Cohousing-L Mailing List: RE: taxes

[TR Ruddick (truddick]

> Message: 6
> From: Sue Pniewski <SPniewski [at] Habijax.com>
> 
> Liz-
> I understand your passion about the tax laws.  To some extent you are
> correct.  But as I have mentioned, I was a tax lawyer for a long time, I
> still am in fact, but I try to stay away now because the abuse sickens
me.  
> I know the common perception out there is that the rich get tax breaks and
> the poor do not.  Hate to break it to you, but if you make less than 20K
and
> have a couple of kids, you DON'T PAY TAXES under the current laws.

We may be ranging afield from cohousing here, but it is a topic of common
concern.  Especially if we're struggling with questions about the effects
and ethics of differential wealth.

Sue, I believe you have it wrong.  You seem to have made the same error as
so many people today; you are only counting income taxes.  In reality,
income taxes are only a slice out of the big tax payment pie.

If you make less than 20K and have a couple of kids, you pay about the same
percentage of your income in taxes as the wealthiest.  In fact, since the
Bush tax cuts, you probably pay a HIGHER percentage.

Poor people don't pay federal income taxes--they even get earned income
credits.  But regressive taxes (like that "flat tax" that you support) are
enormous.  Those with lower incomes spend everything they earn, while the
wealthy invest most of what they earn.  Investments get significant tax
breaks; whereas the cost of consumer goods contains dozens of hidden "flat
taxes" like sales tax, gasoline tax (which increases the base cost of
goods), business license taxes, etc. etc.  Some are paid directly, some
indirectly as noted through increased costs of goods.

Look; if you earn 10 times as much as I do (probably; you're an attorney,
I'm a professor) and we each buy a new car within our budget, I can afford
a nice Kia minivan for $20,000 and you can afford anything you
please--let's treat you to a $50K BMW.  You pay two-and-a-half times more
sales tax than I (your other taxes, like vehicle registration fees, are
equal to mine in this purchase).  So you make 10 times what I do, but your
sales taxes are a much lower percentage of your income than mine.  See how
that works?

I believe it was the institute of tax fairness which, a couple of years
ago, analyzed the percentage of income that went into taxes by economic
level.  The wealthiest paid, on average, 18% of their income in taxes; the
middle, 25%; the poor, 17%.  That data was collected, as I noted, before
the major tax restructuring of the Bush administration and the resultant
changes in tax structures in the states (which rely more on regressive
"flat" taxes, like sales and property and usage, to make up for lost
federal funds).

I like to use an analogy concerning the fairness of tax codes.  Our society
is a burden that we all must carry.  Let's compare it to a physical
burden--let's say we've got 120 pounds of stuff that must be carried five
miles, and we've got three people to carry it: me (an out-of-shape old
professor), Hallie Eisenberg (the cute little kid in the Pepsi
commercials), and Dwayne "The Rock" Johnson (professional wrestler and
action film hero). 

A "flat tax" says that Hallie, I, and "the Rock" each should carry forty
pounds five miles, and further that we all should arrive at the destination
at precisely the same moment.

A progressive tax would say that a weight lifter like Johnson could take
70, I could handle 35, and little Hallie might drag 15.  And everyone gets
to stop and rest when needed.

I have to insist that the second scenario is what's fair.  As Ross Perot
said, "rich people can afford to pay higher taxes--I know, I'm one of them!"

Not to ignore that wealthy people cost society more than less wealthy.  If
I murdered my wife, I'd wind up with a plea bargain and the state's legal
expenses would be several thousand; when OJ murders his wife, it costs
millions to prosecute unsuccessfully.  Wealthy people use more resources,
either for conspicuous consumption or for generating greater wealth--why
shouldn't they pay more for the privilege?

In fact, I'd argue that we'd all be better off if we eliminated all forms
of taxation except income taxes (and greatly simplify income taxes to
eliminate deductions).  The result would be a more stable income flow for
our government; payments made by taxpayers at the time they're best able to
afford them; less dependence on a byzantine and bloated tax enforcement
beauracracy; progressive tax structure; ability to better predict personal
tax liability.

And a lot less rhetoric about how the poor "don't pay any taxes."  Please
don't help Rush Limbaugh and his ilk spread that kind of nonsense around
anymore!

TR Ruddick
Dayton Cohousing


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