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Funny you quote Ben Franklin, because in his day, the taxation looked very very differently than it does now: "The tax mechanisms used during first 150 years or
by sologoub 13y ago
Funny you quote Ben Franklin, because in his day, the taxation looked very very differently than it does now:
"The tax mechanisms used during first 150 years or so of U.S. tax history bears little resemblance to the current system of taxation. First, the U.S. Constitution restricted “direct” taxation by the federal government – meaning taxes directly on individuals. Instead, the federal government relied on indirect taxes including taxes on imports (tariffs) and excise taxes. Tariffs were the major source of U.S. government receipts from the beginning of the nation up to the early 1900s. For example, in 1800, custom duties comprised about 84% of government receipts." (Source: http://www.eoearth.org/article/History_of_taxation_in_the_United_States http://www.eoearth.org/article/History_of_taxation_in_the_Un...)
Government activity was also a tiny part of the economy: "Another important difference is the scale of government taxation and expenditures relative to the entire economy. Government spending is currently a major portion of the total U.S. economy – in 2002 government expenditures and investment at all levels comprised about 20% of total economic output. In the late 1800s government expenditures were responsible for only about 2% of national output (earlier data on national output are not available). " (Source: http://www.eoearth.org/article/History_of_taxation_in_the_United_States http://www.eoearth.org/article/History_of_taxation_in_the_Un...)
Another source of similar info:
"But lets start with what was levied initially:
1. Excise taxes: First levied July 4, 1789, they accounted for 80-95% of all federal government revenue. Tariffs were the main source of government revenue through the 1800s.
2. Property tax: One of the earliest taxes imposed. In 1634, property taxes were assessed by the colonies. In 1796, 14 of the 15 states collected property tax. Delaware levied tax on income from property, but not on the property itself." (Source: http://www.foxbusiness.com/personal-finance/2011/08/25/snapshopt-taxes-paid-then-vs-now/#ixzz2ThJLsPFM http://www.foxbusiness.com/personal-finance/2011/08/25/snaps...)
By looking at these taxes, seems like it would be a no-brainer to pay them. As a property owner, I will gladly pay to ensure I have security, safety and infrastructure around my property. Safe, clean areas with good schools tend to promote better property value growth. As a consumer, if I want something that is imported or otherwise taxed, I will probably still buy it. I may consume less of it due to the price. There has to be an exemption for essentials, but overall, if a Honda or BMW happens to cost 30% more because it's imported, whether I buy it or not will depend on whether it's 30% better than the alternative (if there is one).
What we have today is hardly what Ben Franklin was talking about. Today, those who consider themselves upper-middle to upper class are paying 10-22% (top 1% is around 28%). (Source: http://www.forbes.com/sites/timworstall/2012/07/15/the-real-middle-class-tax-rate-is-minus-5-percent/ http://www.forbes.com/sites/timworstall/2012/07/15/the-real-...) For that, they don't get any type of real retirement guarantee, nor any health care guarantee, or even truly free education. Even the public schools cost money because the free services are bare minimum and do not include anything to do with sports or education outside of classrooms. In order to have any of those social safety nets kick in, those upper-middle class members have to hit financial ruin.
Also, funny math in the referenced Forbes article - 3 of the lowest quintile supposedly get money back that they did not earn... I haven't verified the math, but it's a bit disturbing that the tax system is being used as a means to directly redistribute wealth, and not actually provide services to all of society. Somehow in my mind, taking money from person A and directly giving it to person B strikes me as wrong. Taking money from person A and providing health care accessible to person A, B and C, does not result in the same emotional response for me, because person A actually gets to enjoy some of the benefit of this social good.
- newbie12 13y agoWell put, but the top income tax rate in the US is now nearly 40%. Plus there's 12.4% for Social Security (employer+employee but it is economically all your salary) and state income taxes. And if you invest anything after that, there's capital gains and dividend taxes.
- greghinch 13y agoI think the parent was referring to effective tax rate. Tax rates are applied in graded steps, so you will only pay 40% on income over a certain amount.
- jacques_chester 13y agoAs your total income rises, your effective tax rate converges to the headline marginal rate. (Granted this is a mathematical problem for millionaires, but still...)
- dripton 13y agoExcept that the truly rich tend to get most of their income from capital gains rather than wages and salaries, and there's a much lower rate for capital gains than for earned income. The "Buffet pays a lower tax rate than his secretary" problem.
- jacques_chester 13y agoQuite, though the arrangements vary from place to place. There's a lot distortion and unseemly outcomes that flow from having misaligned personal, capital gains and corporate tax rates.
- beefman 13y agoUnless you pay the AMT.
- kip_ 13y agoSocial Security taxes are only on the poor and middle class. If you make more than $113,700/year you're only out the $14,098.80 Source: http://www.ssa.gov/pubs/EN-05-10003.pdf http://www.ssa.gov/pubs/EN-05-10003.pdf