5:39 p.m. - 2008-09-01
taxes...a long string of thoughts
Here is a very interesting web site that compares your tax situation based on McCain's plan and Obama's plan.
www.obamataxcut.com
You just answer three or four easy questions and it calculates whose plan would tax you at a higher rate. The site says that the calculations (which are given instantly - you don't have to enter any personal info and wait for an email or anything) are provided by the non-partisan "tax policy center' and provides a link if you are skeptical.
Basically, McCain will tax the middle class more and Obama will tax them less while taxing the wealthy more. Who has the better plan depends on how you feel about our tax system and how these new plans affect you. You might get taxed less with Obama's plan (you almost definitely will, unless you've been holding out on me and make a lot more money than I thought you did in which case you can expect a call from me while I am wearing my "fundraising" hat at work) and while that is good news to you personally, it raises an interesting issue.
I, myself (though I am an ardent Obama supporter, regardless) am torn in regard to how I feel about taxes. On the one hand, I feel that wealthier people should not receive tax breaks when lower and lower-middle class folks struggle to get by on what they make. Our current tax system works on a tier basis - skip this if you already understand our basic tax situation. (
I am rounding these dollar amounts to make it simpler.)
If you are single and make up to $8,000 a year which is significantly below the federal poverty level, mind you, you pay 10% of your income in taxes. That is the first tier or "bracket." Second tier: If you make between $8001 and $31,000 you pay a set dollar amount - that amount is equal to 10% of the lowest amount - $8,001 per year - so, about $800, PLUS you pay another 15% on the amount above the lowest amont in that bracket ($8,001.) So, if you made $10,000 you would pay $800 (the 10% of $8,001) plus 15% on the $2,000 you make above the $8,001, which is about $300. So you would pay $1,100 or 11% on a $10,000 income. The next tier up, which goes from $31,001 up to like $70,000. If you were in this bracket, you would pay the 10% on $31,001 as everyone in this bracket would, plus 25% on anything over $31,001. And it goes up from there, although the percentage they tax you at, above the lowest amount in the teir goes up like this: 15%, 25%, 28%, 33%, 35%. If you make over approx. $350,000 you pay 35% on the amount above that no matter how much you make.
Oh my gosh, I am such a nerd. I am so sorry, that is probably terrible to read. Anyway...
I like the fact that we (Kevin and I) will pay less with Obama's plan. We make what to some sounds like a lot of money to some people and very little to others which probably makes us firmly middle class. We have a lot of bills - school loans and current schooling costs, credit card debt from our less-than-smart past decisions, mortgage, health care contributions, etc. and I'm happy to have anything extra coming in or anything less going out. However, I am not totally comfortable with financially successful people paying higher taxes just because they make more.
If you let kids break open a pinata, and they scramble for candy on the ground, do you take it all from them when they are done and then evenly re-distribute it? Maybe you WOULD do that - but if you did, what would probably happen the next time is that no one would try very hard for the candy because they know that effort doesn't mean more candy. Maybe that's a bad analogy, but it makes a lot of sense to me as a way to illustrate the principal of punishing success.
Kelly says this makes me a Republican. I am NOT (I am pro-choice, anti-death penalty, for equal pay for women, pro-affirmative action when used appropriately, anti-war against terror as it currently exists, and strongly in favor of generous government programs that equip the poor with the tools they need to be independent wage-earners and help them out while they are working on it and more and more, I am coming around to being pro-universal healthcare.)
I get it that this concern of mine can be viewed as a Republican-esque idea. But maybe, even though Republicans mostly kind of suck, it is worth a little of our time in thought and consideration. Doesn't it make sense to question, just a little bit at least, that we are punishing people for their hard work, experience and/or education and the ability to hold down a good job? Most of the time, not all, but most of the time when someone makes a lot of money, isn't it because they put in a lot of hours, achieved goals for their organization and spent their own money on a solid education? Success generally requires committment and sacrifice. The people I know who make what I consider to be a lot of money are extremely hard workers.
On the one hand, I look at the extremely wealthy who buy boats and dozens of cars and giant houses and I think "Sure, go ahead, tax the hell out of them." (Sidenote: Kevin, who takes a much stronger position on this than I do would say it's none of the government's business what those people buy - it's their money and they shouldn't have to fork a lot of it over even if they are buying rooms full of gold monkey statues.) But the problem comes when someone has to define "rich" or "very rich."
John McCain recently said something akin to the idea that only people pulling in over 5 million dollars a year are truly wealthy. (In order to justify his lowering of taxes for people bringing in 1 million, 2 million, 3 million, etc. Most of us would say - 5 million is the bottom of the rich scale?! You mean 1 million! Or half a million! I can look at these numbers in relation to my own financial situation and say that half a million dollars a year should be plenty for anyone and that anything over that should be taxed at a higher rate. However, more and more, I realize, it's not fair for me to be the one to set the amount. As evidenced by recent conversations, the amount that Kevin and I make seems like a lot of money to some people. It is, unless you factor in our bills - and we aren't talking about brand new cars, a summer home, trips to Vail for skiing, weekly pedicures or cases of expensive wine. We are talking about insurance and repairs on two cars from the 90s that we have pledged to drive until we have to push them down the road, a mortgage that we refinanced so we could get a lower interest rate, school loans and old credit card habits (believe me, we are reformed), 2 dollar drafts at the local pub, shoes from Target and vacations that are most often paid for in part or total by other people. We eat well (mostly fresh, whole foods with few preseratives that tend to be more expensive) and we have never had to decide between paying our electric bill or the gas bill but it does not feel at all like we are living large. We are extremely grateful that we had enough money in savings to pay for the windshield when Kevin smashed it accidentally with a 2x4 because a year ago, we wouldn't have had it - we would have had to put it on a credit card and felt bad about it or asked our parents for the money. We have cut way back on going out and we will probably hardly ever go on a vacation that does not include either sleeping on a futon in someone's living room or allowing someone else to pay for it. I know that we are not poor, but we are also NOT wealthy and I am, frankly, offended to be seen as wealthy when my husband doesn't go to the doctor when something bothers him because his health insurance kind of sucks and he's worried fixing whatever is wrong will be expensive and we waited a month to get our tv fixed until we actually saved up the money and had it in hand for a repair.
You have to factor in "expenditures." If you are single and making $50,000 a year and you have no debt, no car payment, no major health problems, no children, no ill relatives, no broken sewage line and no termites, you are probably doing just fine. If you make $50,000 and you have a sick aunt with crappy insurance who requires a home-nurse visit twice a day that you pay for because no one else can, your car just died and you have to buy a new one, you work 35 miles away because it is the only job you could find and you are paying $500 in gas every month, you pay $800 a month on your mortgage, you were stupid in college and have $20,000 worth of credit card debt, you have high property taxes and your boyfriend lives in California where he is in grad school and you can only see him if you fly there...you are not rich. You are probably just getting by. (Incidentally, Obama would tax this person LESS than McCain. Obama's tax increases wouldn't hit a single person with no dependents until you get up around $100,000.)
The thing is, it is easy for me to say that people making three times as much as I am have enough money and the government should get a nice big chunk to fund highway repairs and food stamps. But I've realized recently that some people think that WE are the rich ones. And that seems so far off the mark. Only recently has it come to my attention that people making two or three times what we make probably feel the pinch too (particularly if they have children) even if it is in ways that seem frivolous to me.
I guess the point is that wealth is relative. There is obviously a nation-wide problem of keeping up with the Joneses that contributes to our already problematic desire for material things and experiences. And it's more subtle than walking outside and seeing your neighbor's new Jaguar and going out and buying one yourself or buying designer handbags instead of the equally cute ones at Target. Kevin and I have more creature comforts than we "need." We don't need cable, but we like it and a few times a week, about 8 months out of the year, we get some real enjoyment out of it. We don't need to go to a bar for every Steeler game but we enjoy seeing our friends and watching the game with a motley crew of a community that we wouldn't have met otherwise. We can rationalize every purchase we make - and we can feel superior for every one we don't make. We can look down the street and see the expensive Japanese fountain garden the neighbor just spend a bundle on or the diamond earrings I just saw an acquaintance flash around and we can pat ourselves on the back for putting that amount into our 401(k) this year or donating it to a worthy cause instead of making such a self-indulgent purchase. But maybe others feel that way toward us when we pay a $40 bar bill after a Steelers game and spend $90 in gas to drive to the beach to spend time with our friends and family.
Again, I support Obama and I do think his plan is better. But I am having trouble reconciling this approach - tax the rich, tax their success. Believe me, I don't have any sympathy for the guy buying the boat and the Hummer and the house in the Hamptons and I don't care about it at all if he can't buy one more boat because he has to pay more taxes.
My problem is the slippery slope of this. At what point am I, or are YOU the wealthy one that is allowed to get the shit taxed out of them? Everyone reading this blog is almost certainly in the highest 2% of the entire world in terms of wealth. What if the world decided that everyone in the top 2% were allowed to be taxed at a rate of 40% of their income? I don't know about you, but ourship would be pretty much sunk if that happened.
Oh my word. I have been typing for 2 hours! I am totally procrastinating!! I have 3 chapters of schoolwork to read and a HUGE day tomorrow. Oh dear.
