I’ve always half-heartedly joked that when I make my first million, I’m going to stow it away on the Cayman Islands. The joke of course being that I’m a journalism major and won’t be making my first million anytime soon.
And besides, I shouldn’t be joking like that, it’s un-American. Haven’t you heard? April 15 is the new July 4. Tax day is just two days away, and according to Vice-President Joe Biden, now is the “time to be patriotic.”
If you’re like the average college student and have perfected the art of procrastination, you may well be scrambling to fill out that 1040 and get it mailed in on time. Many of us, however, tend to do this chore early so we can get that refund that much faster. I’m always bemused at how excited everyone, including me, gets at the sight of an IRS check in the mail — almost as if it isn’t just a refund of your own money, but actually a gift bestowed to you from your ever-caring government (How nice of Uncle Sam to send me some cash for beer, just when I was getting a little broke!).
Yet viewing a tax refund as a lovingly-conferred gift, rather than a refund of your own earnings, is a hazardous line of thought. Under this view, the fruits of your labor are only yours by the grace of government, not the other way around.
The new administration’s budget identifies $634 billion in tax increases and spending cuts to help pay for President Obama’s proposed government health care and other social programs. In a speech to Congress at the beginning of March, Obama said that his budget team has “already identified $2 trillion in savings” to help tame record budget deficits — yet about half of those “savings” are actually tax increases.
Since your income is White House slang for “savings,” it shouldn’t come as any surprise when our taxes start going through the roof in the next several years. How else do you expect to pay for these trillions of dollars in bailouts, stimulus packages and war expenditures? The Treasury’s printing presses can only roll so fast. And here in California — the American tax capital until a few weeks ago when New York stepped in to claim the honors — we’ve got a crippling budget deficit to deal with too.
Naturally, the government will look towards its main source of income to fund its ever-increasing appetite: you. Or rather, your income. In doing so, it hopes that you’ll forget that government mismanagement helped land us in this mess in the first place.
My fellow college students seem largely unconcerned about taxes. Maybe that’s because most have yet to earn enough money to notice when a fraction of it gets taken a way, or maybe a few more simply swipe Daddy’s credit card in blissful ignorance of how the real world works. But for those of us who pay our own rent, food, gas and utilities, every dollar in taxes is sorely missed.
It’s even more disconcerting to realize that, thanks to our progressive taxation system, the chunk taken out of my paycheck — or if I’m lucky enough to start my own business one day, my profits — will only increase as I become more successful.
And this, of course, is where two vastly different moral philosophies come into play.
Taxes have long been a point of contention between the presiding political ideologies of the day. Traditionally, liberals, in favor of big government welfare and expenditure programs, have favored the higher tax rates that allow them to fund these extravagances. Conservatives were supposed to be ones that believed in small government and low taxes — although that can hardly be said to hold true anymore either.
In this new “era of responsibility,” it’s more fashionable than ever to tax more, and the rich the most. Doing whatever it takes to benefit “the greater good” is back in vogue; taxes aren’t even seen as a necessary evil anymore, but as a patriotic duty.
In an interview with Kate Snow on “Good Morning America,” Biden leans forward and says “You got it, Kate. It’s time to be patriotic, time to jump in, time to be part of the
deal, time to help America get out of the rut.”
We have to spread the wealth — and pain — around.
I suppose it would be one thing if we were all “equally patriotic” in our tax-paying duties. But we’re not. Consider that the bottom 50 percent of taxpayers contribute only 3 percent of the nation’s federal income tax revenue, while the top 1 percent pays almost 40 percent. Under our progressive taxation system, the average American currently gives away 13 percent of his income in taxes, while the richest 1 percent gives away 23 percent. By the time you add state income taxes into the mix, the average person will work for 109 days this year just to pay their 2009 taxes.
Yet these statistics, shocking as they are, only begin to scratch the surface. Taxation is not only a huge burden on the backs of average working Americans, but it has a contractionary effect on business and the microeconomy as a whole that even the staunchest big-government Keynesians can’t deny. When you not only take a larger net amount of someone’s income based on how much they make, but a larger percentage, taxation acts as a disincentive for economic growth. Just what we need in a recession.
If you’re graduating in the next few years, consider how little of your future income you’re willing to live on. Sixty percent? Fifty percent?
You’re entitled to the money you earn, and the government has no business taking it to spend as it sees fit. Increasing taxes are the last thing an already down economy and workforce needs.
Oh wait, I forgot, it’s that time of the year. Let’s be patriotic. Go on, put your right hand on your heart, and with the other, hand over those earnings.
Marlize van Romburgh is a journalism senior with an economics minor and the Mustang Daily editor in chief. “Business as Usual” is the new business column, appearing in the Daily every Monday.
Nice column.
Unfortunately you forgot to mention just how patriotic Obama’s appointees have been. I beleive the count is now up to five that did not pay their patriotic fair-share of the taxes.
If the people raising our taxes aren’t willing to pay them themselves, maybe we should all start making “innocent” mistakes on our tax returns.
It sucks to have money taken from you by the government. Absolutely. Your life would be better, all things remaining equal, for you to have more money. Its undeniable. But what are the alternatives?
I am writing under the assumption that we can agree that a federal deficit is bad for the long-term health of our economy, and that balancing the budget is beneficial. As we are currently borrowing/manufacturing an astronomical amount of money to fund our government, there seem to be two real options to close the gap between income and expenditures: 1. Increase revenue (by increasing taxes) and/or, 2. Cut spending.
The money taken in taxes (and then some) is all put towards uses that are deemed necessary by at least a large faction of the general public. Of course, government may or may not spend that money efficiently, but who would you rather do it?
Cutting spending seems like an obvious first step, and Liberals’ ‘extravagances’ seem like the place you would like to start. Below is a URL to the U.S. Federal funding for 2009. On the federal level, three spending areas stand far above all others: Pensions (Social Security) at $713 Billion, Health Care at $724B, and Defense at $819B. These three spending areas account for $2.3 trillion, or 58% of the 2009 federal budget. If you’re going to make serious budget cuts at least one of these areas are going to have to take a serious hit. The choice then comes down to taking away Grandma and Grandpa’s money that they put away, saved, and have been promised, lowering the already ludicrously low standards for health care for the general public, and spending less on military toys. If it came down to one, I know which one I would choose (even though military technology shows would be less fun to watch…). The U.S. already spends more than the rest of the world combined on its military.
Of course, spending will have to be cut across the board in order to balance the budget. This is where Obama’s now infamous ‘scalpel’ metaphor comes in. Like the metaphor or not, in this context, it seems to make a lot more sense than an axe. Education is drastically underfunded and only recieves $99 billion dollars (about 1/9 of the budget for defense) from the federal government.
In light of this, how can you advocate BOTH a balanced budget and tax cuts? Especially after, at the beginning of the article, joking that it will be a long time before you make your first million dollars. As with most Americans that will not make quick millions, you will not be paying much in taxes. This article seems like a big complaint from somebody who will be paying less than the 13% national average for some time going forward.
Finally, how did you come up with the 109 days to pay federal taxes? By my calculations (if 13% is correct):
250 work days/year x 13% = 32.5 days/year to pay taxes.
(50 weeks x 5 days/week )
http://www.usgovernmentspending.com/year2009_0.html#usgs30240
Thank you Matt for saying what I was going to say in a way less angry fashion. I would also like to add that one of those “liberal extravagances” also happens to be the very school that you,the writer, are going to. Cal Poly receives its money not just from tuition but also from state funding which, how do you like that, comes from taxes. Which by the way is the reason it is so much cheaper in comparison to other schools, particularly private colleges. I’m sure the major reason that you, so concerned over monetary matters, choose this school was because of the great deal you would have coming here. And how is this possible? Taxes. Taxes coming from peoples pockets to help subsidize what you have to pay. So how about this: instead of bitching about taxes, bitch about how they are used.
It seems the folks deriding the lack of federal spending on education have forgotten about state and local government. Things like education, most highway funding, and even most social services come out of the state and local budget.
Matt, where have you been? You act as if we don’t have billions of dollars of bailouts and unnecessary stimulus packages coming out of tax revenue, as if taxes only go towards public services like education and health or social security. While those services do place a heavy and unfair drain on the more succesful members of our society, they wouldn’t be the first place I would make cuts. No, I think I’d start with NOT passing a $700+ billion ‘stimulus’ package!! Where do you think that money comes from?!
From my experience, it’s usually the people who are in that "bottom 50 percent of taxpayers" who "contribute only 3 percent of the nation’s federal income tax revenue" who are more than happy with the current tax system. And why wouldn’t you be? I mean, you hardly have to pay anything, and yet you get so much free stuff! What a fuckin’ deal!
Those of us that don’t plan to work at low-paying jobs our whole lives understandably have a different take on the issue. Call it perspective I guess.
– J
(ps: She says "By the time you add state income taxes into the mix…" so I’m not sure why you say "how did you come up with the 109 days to pay federal taxes?" I mean, you do realize that you pay taxes at both the state AND federal level, right?)
(pps: I’m acquanited with the writer, and she’s attending CP out of state. So in response to the other commenter, she gets to pay out of state (aka non taxpayer subsidized) tuition.)
J,
I appreciate your concern for the way money is being spent by the federal government right now. I AGREE that spending could be more efficient.
Forgive me if I missed something, but was this article about the merits of the bailouts?
The bailouts are NOT being paid for with additional taxes. They are just being tacked on to our budget deficit, adding to the nation’s debt. The direct result of the trillion+ dollars we’ve allocated to the "bailouts" is a larger national debt, inflation, etc.. I haven’t seen a serious proposal that would raise taxes on anybody making less than a couple hundred thousand dollars a year. So the answer to your question, "Where do you think that money comes from?!": I think it comes from inflationary spending. An important issue, but not a tax rate issue.
Tax levels are the same, or lower, than they were when Obama took office.
In response to "it’s usually the people who are in that "bottom 50 percent of taxpayers who contribute only 3 percent of the nation’s federal income tax revenue" who are more than happy with the current tax system":
That statistic is quite misleading. The fact is that the bottom 60% of the population only held about 4% of the nation’s total wealth as of 2004, according to the Survey of Consumer Finances. Take out the top 10%, of the bottom 60%, and it doesn’t seem so unreasonable for that group to only contribute 3%. "Screw those 50% for being poor!!!" So, where you see tax inequity, I see uneven distribution of wealth.
As to the issue of the 109 days… that would equal about 43% of a 250 day work year. Without looking up the data, 43% seems like a big jump from that 13% in federal taxes the average worker pays. I believe in California the top bracket is around 10%. Yes, I know how many W-2’s I file. No, I don’t think that I, or any average worker, spent 109 days of work paying for my taxes this year.
You know it’s posts like this that can easily spur people on to grasp about this. I found it to be extremely informative. I will be coming back here for more reading as I much enjoyed this!