A Terribly Taxing Subject

Seal of the Internal Revenue Service's Office ...

IRS Seal, via Wikipedia

The Erstwhile Conservative has performed a good service for us on his recent blog, Are The Rich Taxed Enough?, by analyzing the issue of taxes (of all kinds) and their burden on the different income segments of society. I started a comment and then realized that I had more to say on the subject.

Some might argue that payroll taxes ought not be bundled with the others because they are intended for specific purposes. However, after receiving payroll taxes, Congress routinely “borrows” that money through the use of “special” Treasury notes and spends it just like its other revenue. Therefore its inclusion here is quite proper. So are sales tax and gasoline tax.

The trope that the bottom half of wage earners pay little or no income tax has become an enduring and effective sound bite for the political right, and that’s misleading because of what the statement omits.  It is a clever use of a partial truth.

Sales taxes deserve special attention. I think of them as a kind of stealth tax.  (Would it not be interesting if there were a law requiring that all advertised prices include all taxes and fees?)  Sales taxes have crept up steadily during my lifetime. For sure, they accomplish a lot and when they benefit almost everyone, such as the recent 1/4 of 1% parks and sewer levy, I can bring myself to vote for them, as I did that one. But sales tax is approaching 10% in many localities, and as Duane properly points out, that becomes very significant to a family that spends almost all its income every month. I suggest too, that a sales tax that tops 10%, and I know of none that does, would become much more noticeable to the average consumer.

Luxury Penthouse rental in downtown Telluride ...

Luxury Penthouse, by HeartOfTelluride.com via Flickr

Finally, no matter how one views tax issues, what is most significant to me in money matters is discretionary income. Money, as I’ve suggested before, is basically an accounting mechanism that allows us to track contributions and receipts of labor and material things among everyone. But when the smoke clears and the dust settles, after all the taxes, all the deductions, all the tax evasion, all the black-market untaxed transactions, all the tax breaks, all the tax credits, all the hidden tariffs, all the outsourced jobs, what is most significant is how much discretionary income is left to each segment or individual.

I believe there is consensus that the current disparity of discretionary income between the top few percent and the rest is historically high (at least for modern history). So, while we bloggers debate the nuances of such things as kinds of taxes as Duane does in his post, and I’m grateful for his work in doing so, let’s not lose sight of the forest for the tax trees. Tax reform may be a chimera, but if it ever does come to pass there is a world of mischief that can be eliminated that way, and a fundamental goal should be tax fairness that anyone can understand.  (Bi-partisan commission, anyone?)

I see that Anson Burlingame has raised a related issue in his comment on my previous post, An Historic Failure, i.e., the question of whether the riots in the U.K. are related to the bad economy and austerity measures there. While I agree that there is no proof of such, such a thing is hard to prove by its very nature. I suppose one would have to have evidence of some kind of conspiracy. But is it not interesting that many of the hoodlums are using Blackberrys which have a texting system that can not be geographically tracked? (Last night’s evening news had that report.)

Joblessness and street violence have been firmly related by economists to income disparity throughout the modern era, including several of the French revolutions and the Watts riots in LA.  I for one see the most violent destruction in the U.K. since WW II, which is what the media is calling it, as a big cautionary message.

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About Jim Wheeler

U. S. Naval Academy, BS, Engineering, 1959; Naval line officer and submariner, 1959 -1981, Commander, USN; The George Washington U., MSA, Management Eng.; Aerospace Engineer, 1981-1999; Resident Gadfly, 1999 - present. Political affiliation: Independent, tending progressive as the GOP recedes from its Eisenhower roots.
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6 Responses to A Terribly Taxing Subject

  1. ansonburlingame says:

    OK Jim,

    At the risk of sounding patronizing again (at least to you) here goes.

    Duane posted an earlier blog to which I responded with a link refuting some of his comments. He then posted the above blog mentioned to refute my link and add his own “table” in that debate. Great so far and no complaints.

    I then wrote a long comment to the above blog again joining into what I thought was a continuing good debate. I also noted that my “right wing” link was countered by a “left wing table from a Union advocate” but gave him the benefit of the doubt on his table. I then posted (before this one came “up”) a blog of my own called “Total Taxation and Fairness”.

    Now Duane and I so far have not at all been going after each other in any “nasty” way. It is a serious issue and deserves serious discussion and hopefully both of us will continue the reasonable debate farther but propbably never reach a consensus view. THAT is too much to expect.

    Now in just over the last say four hours in this debate with Duane and having considered his ideas and posting my own, I read the above, hoping for a new and different perspective on the whole matter. Nope, it is not there in my view. You essentially give Duane credit for a good blog, endorse his ideas and provide no specific or constructive solution above to how to resolve the issue other than the “liberal way”.

    My comment to his blog was ignored as a rebutal and certainly no acknowledgement to my own rebutal blog which is understandable considering how fast these things can go up (or down).

    So if you read his blog, AND my comment thereto, AND my blog on essentially the same subject, you have a distinct left right and reasonable, in my view at least, debate. THEN you can decide whether to come down in the middle or take a side one way or the other. Such was not the case above, again in my view.

    Bottom line in case you don’t want to wade through all of the above, our problem is in our TAX CODES and not in our TAX RATES. And in such a debate I have no idea what you mean by TAX REFORM? Is it reform of codes, rates, all of the above, something else and what is the ultimate goal of such reform. If you say correcting income disparity is the goal, then go read my blog and I won’t post a rebutal herein. Taxes should fund the government fairly and leave social engineering to other areas of government where we can gridlock but not default on anything..

    Anson

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  2. johncerickson says:

    Just a point for consideration. When last I kept track of these things (10 years ago), Chicago had a combined sales tax well over 10%. The total comes from federal, state, “RTA Authority” (the collar counties’ mass-transit system), Cook County (Chicago’s home county), and finally the city. Even 25 miles outside of downtown, where I last lived, racked up all of the above except the city tax (DuPage County had its’ own tax, albeit lower than Cook’s). Yet people still took the train into the city to buy things in the high tax areas. (Or, in a fluke of cartography, drove to Woodfield Mall, further west, yet paid the same Cook County-level taxes.)
    Once again, like the difference between the $117,900 house we mortgaged in Illinois and the $35,000 we own clear down here, the geographical differences can be stunning. (I have no clue what NYC taxes might be, but I shudder at the thought!) Just some thoughts to ponder…..

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    • Jim Wheeler says:

      Wow, John. I had no idea. But then, the closest we ever came to living in a big city was a suburb of Boston, and that was about 1980. I don’t even remember what the sales tax was then and there, probably because we had no alternative to it. Come to think of it, I think the colloquial term for the state then was “Taxachussetts”.

      But this reminds me of yet another high tax not discussed so far – the extra motel tax. Those are getting high now too. I think it just proves that it’s easier to extract tax a little at a time than a lot once a year.

      They say if you have a frog in a pot of water you can cook him alive if you just raise the temperature a little at a time. 🙄

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  3. ansonburlingame says:

    John and Jim,

    I have lived in some high cost areas like DC and LA (Pasadena) and thus have seen the differences in “extra” income. That is one reason why I like Joplin. The overall cost of living is much lower than in other areas of the country and I would like to keep it that way.

    And frankly, in Joplin, I see no local lack of programs that are necessary. Our schools for example need to be improved but money is not the question, in my view, it is leadership. And from what I have seen since the tornado, our R-8 leadership has been spectacular so far, just as an example. Same way with City leadership exemplified by our City Manager, Mark Rohr. None better is my fairly long experience for both Huff (our Superintendent of Schools) and Rohr when the chips were really down.

    And then if you read my blog on debris removal, money was not the solution, it was leadership and hard work which were obvioulsy in abundance over the last three months.

    Now if we could instill such in our federal bureaucracy in DC I would be very HAPPY!

    And If I had a gazillion dollars I would NEVER live in Chicago or NYC! LA I would consider in an outlying area such as Pasadena, a pretty nice little city in my view with access to the really big but crazy cities nearby. But then again, Northern VA, no way. Too many crazy bureaucrates living there!!

    Anson

    Anson

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  4. ansonburlingame says:

    No Sekan,

    All the money in the world or a total lack of same would keep me right here in America. No greener pasture avaiable for me or mine.

    Anson

    Like

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