Let me offer a few simple, cranky, thoughts on taxes today.
(1) I like to believe I am not the dumbest person on the planet. I also happen to be a professional economist. And I have absolutely NO IDEA going into the year how much in tax obligations I owe to the government at all levels. If I get within 10% I would be incredibly impressed with myself. I find that to be “problematic.”
(2) In terms of tax incidence, it is well understood that at all levels, but even just at the federal level, the rich pay much larger shares of their incomes as taxes than the non-rich, despite the rhetoric. The table below, from the CBO, shows it for the federal level. But what I’d like to see, but cannot find from a cursory search, is a distribution of tax payments by household. For example, if you paid $10,000 in taxes last year, what percentile of the tax paying distribution does that put you in?
(3) Just for those of you who know me and my extravagant and unseemly lifestyle, my estimate is that Rachel and I, whose combined income puts us nowhere near the 1% (not that it should matter), paid a total of about SIXTY THREE THOUSAND dollars in taxes last year. Are we doing our share? And let’s ask simply, does that make us more or less likely to give to charities in a given year? Given that I am told that government is supposed to provide for my health and retirement security, does this make me more or less likely to save for my own health and retirement? Does this make us more or less likely to spend time in the community in a given year? Does this make us more or less likely to be sympathetic to all of the “hard work” our elected officials do? We can ask many more questions. But I’d like to do this exercise one day (were in not impossible due to Friedman’s stupid recommendation that we have tax withholding). I want to take $63,000 worth of cash. And I want to go to a research lab investigating basic disease pathways. And I want to go to a single mother in the inner city who is struggling to find work and feed her kids. And I want to go to a piece of state or national forest that is threatened by some development or other encroachment. And I’d like to ask, “are you better off with me handing some of this to you or by me sending it all to Albany and DC first and having their experts take care of you?” Note that this is not committing the “voluntarism fantasy” (more on that in a future post) but rather me committing the $63,000 to the causes that we support. Is there ANYONE, regardless of political affiliation, who would say,”yah, you know, I don’t think we want that money from you, better to funnel it through the political sausage grinders in DC and Albany, that way we can make sure it is spent properly!”
No reason to go on. I’ll just leave with my annual takeaway point. I think my family is upper middle class at best, and we pay $63,000 every year in taxes. My bet is half of this is totally wasted and funneled to politically favored interests. My bet is that half the remaining funds are used to supply services that we take advantage of (this is not to say they couldn’t otherwise be provided” and the remaining quarter maybe goes to do things we otherwise couldn’t do on our own. But the larger point I will beat on until I am in the grave … at all levels of government we spend DIRECTLY over $6 trillion. That government spending is equivalent to the second or third largest country on Earth if we relate that to GDP. And people are still screaming that we can’t get basic infrastructure provided. We can’t get adequate schooling provided. We can’t get enough funds for basic scientific research. Our military is squeezed. Our state budgets are squeezed.
Well, as they say, (insert mean words here). That’s pathetic. There is simply no case to be made that we are undertaxed, that we underspend, or can’t get done what needs to get done. Every time I hear that, (remember yesterday’s post) this is a gigantic admission that the entire apparatus is incompetent and failing, and yet that is proudly pronounced by supporters of big government each and every time this sort of an issue comes up. There is no reason for me to be charitable to that view. If there is a case to raise taxes more, or spending more, it’s NOT on the grounds that we’re not doing enough now. Not … at … all. That case can only be supported by arguing, however crazy I think it is, that we should do more, that families like mine should “contribute more”, that retirees “deserve” more, that all of our “obligations” to all of the millions of people with hands in the cookie jar must be met in full. Give me a break.
Finally, just to kick us in the nuts a little harder than normal, after I paid $90 to Turbotax to do my taxes (a racket if there ever was one), I was greeted with a sales tax on the software on top of it. Thugs.
Update: the first article I read today is this one from Vox …
Yes, they are calling the lack of movement on infrastructure a “tragedy.” Quiz time everyone: how much of the federal gas tax dollars have actually been funneled to toy transit projects and away from roads? Question #2 is this really a “tragedy?” Question #3 so 6 years into the crisis we’re still in a depression? Can I just ask someone to tell me when it’s over? Finally … well … I think Vox is doomed. This particular author used to write far more nuanced pieces than this. Tragedy? … $6 trillion. Repeat it …$6 trillion and one of government’s most fundamental jobs is being deemed a tragedy. Emperor? Clothes?