not like it, you could move to another one that most fit your lifestyle.
    In a vote, one is choosing ppl to most closely represent their point of view.
    So, we are voting on the principals those candidates stand for. Those principals are then carried out in their participation in Congress.
    Term limits and pay cuts would certainly clean the house in Washington. No longer would some ppl aim to become national politicians if the power and money did not come along with the job.
    Original our country was founded on politicians going to Washington only for a season not to go longer than 7 years, and it was with great financial sacrifice, as they were only paid a small stipend.
    Here in NH we still practice this, $100 for the legislative year is the stipend to our state reps & senators.
    Power on the State level, where we have direct say and accountability with our politicians is where things need to return.
    The Federal govt only needs to worry about money, roads, and national defense.
    If your state does not have what you want, try to create it, or move.
    By the way, we all have the right to ‘PURSUE’ in our lives what we do not have. WE DO NOT HAVE THE RIGHT TO RECEIVE WHAT WE DO NOT HAVE!

  184. Mike says:

    @ Jessica, #30

    What the government does provide can be provided by private business much cheaper, more efficiently, provided the government stops meddling and allows FREE markets to work on their own.

    As supply meets and surpasses demands, prices fall. If you limit supply to fall short of demand, prices rise.

    I cannot explain it as brilliantly as Mr. Shawn Ritenour has in his Mises article posting. Please read it, or download the free audio mp3: “When Stimulus Does Not Stimulate”

    http :// mises [dot] org [slash] story [slash] 3535

  185. Mike says:

    @ Johanna, #76

    Thank you, someone understands at least. I agree we need to pay taxes, but the amounts we pay currently are totally outrageous. Income tax should not exist.

    The government does not build roads, they pay PRIVATE companies to do that. At least here in Canada they do, perhaps it’s different in the states.

    The government does not provide decent health care here in Canada. Long long waiting lists, doctor shortages, and if you have an emergency you’re lucky to get in right away. Our Emergency room doesn’t ‘open’ until 2PM! Don’t get hurt, or have a heart attack until after lunch!

    The government should be reduced to just enforcing contracts, laws, coinage, and nothing else. Wasn’t that what your US Constitution stated?

    Read the MISES website articles, trust me, you will be amazed. I know it opened my eyes as to how corrupt this world is.

  186. Catherine says:

    “I’m imagining library cards that cost $50 a year (like Costco), combined with donations and higher late fees, but it hasn’t really happened in the private sector (hard to compete with the government), so no one can truly know what it would look like.”–Alex, #99

    Alex, you didn’t mean to, but you just hit a nerve. When I was growing up–in Illinois in the 1980s, not long, long ago or far, far away–we lived in the country and did not have a public library that served our township. We could get a membership at the nearest public library for $30 a year. As my mother puts it, “It might as well have been $3,000. We just didn’t have it.” I was a voracious reader, and we had some books at home but obviously no money to buy more. My country school had only a few shelves of books and good teachers but not a lot in the way of the extras to offer a gifted student. We got a library card when my principal took pity and used some discretionary school funds to buy us a card (I now wonder if he was just sparing our feelings and was using his own money). I gained a tremendous education and probably kept my sanity thanks to having books to read. Charging *anything* to use the library puts it out of the reach of some people.

    A couple further points. Your idea of private lending libraries *has* been tried. It’s what we had before public libraries, and public libraries were formed to extend a service that many (most) people could not afford to the masses. They gained federal funding beginning in the U.S. in the 1950s in order to expand library service in rural areas, which had little to none.

    Charging $50/year means that you would have to have 800 members to afford even one librarian, let alone materials to lend. My aforementioned hometown public library is in a town of 1,000, and my family who couldn’t afford $30/year wasn’t the poorest family there by far. My parents are now better off, but the town as a whole isn’t. What I’m saying is, your method is not economically viable except in cities and for the well-to-do.

  187. Johanna says:

    @Mike #173: I’m Johanna, with an h. #76 is Joanna, without an h, who is not me. I’m staying out of this thread (although I’m reading it with interest).

  188. Mike says:

    I forgot to add government should also provide a national defense. There’s other things i’ve missed, but the point is the smaller government is, the less money it requires to operate.

    Take a look at our Canadian Gun Registry fiasco to further prove my point of how useless Government is at handling money.

    They don’t have to worry about not making a profit, because if they don’t they can just raise taxes thus stealing it from you, or print/borrow more money.

  189. Mike says:

    @ Johanna, #175.

    My apologies for my typo.

  190. http://www.npr.org/templates/story/story.php?storyId=111634262

    “Less than half the people surveyed [last year] — 46 percent — complained their taxes are too high. That’s the smallest fraction since 1961. And for only the second time in decades, a slightly larger group of people actually thought their taxes were about right.”

  191. Lynne says:

    I don’t like paying taxes, just like I don’t like paying out for certain other expenses. I do it anyway because 1) it’s the law 2) it is necessary to welfare of our country. True, much of our tax money goes to “pork barrel” items. There is a lot of waste in government, and it has grown too top heavy over the years. Assistants have assistant assistants is the way I see it. But we do take care of our veterans, we do provide for widows with children under the age of 18 (not widows like me whose children are grown), we have firemen & women & police to protect us and on and on. Could it government be better managed, sure, but I don’t see it happening. I live in CA and no I can’t afford to move away, aside from the fact that my family is here. So I will pay taxes, study my ballot, and vote conscientiuously.

  192. Sarah says:

    @Kevin (#65): Kevin, the feeding of the hungry, etc., is not some mere prophecy that someday will be fulfilled. It is a clear commandment to Christians, and a warning: “‘Assuredly, I say to you, inasmuch as you did not do it to one of the least of these, you did not do it to Me.’” If you think it’s merely something that will happen someday rather than something you are commanded to do on pain of “going away into everlasting punishment,” no wonder you’re against taxes.

    Me, I’m not a Christian, but I think that list is a pretty darned good place to start. Taking care of people in this society–all of them, including those gross icky poor people with the iPods and the multiple babies who everyone seems to believe make up the vast majority of the poor, at least until they themselves fall ill or are fired or retire and suddenly find themselves in need–is our responsibility. Taxes meet many many of those needs, and people who think otherwise just have no idea what it was like to be poor in the U.S. even a century ago.

  193. Sarah (179)–Based on what do you make the assumption I’m against taxes?

  194. Kelly says:

    Well, since there are already a number of comments on this, I figured I would throw in my two cents…

    First, I think everyone should be able to agree that the government’s budgets should be balanced (this includes local, state, and federal). There may be some exceptions, but as a general rule of thumb, this should always be maintained.

    Second, when government decides to go into debt for things such as the stimulus plan, a corresponding plan should be put together to determine how we will pay for the debt in a reasonable time period.

    Third, many people are trying to make this an either/or debate when it isn’t quite that way. Some services are running great, some are at the federal level when they should be local and vice versa.

    Fourth, one of the biggest complaints I see with all governmental services is that citizens do not have a choice necessarily. As one commenter mentioned, the government will receive all our tax dollars and if the service is inefficient we don’t have the choice of going elsewhere. One exception to this is the Post Office, for all its flaws, I love the post office, they run independently and my tax dollars do not go towards it. I only pay for it if I use it…what a novel idea :)

    With all that being said, I do think some taxes are necessary, but the government in many cases crosses over from performing those vital services such as libraries, education, fire department, etc. into other areas that should often be performed by private industry, such as scientific research, retirement savings, and insurance.

    Well, my two cents are up.

    On a side note, from a personal finance point of view, I pay the taxes as a bill, but like all bills, I try to reduce it as much as I can…my effective tax rate last year including Federal, sales, property, etc would have been approximately 27% (~8% federal, ~3% property, ~8% Sales, and ~8% SS and Medicare)

  195. Vicki, Albuquerque, NM says:

    Wow! I knew this one would get some comments, but I find some of the rhetoric in the comments kind of shocking. It just goes to show that opinions run the spectrum; which is why you can’t please all the people any of the time. My own viewpoint is that those who benefit the most from society, should contribute the most in return. That goes for corporations and individuals, but there are so many loopholes that those who benefit the most end up paying a smaller percentage of their income than those who benefit the least. In general, people are against spending money on social programs—until the day comes that they, or someone that they love, needs those programs–no one likes paying for schools until they have kids or grandkids–no one likes the FICA taken out of their paychecks until they depend on social security and medicare themselves. I think we need to look at making the tax system fair for all—get rid of deductions, loopholes, etc…have a fair flat rate of tax for all income (regardless of type) and a national sales tax. That way, we all would contribute the same % of our income in taxes, but those who benefit the most from our society would contribute more (via the national sales tax) as they spent the extra benefits that they receive from our society. Please don’t call for my lynching if you disagree with me!

  196. sharon says:

    Interesting posts. Question- has anyone lived in a country where the taxes were almost non-existent or could be escaped easily? I have and I don’t think anyone would like it. Poor to useless roads, lack of medical services other than paid by you- show up at hospital and have to pay the doctors fees, bring your own sheets and food, etc.and hope you have family to do those things for you, pay school fees at all levels, on and on and on. Most people posting here have a computer and are using the government developed internet, receive electricity, water, telecom and other services the government subsidizes among many already mentioned. I want more fiscally sound spending and less debt AND I’ll happily pay my taxes.

    Vicki#182, agree with you that most want no taxes until they use the system in some way. Even those who think they’re self sufficient use government funded service like bike trails and benefit from the clean air act, etc.

    I’ve worked for private industry and local government and have seen waste in both areas. Both are run by humans who can be smart, stupid, corrupt, etc. The governmental system of budget creation needs to be changed where agencies and individuals are rewarded for cost savings rather than penalized as they currently are. As for private industry, I’m a shareholder in many companies yet we continue to pay exorbitant salaries to many who screw up. Shareholders are owners yet we still have to pay those bums.
    What’s so miraculous about private industry? Finally, private industry and government have different purposes so perhaps we should get clear on thier functions…just a few thoughts and thranks for the great comments.

  197. Kate says:

    TANSTAAFL.

    Pronounce that word “TAWN-staff-al” and remember it. Use it. Promote it.

    It was coined by the immortal Robert Heinlein, and it means There Ain’t No Such Thing As A Free Lunch.

    People who complain that the government never does anything (while driving on public roads) or who consider taxes as always a waste of *their* personal money are people who want a free lunch. Take away any part of that lunch and they’d complain just as vehemently, without even seeing the irony inherent in the contradiction.

    Certainly some tax money is wasted. That doesn’t mean all of it is, nor does it mean you fix the problem of waste by trying to stop all spending.

    Put me down as another willing to pay more taxes as needed, and this is NOT just verbiage. I vote yes on school bond issues and the like, even though it raises our property tax. If the state legislature ever gets it on the ballot, I intend to vote for the increased state sales tax (even though it’s regressive)to keep Arizona from killing even more vital services.

    TANSTAAFL, blast it. TANSTAAFL.

  198. spaces says:

    Kevin #163 —

    I sat down and tried to find that situation a few years ago, with a spreadsheet, some fancy software and some free time. Tax laws are largely the same now as they have been for decades, so the same analysis should hold true today. I was surprised that I was able to create a couple of scenarios where folks did actually take home less, from the federal point of view, when they grossed more. IIRC the situations involved hitting a threshold where several tax benefits phased out as a result of the same increase in gross income. IIRC, you had to have both a student loan interest deduction and an educational credit, meaning that you were both paying off loans and going to school at the same time, but you also had to make enough where both tax benefits were fully phased out. But recast the situation with gross income 5k higher or lower, and the situation didn’t occur at all.

    It remains IMO incredibly unlikely that this would actually happen to anyone, but it is possible. I have yet to actually meet anyone or know of anyone, even fifth hand, where this situation was actually true (after a modest amount of probing indicated it wasn’t just bs-on-hearsay). FWIW.

  199. Kate says:

    “My mother and my father were illiterate immigrants from Russia. When I was a child they were constantly amazed that I could go to a building and take a book on any subject. They couldn’t believe this access to knowledge we have here in America. They couldn’t believe that it was free.”
    — Kirk DOUGLAS

  200. Lenore says:

    The histrionics of some Republicans (planted by health insurance companies?) at Town Hall meetings are making me sick. Bush/Cheney ran up trillions of dollars in national debt to fund an unnecessary, unscrupulous war in Iraq. Now people from the same party are begrudging any cent of taxes toward keeping people alive.

    How can anyone be oblivious to the suffering of millions with inadequate access to healthcare? I knew two people personally who DIED in the last four years because they had insufficient health coverage and were denied essential services. Since they can no longer speak for themselves, I am trying to sustain their memory by clamoring for reform.

    If keeping Americans healthy isn’t a wise use of tax dollars, what is? Almost every first world country realizes this, but just as the U.S. was the last to permit slavery, we maintain this “peculiar institution” of restricted healthcare. To paraphrase Oscar Wilde: the rich may avoid living with the poor, but they cannot avoid dying with them when the plague comes.

  201. Dan says:

    @Kevin@OutofyourRut (#165) and @Troy (#156)

    The original poster I responded to claims “We have failed to recognize that everyone provides about 40% to the government when you factor in federal and state income taxes, sales taxes, social security/Medicare, and the various license fees.” I am correct when I say that people do not pay that much. This was in the context of making a larger argument that most people’s angst about high taxes comes from a misunderstanding of how they actually work in this country. In both of your attempts to support the idea that we all pay 40% in taxes, you use incorrect numbers and demonstrate a larger misunderstanding of system in general.

    Let’s take Kevin’s post first. Total government spending is closer to 4.5 trillion not 6 trillion. A better way to look at it is total government spending is about 36% of GDP. Of course, that is what government SPENDS, not what it takes in. We all know that we are running a huge defecit. If spending is 36% of GDP, and we have a trillion dollar defecit, the government takes in 28% of GDP. This is substantially lower than your +40% guesstimate. And that includes everything from tariffs to corporate taxes. I respect the argument that in essence we pay for these taxes whether we see them or not. However, what others were arguing was that everyone pays 40% in “federal and state income taxes, sales taxes, social security/Medicare, and the various license fees.” This is certainly not true as is seen in Troy’s post.

    Let’s take a look at Troy’s scenario of a married couple with 100k in income without kids filing jointly who own a 250k home. The hypothetical he describes is coincidently almost exactly my personal scenario, so it’s pretty easy to see where he got off track.

    Federal income tax = 11.9%* not 15%. This is just poor research.

    *(We’ll even assume that this is an irresponsible couple who does not contribute to 401k, opted for no health insurance at work and does not contribute a dime to charity).

    FICA/Medicare = 7.5%. You can make the argument that we pay 15% because our employer pays it for us, but it’s a bit problematic because it assumes that if relieved of this burden that employer would pay us that 7.5% in salary. The wouldn’t. Maybe a small portion over time. At any rate, if that 7.5% being paid by the employer is considered the employee’s money than the real gross income of the couple would be $107,500, thus lowering the effective rates slightly in all other categories.

    State tax = 5.5% not 7% for this couple in MO.

    Property tax = We don’t know how much this is exactly, but in my area it would be about $6000/yr and I think that’s probably higher than the national average. But Troy forgot that you have deduct interest paid on the mortgage loan from taxable income. Interest paid that year was probably around 10k, and these folks are in the 25% marginal rate, so the net in property tax is about 3,500 or about 3.5%.

    Sales tax: On this one, Troy forgot that like property tax, sales tax is not percentage of income is a percentage of what you spend. Not everything you pay for has the same sales tax and some things have no sales tax at all. After deducting mortgage and car payments, my wife and I spend 2400/mo. Let’s round up and call that 30000/yr. Now, we’ll be exceedingly generous and pretend all of that was spent with a 10% sales tax. Then we’ll round up again. Sales tax= 3% of income.

    Add those all together and you get 31.4%. Even with the argument that the employer’s share of FICA is part of our income, you can’t hit 40% let alone 50%. And remember, this is an unrealistic scenario where we tried maximize the estimate of tax paid. In real life, there is unreported income and a litany of tax deductions that are included in tax returns.

    The bottom line is there is a lot of anger about taxes and government out there that has its roots in ignorance. And there are a lot of people out there with an interest in fomenting it. When Joe the Plumber said he had a disincentive to earn more income because a higher tax bracket would result in less take home pay, the reaction should have been a resounding “No, you’re mistaken my friend. That’s impossible.” But it wasn’t. Some folks made him out to be a hero. Heck, even on a frugality website you have commentors who believe that noise. It’s a shame really.

  202. Catherine says:

    I can’t seem to stop posting on this thread. I’m the same person who posted earlier about my family’s not being able to afford a library card for which there was a fee. Thinking about that time in my life got me thinking about what our country would really be like if we did not have public education, as a few people here and elsewhere have suggested that we should leave education to the private sector. Let’s really think about that for a minute.

    I believe that without publication it would still be possible to get an education the U.S., and many people still would. We can obviously see that many people already choose private education.

    But here’s my point of view. For three years during my childhood, my parents were unemployed. We got some money from unemployment (taxpayer-supplied, of course), and lived off my parents’ savings (from which I learned frugality). They were able to avoid defaulting on their mortgage, and we never went hungry. But there was almost nothing left over. My parents had a hard time even affording the various fees (maybe $100/year per kid) that were required to send us to public school.

    So. If private school were the only option, we would not have been going. If the law still required us to be in school, my parents would have gone to jail (taxpayer-paid) and we would have become wards of the state (taxpayer-paid) or simply homeless street children. If the law were changed, we simply wouldn’t have gone to school. We’d still be literate, because our parents were, and they taught us to read before we even started school. But with no money for books, we wouldn’t have advanced very far educationally. It’s likely that once getting behind like that, we never would have achieved the relatively high levels of education that we have and that directly and indirectly support the kind of employment we are now able to get. So it’s much more likely that we’d be either on welfare or, without welfare, just plain destitute, instead of contributing to the nation’s economy.

    And all this without even considering that my parents, unlike others, were native English speakers and that we didn’t need school to help assimilate us into a culture in which English is the dominant language.

    Yes, maybe without public education there would be some charity schools that would help fill in the gap. But they’d still have to be supported by money coming out of everybody else’s pockets, and they probably couldn’t manage the kind of nation-wide coverage that helps keep our country from being as poor as it once was. We’re so used to having an educated workforce that I think we’re not even able anymore to see clearly how we got it or to remember that we didn’t always have it.

  203. Joanna says:

    RE: #175 Johanna @ 11:35 am August 12th, 2009

    @Mike #173: I’m Johanna, with an h. #76 is Joanna, without an h, who is not me. I’m staying out of this thread (although I’m reading it with interest).

    Thank you, Johanna! I was actually considering posting that myself but thought that maybe I was overreacting. It’s a bit of a sore spot for me b/c people do it all the time despite the fact that it is spelled out clearly for you in the post I made. Thanks for clarifying this one. Joanna and Johanna are two distinct individuals. :-)

    On another note, I’ve been gone a day and half & am amazed at the # of comments that have occurred in my absence. The ultimate conclusion of this one should be that Trent is at least incorrect in his characterization of people’s feelings regarding taxes. The fact that we pay them does not mean we don’t have strong feelings regarding them.

  204. Joanna says:

    Okay, I, too, seem incapable of not posting despite having missed the past 48 hours of activity.

    Dan, earlier you stated that “Mike and others are suggesting that government always behaves irresponsibly. I would say that it’s been the way of our government recently, but this behavior is not inherent in government per se.” I suppose this depends upon how you define recent, however, in my lifetime (33 years, short I know), I recall lots of stories of $10,000 government-purchased hammers.

    IMHO, this behavior is inherent in government. The very nature of government creates this type of situation, which is why ours was intended to be limited, particularly at the federal level and also why it contains so many checks & balances. Any government creates a barrier between its citizens’ resources (e.g. money) and the use of said resources. I am more than happy to help a friend in need, but if that friend then becomes a freeloader, I’m able to make a decision about whether or not I wish to continue helping. When we create large, bloated entitlement programs, you don’t have this sort of oversight unless you then add resources (e.g. money to pay people) to supervise them. And even then, it’s unlikely that you can catch everything. The government is increasing inefficiency here.

    Or, maybe we say to Congress, spend $XB on national defense. But do we ever actually see where that $$ goes? And even if we’re out on the net looking these things up, what recourse does a private citizen have against the $10k hammer example? I can write my rep & senators I suppose, but how effective is that really for a private citizen (e.g. one who doesn’t have a lobbyist in her pocket)?

    When we see things like $10k hammers happening in the private sector, consumers can boycott their products. And the government can, and does, impose audit requirements on those (publicly owned) companies to ensure that they are honestly and accurately reporting their financial information so that their stakeholders (whether consumers or shareholders) may be well informed. The government has an auditor as well; it’s called the Government Accountability Office. And guess what? For the 12th consecutive year, they have been unable to issue an opinion on the books of the U.S. Government. (See: http://www.gao.gov/transition_2009/challenges/financial_management/consolidated_financial_statements.php) I’m a CPA and have been an auditor for about 10 years. I’ve seen quite a few clients be audited & opinions issued. I’ve seen disputes on accounting issues & their resolutions. I’ve even seen qualified opinions issued. But I have never even heard of a company with records so convoluted that the auditor could not even issue an opinion, qualified or otherwise. I can assure you that if an independent auditor were unable to issue an opinion on a Fortune 500 company, the public outcry would rival the coverage of Michael Jackson’s death. My guess is that any such company would end up in liquidation. And yet, this is the case for our own government and how many of you had even heard of it?

    I’ve got to agree with the previous poster who stated that this debate is truly not valuable until we have balanced books. The folks on this site presumably value frugality and getting out of debt. Why are we not outraged at the fact that our government cannot make it halfway through the year without living off debt? Why are we even debating adding something as expensive as universal health care to our already bloated budget. And am I crazy or did not this President promise a balanced budget during election season?

    Too much emotion, not enough common sense.

  205. SusanB says:

    MSN ran an article stating that “In a study for the National Bureau of Economic Research, Boston University economists Laurence J. Kotlikoff and David Rapson have found that our all-in marginal tax rate is 40%, give or take a bit.”

    The article can be found at: http://articles.moneycentral.msn.com/Taxes/Advice/YourRealTaxRate40.aspx

    I have seen a number of posters dismiss the 40% all-in tax rate as hyperbolic and/or fictional. In response, I would like to point out that the National Bureau of Economic Research is perhaps the most respected economics research organization in the US. They mark the start and end of our recessions and include many prominent economists among their members. I consider them credible. Many others do too. Like MSN.

    If you would like to argue that government priorities should be changed to better serve the needs of the poor, then I am all ears. If you want to argue that our tax laws are unfair to certain groups of people, and the burdens need to be shifted, then I am all ears. If you want to argue that 40% is too low and our government needs to be bigger, then you and I are two very different people!

    However, if you want to argue that the 40% all-in tax rate is untrue, then please cite your sources. I appreciate all those who attempted to run the numbers themselves, and I agree that some households indeed pay less, but I still gotta go the economics PhDs on this one.

  206. Joanna says:

    @Rosa 134:

    But the food banks are typically not-for-profits (at least around here), not government entities. They have much more incentive to function efficiently b/c they can’t just take $ from other sources (like social security for example).

  207. Joanna says:

    RE: #144 Dan: It’s not fair to compare current charitable contributions to current government spending because the current tax rate (e.g. government spending) affects the amount that people can contribute to charities. The two are more likely to be inversely proportional, thus negating your argument.

  208. CaGirl says:

    I look at taxes as the cost of the roads I drive on, the utilities I use (the base equipment – opportunity to have them, not actual usage – I visited Russia in the 90s and saw life where electricity was not consistent), the radio, the public schools I went to – essentially the cost of modern life. Yeah, it hurts to write a big check for taxes, but hey, it means I made enough to pay it.

    While I may not agree with everything the government may do with my tax dollars (wars, etc), I don’t find politics interesting enough to get involved. However, I wish there was less selfishness in our society. The current issue on health insurance could impact my coverage, but if it means that my mother [who isn't old enough to get MediCare but makes too much on my fathers' social security to qualify for low-income health care (believe me, I've looked!!)] could get insurance without having to choose between having hot water or food versus medicine, I’m for it! And even if she had good insurance, I’d still be willing to pay more in taxes to ensure that everyone could have health care.

  209. Joanna says:

    #155 Hogan @ 9:03 pm August 11th, 2009

    Sure taxes are wasted by government but not all taxes. Private businesses waste your investment dollars but they don’t make the newspaper like government waste”

    What?! Come on. I KNOW you must watch the news & see all the coverage of executive salaries. Gimme a break.

    And of course there’s waste with private companies just like we all have waste in our own lives. But private companies (just like we personally) have a powerful incentive, called profit, to waste less. Government, inherently, does not have that same incentive given that it decides when to raise taxes and it has the power to print money.

  210. Dan says:

    @Joanna (#192)

    The fact that charitable giving would increase if we got rid of taxes does not negate the argument. I’m saying that charitable giving would not increase enough to make up for all the government spending that we’d be missing out on if the government stopped taxing us, not even close. The average American gives 20% of income to the federal government and 2% to charity. This libertarian argument that having been relieved of that 20% burden, people will turn around and give that 20% (or even half of it) to charity is naive at best.

  211. Rosa says:

    @Joanna #191 – I used the food bank because I’m pretty familiar with how it works. Ours is a nonprofit but the big base that allowed the building of the institution was government grants at the state and city level. Individual giving is too sporadic to supply the kind of everyday service that it provides.

    The same economies of scale are true of direct social services, like the WIC program, but I haven’t worked with those programs much so I can’t speak very knowledgeably about them.

    The most efficient food program I’ve ever worked with was Food Not Bombs, which takes dumpstered and donated food and cooks it (by volunteers) and serves it for free…but FNB never gets the level of clientele that the big institutional food providers do because it’s not reliable enough – that’s what direct charity looks like, a raggedy-ass kid who sometimes randomly hands you a loaf of bread, not the solid foundation you need to build a successful step out of poverty.

  212. de says:

    If employer withholding were abolished and everyone had to physically write a check for what the government confiscates from their income every quarter as the self employed do, there would be a MAJOR tax revolt.

  213. AnnJo says:

    Back at comment #158, I posted an address to which people who thought their taxes were too low could mail the difference. Many people posted later endorsing higher taxes, less “selfishness,” etc., but I didn’t notice anyone commenting that they intended to send more money to the Treasury. Are all you folks just passing the buck? “Don’t tax me, just tax you and that fellow behind the tree?” Put your money where your keyboard is, folks.

  214. AnnJo (198)–For a lot of people the subject of taxes becomes primarily a philosophical discussion, as though there are no mechanics, no numbers involved.

    But the truth is in the numbers, because no matter what spending program you may count as being worthy of public support, the ability to fund it isn’t and can’t be open ended. In our culture we pretend that it is, and the size of the deficits give testimony to that belief.

    Taxes becomes more an argument of “this is what I believe” rather than “this is what I will do” or a study on the reality of the situation.

  215. Rosa says:

    AnnJo, I already give about 5% of our household income to shore up social spending that’s been cut because of our governor’s pledge not to raise taxes.

    That is: the public schools (my son isn’t even old enough for school yet), the public libraries (on top of volunteer work), and the public parks.

    That said: it only works if EVERYONE does it. That’s why we’re talking about taxes and not tithing to your church.

  216. Joanna says:

    Dan:

    We’re going to have to agree to disagree on this one. Personally, I don’t think either side really has any true evidence since we can hardly do an experiment to see what does happen when you dramatically decrease taxes. In the absence of objective evidence, I personally believe it comes down to what you really think of people deep down. In other words, it’s not a matter of naiveté v. worldly knowledge, but rather a matter of where your heart is. I personally give much more than 2% and would most certainly increase my giving if my tax burden were lessened. Obviously I understand that not everyone is the same, but I believe that the majority of people want to help others. There are SO many examples of this mentality in our country. (THe food bank is actually a great one! It’s an organization formed outside of government, as a not-for-profit, with the sole objective of feeding the hungry.) The idea that the only way we can help other people is by forcing everyone to pay increasingly high taxes, then letting our benevolent, efficient & non-corrupt government funnel it to the people who truly need it is, in my opinion, what’s truly naive. Taxes, once they have surpassed basic services that have historically been the responsibility of government (e.g. infrastructure, national defense, security), are less about true benevolence & more about control. This mentality is even apparent in some of the comments we’ve seen here from people who want to pay more taxes but instead of voluntarily contributing more to the government in a show of support & allowing their good actions to influence their friends / family & spread virally, they want a mandate that will force everyone to share the same actions if not the same belief.

  217. Dan says:

    @Joanna

    We don’t need to run an experiment, we already have plenty of objective evidence. It’s all right there in our history. Charitable giving as percentage of GDP has hovered around 2% even after Reagan and Bush tax cuts. Our reasons for enacting social security is testament to the necessity of a government mandate.

    You and I don’t disagree about the nature of human beings, I object to the narrative that the government has a monoploy on malevolence and corruption and that the free market can cure everything.

    We’ve all accepted that capitalism beats communism. Centrally planned economies make painfully obvious the inefficiencies and shortcomings of government. Of course we all need to be wary of that, but let’s not throw the baby out with bath water. After you take out defense, 55% of government spending is Medicare and Social Security. These programs are essential to take care of our elderly population. People would have start giving over 12% of their income to charity to make up for that. Now I agree the richer people feel, the more they give, but would would it increase six-fold? No. Unfortunately, there are folks (not the majority) out there who give zero to charity. It’s not that they can’t afford it. Either they don’t want to or can’t live within their means. An increase in disposable income won’t change that.

    Even if they did, it’s not as if turning everything over to private sector guarantees increased efficiency and a distribution of monies that reflects a superior representation of public will. Medicare is run with less administrative waste than even non profit health insurers. Social Security would be logistically impossible to administer without a central control.
    Even in the era of greater information and watchdog resources like Charity Navigator, plenty of charities are disgustingly inefficient and corrupt.

  218. Joanna says:

    Dan:

    I I object to your characterization of *my* argument as stating that “the government has a monoploy on malevolence and corruption and that the free market can cure everything”. You can certainly exagerrate what I’m saying (or pull from others’ posts) in order to ignore my point, but know that you’re taking the easy way out here.

    Additionally, while the private sector is not *always* more efficent than government, it certainly has a more powerful incentive to be efficient than government does. And even if “turning everything over to private sector” *wouldn’t* *guarantee* “increased efficiency”, it most certainly *would* guarantee “a distribution of monies that reflects a superior representation of public will” since each individual would be following his own will rather than a government mandate.

    Finally, I would love to see your resource for the following facts you’ve stated. I’m not being catty here, I would genuinely appreciate knowing where you’re getting this info.

    “Charitable giving as percentage of GDP has hovered around 2%”

    “Medicare is run with less administrative waste than even non profit health insurers.”

    Respectfully,

    Joanna

  219. Donna Marie says:

    I don’t think I’ve ever yet complained about high taxes, and I live in California. I have no problem paying for a civil society. Is there some waste? Yes. Would I like to see it cut? Absolutely, but I would vote to move those “extra” funds towards improving the schools in America, and would not vote to return those funds to the taxpayers.

  220. Julie says:

    katy #67
    “My husband and I have no children. I don’t want money to go to schools.”

    Educating children in the United States whether they are yours or not is not just about “your kids”. The goal of the government is that 18 years later it has healthy, educated, well informed citizens who will work toward it’s betterment, fight in it’s armed forces, pay taxes towards it’s continued betterment.

    That’s why education and healthcare are such important topics to any government. The better educated your citizens are (usually) the higher the tax base. The higher the tax base, the better the services that can be offered. The better health your citizens are in, the longer and more fully they can continue to work. (They also cost less). In WWII when the the military desperately needed recruits, it discovered that most of it’s recruits were horribly underfed, and many were in bad health. I believe that food stamps, welfare, etc. are a direct result of the US goverment realizing when it needed to mobilize it’s citizens the most, it did not receive the quality of armed forces it needed.

    The states responsibility to it’s citiziens is found in our standing military (not military complex) the FDA, the DOT, the Justice System, Medicaid, Medicare, Welfare, food stamps.

    Mike #173 – actually in the United States the government does fix the roads and highways. The Department of Transportation is loved and hated by us all.

    Finally I want to comment on something that makes me cringe whenever it is mentioned.

    The United States is not a democracy, it is representative republic. We elect our local, state and federal officials so that they might take our feedback, think, relect, debate and then vote the best they can for the citizens of their ward/county/city/state.

  221. For me, my main concern with increasing taxes is that it means that government is spending more. I am required to tighten my budget, but government rarely tightens theirs. Why? Well, if I was spending my neighbors money, I would be less concerned about frugality too.

  222. JU says:

    Just wanted to thank trb (#79) for responding to Alex. Well said and articulated — so glad you covered it. I agree w/ you 100% — “I’ll pay for equality over anarchy any day.”

  223. Jeroen says:

    I always find it funny when Americans complain about their high taxes. Read here about the taxes in other countries: http://www.worldwide-tax.com/index.asp#partthree

    I pay up to 50% in income tax (highest scale part of my income), for example. I do feel I get enough back from my government (roads, public transport, fire dept, police dept, jails, free health care, state pension, unemployment if I would need it.

    @katy: you don’t have to pay taxes for other people’s kids, you need to repay society for your own education. Do you think that everyone who was against the Iraq war shouldn’t be paying for the army, either?

  224. Taxes matter so much that I’m buying a property in Nevada to set up residency and avoid the ridiculous 10% state income tax California charges while spending themselves into bankruptcy.

    Regards,

    Shogun

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