ESO,

Taxation is a burden. It is supposed to be. It is meant as a sacrifice, a way for members of a community to “pull their weight” and do something for the greater good. We here in America emphasize far too greatly the individual at the expense of the community (an example—the Army’s recent slogan “An Army of One”). There has to be a balance between the two.

I’d agree with you if there was not so much government waste. If 100% of my taxes really went to pay (efficiently) for the things you listed, like schools, I’d be happy. Unfortunately that’s not the case.

Also, by including social welfare in your list of reasons to pay taxes, you are assuming the government is the most efficient means by which we can help the poor. Did the zion society described in 4th Nephi occur because of government welfare? I don’t know, but it’s certainly debatable.

So please don’t lump everyone who thinks taxes are too high as anti-school and anti-poor.

High taxes are bad. They squelch incentives to produce and create. “The power to tax is the power to destroy.”

ESO

Taxes suck because for those taxed because it is a transfer of their individual economic freedom to the government, which then generally handles it very poorly.

Taxes suck for the poor because they suppress the economic growth that would exist in the absence of the tax and has proven to be the best way to alleviate poverty.

Dan

Taxation is a burden. It is supposed to be. It is meant as a sacrifice, a way for members of a community to “pull their weight” and do something for the greater good.

Do yo intend to say that taxation is an end unto itself?

The fortune of birth into favorable circumstance may be dumb luck for us, but it is also a heritage bestowed upon us by our forebearers and community, and it would be ungrateful to slight what they prepared for us–the kind of slight that well internalized leads to no such heritage for those to come.

ESO: …some view taxes as a distinct burden… Can you explain? What makes that money yours? Why are taxes hard? How are you entitled to that money more than someone else? Do you ACTUALLY work harder for that money than hundreds of lesser-paid workers?

I don’t like this kind of question, because it’s like asking, “explain to us how you’re victimized.” In that sense, it’s more than a bit manipulative, because it puts one in a position where she’s asked to explain why her life is hard, so that obvious and trivial examples of harder lives can be used to knock it down. In spite of that:

I’ve never had a salaried position wherein my cohorts or I could get away with working fewer than 50 hours. My own average over the past year was about 55 or 60 hours per week.

For one year when I was running my own business, I couldn’t afford insurance, so that my wife, my daughter, and I had no insurance coverage (and my wife was working part time to bring in extra cash). The last year before I sold my business, I took 5 days off of work total — weekends and holidays included. When my first daughter was born, I took one day off work.

Every job I’ve had that didn’t pay hourly, no matter where I was or what I was doing, I was liable to be interrupted by high-priority work activities, so that I was de facto on call 24/7.

I’ll concede that there are people who earn a fraction what I do who suffer under the same employment pressures and constraints, but there are many more of them on my side of the income curve than on the other side. And if you want to work under these conditions, you’re likely to earn more (not less) income. (For example, if you dig post-holes or run the register at Wall-Mart or wait tables for a living, then nobody is going to bug you when you’re not at work.)

Part of the problem with the Mormon doctrine of pre-existence is that it invites us to (patronizingly) be thankful for being born under the circumstances under which we were born. I’m certainly grateful for all that I have, but it’s folly to be thankful for not being someone else. I am who I am. I work what I work. I earn what I earn. And it boils me that I must pay more than 1/3 of it in taxes.

Moreover, taxes aren’t just a burden, they’re a violent burden, because they’re extracted under threat of force. Since there were roads, education, and social welfare long before taxes took a full-third of the average wage-earner’s income, and since there’s no correlation between quality of service and government money spent, I’d like to know what’s so important that it requires a full third of the average wage-earner’s income?

Lastly, it’s great that you feel fine about paying your taxes, but isn’t it a bit presumptuous to suppose that others should be as free with their money in that respect as you are with yours?

Jota,
While a popular anti-tax slogan, the idea that the power to tax is the power to destroy makes no economic sense. Why would an economically rational actor destroy a revenue stream?

MAC,
I doubt that Dan is suggesting that taxation is an end to itself; rather, he’s saying its a mechanism by which community members can support the community. In spite of libertarian rhetoric, most of the wealth in the U.S. is attributable, not to the land (which, frankly, even libertarian philosophers acknowledge was originally granted to individuals by the sovereign) but to the infrastructure developed with and by the government. If, for example, there were not a robust manner in which parties could resolve contractual differences, I wouldn’t run a business in the U.S. Similar things can be said for education, for defense, and for police forces. And the redistributive components of our government make much more likely that we won’t see riots born of lacking basic necessities, riots which would destroy personal property and disrupt economic growth.

Which is not, by any means, to argue that our system of taxation or of spending is perfect. But it is to suggest that there is no utopian world without tax or government, one of perfect self-interest and growth, and it’s not to suggest either that, if such a world of unrestricted property rights existed, you or I would want to live there.

MAC,

Taxes suck for the poor because they suppress the economic growth that would exist in the absence of the tax and has proven to be the best way to alleviate poverty.

Can you please show us this evidence. Show us examples of where it has been “proven to be the best way to alleviate poverty.” Remember to control for other variables.

Do yo intend to say that taxation is an end unto itself?

Did I say that?

KyleM,

All I know is the King Noah tax looks pretty good to me.

huh, did King Noah use his taxes to build roads, create programs for the poor, help students pay for their education, etc? I thought we left silliness behind in the seventh grade.

As usual with political discussions, Dan, you miss the point. The fact that there’s no alternative to coercion when enforcing laws is a trivial one. A primary factor in creating the US Constitution was the need give the central government coercive power to collect taxes. The fact that coercion is required to collect taxes indicates that tax policy shouldn’t be approached in a cavalier fashion; e.g., by asking whether it’s something people can afford.

So then what’s your point DKL?

Dan (#6),

Really. It is very basic economics. A tax on income raises the relative cost of your labor as opposed to other activity, in other words, you get a lower price for each hour of labor you supply toward income-producing work. The increased burden results in a fall in the quantity supplied of the good.

The growth starting in 1982, which has continued to the present day coincided with a dramatic reduction in the tax burden. The height of the tax burden was between 1976 and 1982 - not a great period in US economic prosperity…

I acknowledge that we’ve enjoyed good growth over the last 25 years, but think about where we would be if the tax burden had been less onerous and the government didn’t waste people’s money.

Dan, the post states, “some view taxes as a distinct burden, a mechanism whereby the government takes away money that was ‘hard earned.’” If tax-policy makers do not view taxation as a mechanism whereby the government takes away money that was “hard earned,” then they are, in my view, approaching tax policy cavalierly.

DKL,

Ah, okay. I was just making sure you didn’t think I endorsed some cavalier approach to taxation. That would hardly be the case.

Dan: The growth that has occurred from 1982 to present, in real terms, is only growth for the richest Americans.

That’s nonsense, Dan. You’re quoting statistics that George Mitchell commissioned (with taxpayer money that should have been spent on schools or roads or war) in order to contrive some measures according to which Reagan’s expansion could be put in a negative light.

Mitchell is famous for introducing the notion of household wages, and using it (instead of individual wages) as an economic indicator. The problem with household income is that it’s fraught with confounding variables that have nothing to do with the state of the economy. For example: A household with 2 parents earning (say) 100k is a single household with 200k income. If the parents divorce, then they become 2 households earning 100k, cutting the average household income in half. This is just the beginning.

And, btw, the New York Times article doesn’t have anything to do with wages since 1982. In fact, it posits that the Reagan’s 1980s expansion increased real-wages across the wage-earning spectrum when it states, “the current expansion has a chance to become the first sustained period of economic growth since World War II that fails to offer a prolonged increase in real wages for most workers.” And the article’s measure of real-wages, “wages as a percentage of GDP” is no less contrived than “household income.”

MAC,
I didn’t intend to be euphemistic; that’s what you get, I suppose, when you try to condense a bunch of tax policy arguments into a couple line in between assignments at work on a blog. Unpacking all of that would take more time, effort, and space than I feel like, and I’d come to the conclusion that I don’t completely agree with that line of justification of taxation, but I do think it’s fruitful up to a point. Partly, though, I reject the libertarian idea that what’s mine is mine, full stop, because the inputs that allow me to have what is mine derive from me, from family, from community, and from government (that is, I wouldn’t be where I am today without my hard work, without government subsidies at schools I’ve gone to, without the infrastructure provided by state, local, and federal government, without a certain amount of generosity by friends and strangers, etc.).

Sam B., #28

Maybe we are both reading too much into other’s comments. I suspect that our respective opinions are not that divergent.

Doh, forgot the quote tags on the first paragraph.

BBell,

Amen.

All– thanks. Am I the only female here? Are taxes such a gendered subject?

A few things:
I agree that taxes become more painful when we anticipate their use in a way we do not approve of. I am all for social programs but have a harder time funding an (IMO) unjust war. I wonder what would happen if we could specify which programs our $x went to fund? I bet we would have less war, fewer agricultural and airline subsidies, etc.

I am all for reform and change in the tax system–ours seems quite imperfect. But I have reservations about a flat tax similar to the ones Sam B pointed out.

DKL–feel free to ignore any or all questions you do not like and answer your own. I appreciate your sharing your experience. I am sure that, as BBell pointed out, self-employment brings on a dynamic that makes taxation much more personal and perhaps it begins to feel punitive. I have also lived without health insurance, and it is very stressful. Personally, I think that the link we have in the US between our jobs and health insurance and pensions is really unfortunate–I would happily support a move to a European model, but I don’t think most Americans are with me. I am not too surprised that we view money differently–and clearly we do.

Regarding tax reform, I deplore the flat tax, but less than I deplore the current graduated system. I also think that the Fair Tax is a terrible idea. The problem with all of them is that they’re premised on a centralized taxation system.

I’d like to see an abolition of direct Federal taxation. Let the Federal government apportion tax liability to individual states, and allow each state to come up with revenue collection mechanisms that suit its own citizens. That would allow everyone some degree of choice about which tax-regime they lived under, which would make taxes seem substantially less punitive.

DKL–that is an interesting notion. I live in a heavily taxed state (NY) and I tire of people complaining about it (especially transplants), and I wonder why they don’t move elsewhere. I think most of us have specific educational or career options that put us in specific places.

annegb–thanks for jumping in. I do not equate taxes to tithing. I honestly believe and feel that I am lucky to have my income and know for a fact that I do not work as hard as many people who earn less than I do. My money, my cars, my children, my rented roof are all gifts from God.

I agree that government waste exists, but the government also provides me with many invaluable services. I’d rather pay high taxes than high prices that are simply profits for some company. At least I get something for my tax money.

Last week I was sharing a car with a friend on the way to the temple. We began discussing employment decisions and he explained that he didn’t consider how much money he would make when choosing employment as long as there was enough to meet his needs. Approximately half an hour later we began discussing whether a government-sponsored bailout of homes in foreclosure was a good idea. He was for, I was against. It occurred to me that he was being very generous with other people’s money.

Without a regime that requires each person to maximize their economic potential, taxes unfairly (not to say unjustly) penalize those who choose to do so. One possible explanation for why a person may view money as their property and why they object to taxes, then, is that they believe they are closer to maximizing their economic potential than the guy who dropped out of the rat race to become a yoga instructor.

Both the economic maximizer and the non-maximizer make a choice based on their personal values. Not surprisingly the economic maximizer objects to the non-maximizer free-riding on the maximizer’s economic efforts. Note that a person who makes relatively little money is not necessarily a non-maximizer–although this point is often lost on well-off maximizers.

queuno,

My first paragraph was meant to illustrate how an admitted economic non-maximizer might be in favor of spending government money even though he didn’t intend to maximize the amount of money he contributes to the pot.

It was not meant to be an argument for or against a government-sponsored bailout of homeowners or even, as you seem to imply in your final sentence, an indictment of people whose homes are in foreclosure. If it were, however, I agree it would be a bit simplistic.

Did God make you a slave? (Of course not!). God gave YOU a stewardship. YOU are responsible to God with what you do with this stewardship. You (not the group) will be rewarded/punished with how well YOU align your will with His. You do not have God’s authority to take part of Paul’s stewardship to help Peter (with his health, wealth, education, etc.) because in doing so you would be following Satan’s plan of force and denying Paul the reward/punish consequences of his actions. Since you do not have God’s authority to deprive Paul of his life, liberty, or property you can not give the authority (to act in your name) to anyone else, including agents of the state, to take from Paul.

I suspect with the current tax system that a high percentage of the population is not taxed at all. One of the reasons I support a flat tax approach (as I mentioned in comment #2) is that it would simply the mathematics and paperwork involved which could also facilitate holding people accountable for paying taxes.

I suspect if there was a flat tax, the government would be freed follow-up and collect from more people (from many of those who are not paying taxes at all) and ultimately would then be able to tax the overall population less.

I don’t claim to be an expert on taxes at all - it just seems beyond obvious from what I’ve observed that the current system’s complexity ultimately undermines its own purpose.

ESO,

NY is a heavily taxed state. As a result its been losing ground population wise and economic growth wise for several decades now.

bbell–I know. But it doesn’t stop whiners from UT coming to medical school here and complaining about the taxes (although most of them use our social services to pack as many births into their 4 years as they can). In my experience, most “real” NYers complain less than the temporary ones–in part, I’m sure because they are not experiencing the same shock, but also because they have a better understanding of the benefits. I don’t mind if they come here for school, just don’t whine about it.

I live in western NY, and it is quite stagnant economically. Many people have left. Some have come back.

The bottom 40% pay federal taxes, just not personal income taxes. See Table 1 in the following link for effective federal tax rates by income quintile.

http://www.cbo.gov/ftpdocs/88xx/doc8885/12-11-HistoricalTaxRates.pdf

“… although most of them use our social services to pack as many births into their 4 years as they can …”

Trying for 659 comments?

Dan, right, I’m not disputing that the government can do that. I’m pointing out that there is a difference between filling out your form 1040 and choosing to buy groceries at the Piggly Wiggly instead of Super WalMart. It is the difference between voluntary transactions and compulsory transactions. I am expressing surprise that ESO apparently doesn’t see that difference.

Mark IV, from what she wrote, ESO does see a difference, and thinks there is something wrong about people choosing where to buy groceries instead of bestowing their money upon government.

ESO: I’d rather pay high taxes than high prices that are simply profits for some company

Without corporate profits, there is no middle-class; no society anywhere has ever had a middle class without the wealth-distribution mechanisms and services afforded by the modern corporation. If I were so presumptuous to recommend reading on the topic of wealth distribution, I’d recommend that you read Hayek (e.g., The Constitution of Liberty; if that’s too long, The Road to Surfdom is basically the Readers Digest version).

Between 40% to 50% of any company’s revenue goes to payroll. If Walmart or Microsoft (those mothers of all corporate evil) went belly-up, it would do more to damage the economy than the cancellation of any number of government programs.

ESO,

About a third of the cost of a gallon of gas already is tax. The government will get a buck a gallon whether the cost goes up or down, whether supplies are tight or not, whether truckers strike or not, whether a hurricane destroys drilling rigs in the Gulf of Mexico or not. Why not allow the same to the party that assumes the risk?

You are right that that profits don’t benefit you in the same way you assume taxes do. But they benefit you in other ways, for instance by providing employment to your neighbors, R&D on new products, sponsorship of programs on NPR, etc.

Anyway, I appreciate your tone on this thread. I’m pretty sure we come at this from different perspectives, but I enjoy the give and take. Thanks.

ESO, that complaint about oil prices is common among those who don’t know how oil prices work. The price that we pay for gas on the market is the replacement cost for that gas.

So if an oil company buys oil for a price such that refined gasoline will be sell for (say) $1 per gallon. Then, by the time that oil is refined and makes it to market, the price for the oil yields gasoline at $3 per gallon. This means that the $1/gallon gas will cost $3/gallon. And the oil company will make more money. And gas price declines work the same way, and oil companies make less money. When gas prices remain stable (in real, inflation-adjusted dollars), oil company profits remain stable (in real, inflation-adjusted dollars).

There’s nothing dastardly about what’s going on with the oil companies. The periodic windfalls that oil companies experience are cyclical, and they are compensated for by shrinking revenues in different stages of the cycle. Nobody was complaining in the 1990s, when Exxon Mobile and other companies repeatedly took a beating on their bottom line. There’s no reason to complain now that the cycle is going the other way. (Here’s a New York Times article from 1992 discussing oil company profits falling by half that was one of many such articles that came up from a quick google).

“We are so thoroughly dependent on that stuff that it makes us do crazy things like go to war in other countries.”

I’ll take the bait. How has going to war with Iraq helped us to get oil and satisfy our dependence? I hear this argument all of the time with no evidence to back it up.

The numbers don’t add up. Where is our ROI? I don’t see it. We have put far more into Irag then we will ever hope to get back–assuming that you don’t put a price on safety. Connect the dots for me, please.

ESO,

Yeah, New York City is thriving.

Nate,

The original plan for the invasion of Iraq, as thought up by the Bush administration, was to only take a couple of months. They never planned for a protracted insurgency and then civil war, even though they were warned that this would be the case. But just ask yourself, which companies have the lucrative deals to fix up Iraq? Oil companies. Just ask yourself, why have we built the world’s largest embassy in Iraq? What is its purpose?

But it isn’t just Iraq. Do you remember Operation Ajax? You should read up on it. Look at what role British Petroleum had in it.

We prop up corrupt dictatorships in the Middle East because of oil. We don’t want democracies there, because democracies get disruptive with oil production. Or heck, people would come to power who would say, no, we’re not going to deal with the United States, no matter how profitable. Or, heck, let’s nationalize our oil and make sure the money stays here, and doesn’t just go to America (which is what happened in the 70s).

Oh, and to relate this comment back to the “Not So Taxing” post here, just one more thing to add about Iraq. We’re not paying for it through our taxes yet. The cost of the war has been put on a credit card for our children to pay.

If I were on the school board, I would manuever to get ESO involved in negotiating the teachers’ union’s contract, particularly contributions to the pension plan. “Now really, ESO, would you prefer that we take money away from the school budget and invest it in corporations, or would you prefer that the district keep that money and use it for education?”