I can’t remember a free meal I didn’t enjoy. Sure, at some the food could have been better or the company different, but I’ve always been happy to eat for free. In the same way, I’ve never met a tax I didn’t have to pay that I didn’t like. As long as the sales tax targets something I don’t generally buy, especially if it’s a product I’m not particularly fond of, it sounds good – at first.
Amidst the recent budget shortfalls, some law makers have turned to adult services. No, not to de-stress, but to tax. A number of states and even the federal government have at least considered a possible tax on explicit movies, literature, and other products, much the same way that there are specific taxes on alcohol and tobacco, also known as “sin” taxes.
The “skin taxes” as they are called will have no negative effect on my finances, and should they be passed, survive constitutional challenges, and generate revenue, they might actually lessen my tax burden by making others pay more. However, I’m still uncomfortable with the motivation behind these new taxes. The legislators aren’t moral warriors attempting to use any means necessary to rid their districts of what immorality, they just want to raise funds in a way that offends the least number of people. However, flinging morality around as an insincere excuse for raising revenues doesn’t sit well with me.
Right now, I’m not being targeted. Nobody’s threatening to tack on a twenty percent tax on peanut butter and jelly, spaghetti, yogurt , or – heaven forbid – camera equipment. I guess those must be common enough that representatives don’t think they can just slap a tax on it and not feel repercussions at the ballot box. But what happens when some senator decides religious books are “immoral” for misleading people? Or instead of the “pole tax” that Texas has instituted to force strip clubs to have a five dollar cover, what if politicians decide that people are going to attend church no matter what so they should levy a five dollar cover charge to get in? Perhaps that example is just a bit drastic, but what about charging a cover on trips to the camera store, car dealership, or supermarket?
Certainly there are some times when legal means can be used by sincere individuals to achieve moralistic ends, such as using zoning laws to prevent strip clubs or adult stores from taking root in a new community, but as long as taxes are seen as a valid means for behavior control rather than purely as a revenue generator, I certainly don’t mind “skin taxes,” as well as taxes on tobacco, alcohol, anchovies, women’s clothing, and almost any other item I don’t have to purchase. However, unless I am chosen as dictator – or at least total given control of what gets taxed so I can make sure someone doesn’t tax items that I use – taxes should be a method for raising money and nothing more.
Sunday, March 8, 2009
Friday, March 6, 2009
Investing in the Government of America
Why is losing an Olympic gold medal by a tenth of a second so much more painful than ? Or why is watching an NBA championship slip through your fingers as a last-second shot slip through the net more heart-wrenching than losing 21-19 in a pickup basketball game at the local park? Though losing a job anytime hurt, why is it more wrenching to see a business you founded go under than be laid off from a 9-5 job?
Simple: the more you effort you expend on something, the more valuable it becomes to you. And it also applies to government.
According to IRS statistics, in 2006 about 1/3 of all tax filers owed nothing in taxes. This sobering statistic doesn’t even include people who don’t bother to file taxes, or those who don’t make enough to have to file a return. During this year’s presidential election, Obama and McCain promoted tax cut that would increase that number to 44% and 43%, respectively. That means that they pay nothing for the benefits of living in America. No, it’s certainly not a perfect country but we certainly have it better than most. When you’re given something for free, you’re much more likely to take it for granted than if you pay for it. When my parents paid for my TI-89, I took it for granted a lot more than I do my camera equipment that I paid for myself.
In a publically held company, shareholders votes are proportional to the capital they have invested. The person who has 30% of the capital invested gets 30% of the votes. Chances are, that person is pretty involved in making sure the decisions of the company are good ones. The person who only owns a few shares likely votes by proxy – if they even bother to vote at all. What would happen to voting turn out if even a nominal fee – say, $0.50 or $1 – were charged? While I’m guessing that fee wouldn’t even cover the cost of opening poling places and counting the votes, and I know some people wouldn’t vote simply out of protest, I think most people who did vote would spend more time examining the issues and candidates to make sure they got the most bang for their buck. No, the poll tax will not return, nor should it, but how dearly can people treasure a freebee they take for granted?
I am certainly not suggesting we convert to an aristocracy, but what happens when a majority of Americans have no monetary stake in the government?
A political candidate will be able to shout from the podiums-turned-pulpits that if elected, he or she will increase taxes on the wealthiest 49% - or, to ensure victory, just those whose incomes are in the to 30% - and eliminate the tax burden for the rest of the country. At that point, America will turn from a democracy to a tyranny of the majority – at least until the wealthy decide to leave.
As valuable as every person is, those with capital to invest provide the catalyst for the economy. If wealthy individuals and businesses chose to move elsewhere – and, unlike the poor who usually cannot afford to move out of a bad situation, the wealthy could chose to relocate – they will take their investments with them leaving fewer jobs for those already struggling to make ends meet not to mention the decrease in tax revenues
Am I arguing that everyone should pay the same dollar amount, or even the same percentage of their income, in taxes? Certainly not. But to have a skyrocketing percentage of the population that has no stake in ensuring the government spends its money wisely is foolish.
Simple: the more you effort you expend on something, the more valuable it becomes to you. And it also applies to government.
According to IRS statistics, in 2006 about 1/3 of all tax filers owed nothing in taxes. This sobering statistic doesn’t even include people who don’t bother to file taxes, or those who don’t make enough to have to file a return. During this year’s presidential election, Obama and McCain promoted tax cut that would increase that number to 44% and 43%, respectively. That means that they pay nothing for the benefits of living in America. No, it’s certainly not a perfect country but we certainly have it better than most. When you’re given something for free, you’re much more likely to take it for granted than if you pay for it. When my parents paid for my TI-89, I took it for granted a lot more than I do my camera equipment that I paid for myself.
In a publically held company, shareholders votes are proportional to the capital they have invested. The person who has 30% of the capital invested gets 30% of the votes. Chances are, that person is pretty involved in making sure the decisions of the company are good ones. The person who only owns a few shares likely votes by proxy – if they even bother to vote at all. What would happen to voting turn out if even a nominal fee – say, $0.50 or $1 – were charged? While I’m guessing that fee wouldn’t even cover the cost of opening poling places and counting the votes, and I know some people wouldn’t vote simply out of protest, I think most people who did vote would spend more time examining the issues and candidates to make sure they got the most bang for their buck. No, the poll tax will not return, nor should it, but how dearly can people treasure a freebee they take for granted?
I am certainly not suggesting we convert to an aristocracy, but what happens when a majority of Americans have no monetary stake in the government?
A political candidate will be able to shout from the podiums-turned-pulpits that if elected, he or she will increase taxes on the wealthiest 49% - or, to ensure victory, just those whose incomes are in the to 30% - and eliminate the tax burden for the rest of the country. At that point, America will turn from a democracy to a tyranny of the majority – at least until the wealthy decide to leave.
As valuable as every person is, those with capital to invest provide the catalyst for the economy. If wealthy individuals and businesses chose to move elsewhere – and, unlike the poor who usually cannot afford to move out of a bad situation, the wealthy could chose to relocate – they will take their investments with them leaving fewer jobs for those already struggling to make ends meet not to mention the decrease in tax revenues
Am I arguing that everyone should pay the same dollar amount, or even the same percentage of their income, in taxes? Certainly not. But to have a skyrocketing percentage of the population that has no stake in ensuring the government spends its money wisely is foolish.
Wednesday, March 4, 2009
Tax Refunds for All!
I just got the federal part of my tax refund and was thrilled to realize the government owed me money. Virginia paid me a whole $3 and I’m still waiting on North Carolina to pay me a larger amount. I was thrilled – I mean, who wouldn’t be happy to have the government pay them extra money? And then I realized something that took away my joy.
The government was simply giving me money back that it had forced me to lend it without paying me any interest!
While I can understand giving people the option to have taxes withheld if they would prefer not to keep track of setting aside money to pay in one lump sum, or using it as a punishment for delinquent tax payers, having the government borrow my money interest free is ridiculous. Not only that, but if for some reason you don’t have enough taxes withheld, the government gets to charge you penalties. Just a little one-sided, don’t you think?
Not only that, the “refund” I get obscures how much I really pay in taxes each year. Because people are so accustomed to taking home less than they earn, they just become accustomed to not having that income. Therefore, if you had asked me how much I paid this tax season, I would have said, “Nothing, I actually got a paid by the government.”
“Really? REALLY?” Seth might ask. No, I didn’t get paid by the government. No, the government didn’t donate some money to me. Really, the government just gave me back all the extra money I paid over what I owned. The only difference between paying for a Big Mac with a Benjamin and paying taxes with withheld earnings is that the McDonalds cashier gives you the extra back right away and Uncle Sam takes several months.
It took me taking a second – and third, and fourth – look at my tax return to figure out how much I had actually paid the government. I doubt many people can say exactly how much they paid, and if people can’t say how much they paid, how upset can they possibly be if it is misspent? And if I think the government paying me, they must be doing something right!
Withholding is a genius idea to dull people’s sensitivity to paying taxes. Instead of citizens writing one big check each year, they simply miss a smaller amount each paycheck, and since they’re not used to having it anyway, people don’t miss it. Even tax increases are blunted. Nobody care much about a cup of coffee costing five cents more until they realize how much it costs them per year – but how many people actually total their coffee spending for their year? And coffee companies don’t even give a refund at the end of the year. If the government takes an extra $20 out of your weekly paycheck, but passes a stimulus package that gives you a big, one-time check of $600, most people are going to remember the refund, not the fact that they were paying an extra $1,000 over the year.
Don’t just look at the bottom line of your 1040 for your refund. Look a few lines up for how much you actually paid.
The government was simply giving me money back that it had forced me to lend it without paying me any interest!
While I can understand giving people the option to have taxes withheld if they would prefer not to keep track of setting aside money to pay in one lump sum, or using it as a punishment for delinquent tax payers, having the government borrow my money interest free is ridiculous. Not only that, but if for some reason you don’t have enough taxes withheld, the government gets to charge you penalties. Just a little one-sided, don’t you think?
Not only that, the “refund” I get obscures how much I really pay in taxes each year. Because people are so accustomed to taking home less than they earn, they just become accustomed to not having that income. Therefore, if you had asked me how much I paid this tax season, I would have said, “Nothing, I actually got a paid by the government.”
“Really? REALLY?” Seth might ask. No, I didn’t get paid by the government. No, the government didn’t donate some money to me. Really, the government just gave me back all the extra money I paid over what I owned. The only difference between paying for a Big Mac with a Benjamin and paying taxes with withheld earnings is that the McDonalds cashier gives you the extra back right away and Uncle Sam takes several months.
It took me taking a second – and third, and fourth – look at my tax return to figure out how much I had actually paid the government. I doubt many people can say exactly how much they paid, and if people can’t say how much they paid, how upset can they possibly be if it is misspent? And if I think the government paying me, they must be doing something right!
Withholding is a genius idea to dull people’s sensitivity to paying taxes. Instead of citizens writing one big check each year, they simply miss a smaller amount each paycheck, and since they’re not used to having it anyway, people don’t miss it. Even tax increases are blunted. Nobody care much about a cup of coffee costing five cents more until they realize how much it costs them per year – but how many people actually total their coffee spending for their year? And coffee companies don’t even give a refund at the end of the year. If the government takes an extra $20 out of your weekly paycheck, but passes a stimulus package that gives you a big, one-time check of $600, most people are going to remember the refund, not the fact that they were paying an extra $1,000 over the year.
Don’t just look at the bottom line of your 1040 for your refund. Look a few lines up for how much you actually paid.
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