Here in the United States, whining about taxes is probably more popular than all of the major sports, combined. Forget about baseball – tax-whining is our true national pastime.
What’s amazing is that the distribution of whining, like so many things, is so illogical. In fact, tax-whining is positively correlated with a person’s or a corporation’s wealth. So, the more you have, the more you whine. It’s sort of like a team in Major League Baseball complaining that, in their run up to winning the World Series, too many strikes were called on their batters.
The favorite topic of tax-whiners is that the top income brackets pay all of the taxes while the bottom half of the so-called “middle class” (nobody want to be labelled “poor”) pays nothing. They love to go on about the 47% – the “takers.” That number was made up, by the way.
As justification, the tax-whiners always point to one statistic… the statistic that makes them look right. Here it is, in graph form:
But this is only part of the tax story. People pay taxes on much more than income. They pay taxes on property, gasoline, and sales tax on purchases of goods. The truth is that, when you add all those taxes up, the bottom 20% of earners pay about 17% of their incomes in taxes, while the top 20% of earners pay about 29%. That’s a significant difference, and I’m sure it frustrates those who live inside a calculator.
But it’s nowhere near the claims that are made, usually by Republicans and Tea Party types. And we should pay close attention to the effect that these percentages have on people. For someone who makes $250,000 per year (for example) paying 29% in taxes means that they are left with $177,500 to live on.
For someone earning 13,000 per year, paying 17% in taxes means that they are left with $10,790 to live on. That’s less per year than what the $250,000 earner has left per month. And, as I’ve argued before, the more money a person has, the more benefits he or she gets from taxes.
To the whiners, I say this: I realized that the prospect of paying an extra $500, or so, in taxes for a year might mean you have to put off buying a house for another month. Or it might mean that your kids actually have to go to public school. Or it might mean you have to buy the Lexus GS instead of the LS. But a difference of even $100 to a family on the receiving end of this shotgun economy might mean that their kids get “new” shoes (maybe from the Salvation Army) when their toes poke out through a hole. Or it might mean that they can afford to heat the house to above 55° in the winter. Or it might mean that they can pay the electric bill for another month or two.
These are two different worlds. What I’m talking about is called “Marginal Utility Theory,” and it’s a part of standard, old-fashioned, neo-classical economic theory. It just gets ignored because it is essentially an “inconvenient truth.” Without putting you to sleep, what this boils down to is that $1000 means nothing to the well-being of a millionaire, but it could mean the world to a poor person, or a poor person’s children.
President Obama and others are in the process of attempting to re-balance the tax code which has, in recent decades, come to favor the rich and the corporations. And now, we have an influx of veterans that often have an incredibly hard time finding a good job – or sometimes any job, for that matter. This is happening while government programs are being cut left and right.
If you really want to “support our troops,” if you are really “pro-life,” then realize that your tax dollars are helping people who really need it. And their health and well-being will come back to benefit you in ways you may not be able to imagine.
Tom Rossi is a commentator on politics and social issues. He is a Ph.D. student in International Sustainable Development, concentrating in natural resource and economic policy. Tom greatly enjoys a hearty debate, especially over a hearty pint of Guinness.