The Observer, February 29, 2008
Volume XL, Issue 19
On the Left: Taxes necessary for collective welfare
No one likes paying taxes. Unfortunately, taxes are a necessary evil. Stop and think of the hundreds of government-sponsored initiatives that are funded through your tax dollars: public education, roads, police and fire protection, Social Security, the national military, unemployment benefits, economic development projects, scientific research grants, and on and on.
Granted, our current tax code is a mess. The average income tax return shouldn't require special software or paid professionals to fill it out. Middle- and lower-income earners are paying more than their fair burden because of broken policies, like the Alternative Minimum Tax, and loopholes that allow the wealthiest Americans and the largest businesses to pay almost no taxes at all. The fundamental problem is not that the top income earners in our country are being coerced into paying a higher tax rate. A progressive tax system, in which your tax burden depends on your means, is more than reasonable. The problem is that our tax code allows them to shirk their social responsibility.
Through a democratic process, we have decided that the government should provide certain programs and services and that taxes should be levied to pay for them, all to improve the welfare of our citizens. I firmly believe that all Americans should meaningfully contribute to this collective effort. This means that wealthier citizens should pay a higher percentage of their wealth in taxes. The society that helped them achieve success merits a return on that prosperity – no person can claim total independence in our modern world. And after all, 20 percent of annual income means something different to a waitress than a Fortune 500 CEO.
It's simply absurd to claim that if all Americans paid a similar percentage of their income, affluent Americans would donate more to charity or cut the government an extra check. We don't even do all of our household chores when no one is forcing us, let alone give up more of our income. Sadly, government needs to enforce this collective responsibility.
While reforms to the tax code are certainly needed, the remedies proposed by conservatives and Republicans are questionable at best. Replacing current income and pay roll taxes with a 23 percent national sales tax, as the proposed "Fair Tax" does, comes with its own set of problems. Savers and investors would gain the most – no taxes until consumption. This unfairly saddles those middle class Americans who can't afford to save or invest because most of their income goes directly to paying for goods and services. A savings account is a luxury when you're living paycheck to paycheck. Even Bush administration economists estimate that this will increase the tax burden for those earning between $30,000 and $200,000 per year. The wealthiest Americans would see their burden drop from a current 35 percent of income to only 30 percent of consumption. The last thing our country needs is another tax cut for the richest Americans.
Assuming the "Fair Tax" would be simple or voluntary is naïve. Lobbyists would undoubtedly get exemptions for some goods and services, but not others. What politician wants to vote for a 23 percent sales tax on homes, health care, and education costs? We'd also need to qualify low-income individuals and families to receive tax rebates to make sure a 23 percent national sales tax still allows them to purchase basic necessities. Some government agency would have to enforce this tax, so dreams of eliminating the Internal Revenue Service would stay a fantasy. And while it may be a luxury some rich people can afford, the average person won't be thinking of punishing the federal government for a bad spending choice when they go to Wal-Mart.
I'm not happy that our government is spending upwards of $200 million dollars per day in Iraq or $200 million per year on abstinence-only sex education. I also know that I'll be paying for some services that I will thankfully not likely need, like welfare and Medicaid. But I realize that's part of the price to pay to live in a democratic society with a social safety net. It's not just my well-being or opinions that matter. It's about sacrifice for the collective welfare.
