Taxes and Benefits

Taxes taxes taxes. Today's post has been inspired by a conversation some co-workers were having as I strolled into work (only 15mins late today!). The convo go cut short because we all had to get back to work, but here's the basic gist of what I think the two opposing sides were saying.

ALL OPINION, totally void of facts!... well almost:
Both sides agree that taxes should be "fair," but how they define fair is vastly different. Should the rich pay more because they can, and its only because of their forced generosity that our country is able to operate? Should we all pay the same amount because the poor receive more benefit while paying less taxes, and as an incentive to be a productive member of society, should those who have earned their fortunes be allowed to keep them?

In short. Yes.

Flat taxes that affect all people equally are almost by definition fair. The amount of taxes charged is proportional to the value of the goods or services provided, regardless of who is receiving it. If I buy a car I'll be taxed just as much as if a millionaire buys that same car. There's some equality.

So, where is the fairness in taking more money from society's most successful... just because they're more successful!?! Shouldn't success be rewarded, should there not be an incentive to be the wildest success you can be, and innovate yer a$$ off all the way to the bank? And isn't America the land of opportunity where your place in society and your success is determined by your talent and hard work?

Yes and Yes.

Furthermore, aren't the rich less likely to cash in on government funded programs? They have private schools, purchase their own health insurance, purchase their own homes and home insurance, live in gated communities, don't go to prison (guilty or otherwise, cuz their lawyers cost a TON!). Rich people basically just need police, military, road and park maintenance, and need illegal immigrants out, which isn't even being done. So why is it that they provide the largest share of tax dollars to programs they won't use?

Argument 1: Earlier, unless you disagreed with me, we answered Yes and Yes to providing incentives to succeed, and to America being the great land of opportunity. I say the two are self-reinforcing; America has provided the incentive for working hard by giving you that framework in which you can succeed and become rich, and because America is great, we are obligated to give back to her and KEEP her great with a portion of the wealth she has given us the opportunity to make. Tadah! Born into another country, into another family, Steve Jobs might be revolutionizing the world of riveting grommets into sneakers. And honestly, born into the wrong family in THIS country he might be revolutionizing the world of janitorial services. Success is not just the product of talent and hard work, but also environment, and dues should be paid.

Argument 2: I make a good amount of money and pay taxes accordingly, and I still have WAY more than I need to get by. I enjoy life, spend as freely as I want on my vacations, and have some fairly nice stuff at my place. People who make more than me, no matter how high their taxes, STILL MAKE MORE THAN ME! And I make less than half the $250k Obama threshold of wealth. Still there are so many rich people who donate money to charity or starving children funds or to the warm fuzzy make me feel good about myself funds, whatever, but they bitch like hell about being over taxed! As if any of those causes should come before the needs of the country. Traditional American beliefs say, 'honor your God, Family, and Country and in that order'. Not 'honor yourself, family, shelter animals, the whales, African orphans, breast cancer, and save some for your country.' How many conservatives do you know who fit this description? How many of them are on the "bring America back to its roots and core values upon which it was founded" bandwagon? To continue the theme from the Arizona post, they follow the most traditional of American values, GREED!

Ok, so if I'm lucky maybe half of you are in agreement that we owe some money to the government, but why do the rich owe more than the poor? They don't, but like any family this country needs X amount of dollars to get by, and it's sure not getting it from the people who need government money just so they can get by. Equal payment from the members of this country would be the equivalent of a father demanding equal payment for bills from his wife, children, infants, pets (haha, though in this analogy each adult, child and pet would have an equal vote in how the household is run and opperated :P ...ignore the absurdity there, cuz for better or worse, that is actually how America is run.).

So who's it going to come from? That's right. It sucks, but that's how it is. Should rich people get a medal of honor or a Christmas card for keeping this country afloat? Absolutely. Does it suck that it gets taken without their permission? Definitely. Would they give it to the government if they had the choice and the government asked nicely? Probably not, that's why the gov takes it. Should they get more say in how the country is run because they're the ones paying for it? No, because it's a democracy of equality, but the cool thing for them is that they DO get more say because the rich control the media and sponsor support efforts for bills they believe in. So congratulations rich guys, you are skewing democracy :D INCENTIVE! For those of you rich folk who don't own TV stations, not to worry, there's a good chance they will also support defending your wealth.

The big gripe: "Ok, I'll pay your blasted taxes because I have to. But for God's sake spend it wisely man!" Just as every family needs X number of dollars to get by, every family also has Y dollars WASTED! How do you determine which tax dollars fund X and which fund Y? Ohoo, that is a much longer blog than I care to attack today. But do consider two things when paying them and you may at least sleep better at night:

First, the reason we have the largest economy is because we are the largest consumers in the world, and the reason we are the largest consumers is because we have the largest middle class. The more people we can shoulder up into the middle class, the better off we'll be. The welfare reform laws of 1996 were made to ensure that it's not an enabling crutch, though welfare-type spending has been and will continue to escalate in down times and with the expansion of the government.

Second, the taxes we contribute have been voted on by elected officials, so do your crying to your local representatives and contribute money to battle further tax bills and spending bills, your opposition will do the same, and hooray for democracy. But until your side wins it's your duty as a citizen to pay the taxes owed. DO NOT go crashing your private plane into the IRS building. If he spent as much paying for a good lawyer and some taxes as he did on that plane he crashed, he might be better off than dead. Chronic tax evader, not martyr, don't be that guy!

Sentimental Aside: My family fell on hard times and needed a hand once, right after the divorce. I don't dare ask my mom for the details, but I know we received at least some government assistance. That help was enough for my mom to keep us fed, get on her feet, and decades later she, my sister and I are both very productive members of society and paying back into the funds from which we borrowed, with interest. This may not be the norm, but the poor should have a chance to succeed just as much as the rich, and to some extent the welfare programs ensure that right. Even if only 1 in 5 end up succeeding, we'll still come out ahead (my taxes alone likely pays back in a year what my mom received in total, and my mom pays about the same), and will have at least given everyone a fair chance to succeed.

Conclusion: Yes, taxes are necessary, it's unfortunate but the rich have to take the brunt of it without the benefits (truly taxation without representation :\ ), but it goes to a good cause that indirectly benefits the rich as well. In broad general terms I am SURE there is plenty of government and waste and ways to fix it, but until then keep in mind that the "rich" have more than they need, money doesn't buy happiness, and crying about how things ought to be doesn't buy happiness either. That's it for now, perhaps we can attack what is and is not necessary in a later post.

There will be a post on greed coming soon I'm sure, but I would like to finish the economics book I'm reading first to make it more insightful.

~Yasu