We Need To Be Responsible and Raise Taxes

I don’t like paying taxes. When I get up in the morning, I don’t say, “Oh boy, today I get to pay taxes on stuff.” I don’t think anyone likes having to pay their tithe to the various governments. And yet, I’m more OK with it than most libertarians and their far-right-wing conservative ilk found in the so-called “tea party”.

The very simplified message from the tea party partisans is: lower taxes, less spending. Yeah, that sounds so good. Unfortunately, it contrasts with reality. The tax thing is a no-brainer. At any point in time, people would prefer paying less in taxes than they do. It’s really that less spending thing that trips everything up. No one wants their pet public larder to be diminished or eliminated.

There are plenty of data around the Net to show who gets what money: e.g. http://www.nytimes.com/interactive/2010/02/01/us/budget.html and this oft-embedded one http://www.wallstats.com/deathandtaxes/:

The key thing to know is that the federal government collects $2.567 trillion from all taxes (a little over $2 trillion from income and social security/retirement taxes) but spends $3.834 trillion. That means for every $1 that gets paid in taxes, the federal government spends a tad under $1.50. And keep in mind, this is just the federal government. State and local governments have their own inflow/outgo problems.

The thing is, people like things like clean water, navigable roads, fire and police departments, and a myriad of other things that cost public money. Sure, the cry goes up to cancel this or that (education is often a popular target, as is social security)…except when it matters to you. Plan on having kids? Education tends to be something you want to keep. Expect to retire someday? A lot of people depend on that modest social security income to survive. You know, things like that tend to get people riled up when you talk about taking them away.

Regardless, the spending does need to be reined in where possible. Not fighting protracted and largely reason-less wars will save a nice hunk of change. Actually educating kids instead of simply making them go to school and take tests for twelve years would increase the value of money spent for education. How social security is managed needs to be re-examined. Accounting rules need to be simplified and standardized in order to ensure transparency. Perhaps more importantly, Congressional rules need to be reviewed so as to level out some of the graft and hierarchical power plays that constantly sabotage the process.

That said, there is only so much you can cut and still have a functioning country. Even if you cut it from the federal budget, the states themselves will be forced to take up the slack, and that often goes worse than it does on the federal side. In the end, tax revenue needs to go up. To think otherwise is to deny the realities of sound economics. To have a balanced budget, without accounting tricks, you have to balance tax revenue and overall spending. It’s just that simple.

It really doesn’t matter if a tax is equal for all or progressive. What does matter are the exceptions. Fewer exceptions means fairer distribution of tax burdens. The amazing bulk of the tax code is mostly about catering to the exceptions. Cut the exceptions, you simplify the job for tax payers and tax collectors alike. And, since the U.S. Code actually says that corporations and similar entities are “persons” (and SCOTUS recently agreed) then these multi-m/b/trillion dollar “people” should fall under the same scrutiny as a family of four with a household income of $26,000.

Cut spending? Heck yea. We absolutely have to. Cut taxes? No. When you are in deficit, cutting revenue shouldn’t be on the table. Many billionaires agree. They know the system is out of whack and unfairly favors them. They take advantage of the tilted playing field (they aren’t stupid), but many volunteer that they should be paying more and that it’s unfair that the people who work for them have to shoulder so much.

Your taxes are too high? So are mine. Our financial house is in trouble. The time to pay the piper has come.