Healthcare, who pays?

[EmilyK]

Here's a good article that explains what percentage of Americans pay federal taxes and other types of taxes:

 

http://www.npr.org/templates/story/story.php?storyId=125997180

 

Thanks -- that was helpful. I'm still confused, though. :001_smile: I always assume when people quote that stat that they are saying that 47 percent are "freeloading" in some undeserved way. (I think based on that article that they're saying 47 percent of "filers" which would exclude children -- I'm assuming an adult married couple (along with any dependents) would count as one "filer". So we're talking households here.) I would love to see a statistic that breaks the 47 percent down by elderly and disabled. My guess is that is a huge chunk. Also the working poor. So I'm not sure the 47 percent are really people "we" would tut-tut at. But then again, I'm not feeling resentful on this issue, so I'm not sure I'm the "we" here.

[Crimson Wife]

Just out of curiousity, I did some research regarding R&D spending and it would seem that you could perhaps use one part of the information to support the claim that the US spends more as they do in actual $s but as a percentage of all the goods and services made in the US, they are not number 1. The countries that have the highest spending as a % of GDP are (note projected for 2011): Israel, Japan, Sweden, Finland, South Korea and then the US.

 

But where do these foreign companies expect to recoup most of the costs for the pharmaceuticals they develop? In countries where the government has a monopoly and imposes price caps? Or here in the U.S. where they can charge what the market will bear?

[SKL]

Thanks -- that was helpful. I'm still confused, though. :001_smile: I always assume when people quote that stat that they are saying that 47 percent are "freeloading" in some undeserved way. (I think based on that article that they're saying 47 percent of "filers" which would exclude children -- I'm assuming an adult married couple (along with any dependents) would count as one "filer". So we're talking households here.) I would love to see a statistic that breaks the 47 percent down by elderly and disabled. My guess is that is a huge chunk. Also the working poor. So I'm not sure the 47 percent are really people "we" would tut-tut at. But then again, I'm not feeling resentful on this issue, so I'm not sure I'm the "we" here.

 

No, I don't think it's about "tut-tutting" at these folks. Most of them are filing their taxes according to the law. But the law is messed up when half of Americans are not paying into the pot. Not only does that make half of us dependent on the other half, but it means the dependent half does not have the same kind of stake in government decision-making. It's not healthy for a community.

 

Personally I think that if you can't afford to pay into the system, then you should have to do some sort of community service to hold up your share. We should all be in this together. Right now we aren't.

[Pixjen]

Why is there concern for fairness when it comes to payment of taxes for healthcare, but not as much concern for fairness when it comes to accessing medical care?

 

I'm not so much worried about the "fairness of paying taxes" but would a UHC plan even be fiscally possible in our current system where 1/2 of our citizens don't even pay taxes. :confused:

 

There's a huge possibility that the gov. would be spending at least twice as much as they were bringing in. Add that to our trillion dollar debt, and sending $$$$ overseas just to borrow it again (with interest!) from foreign countries, and you're looking at the potential for a total economic collapse.

 

I am not at all against having a UHC. However, some of the scariest words ever heard are "I'm with the government, and I'm here to help." :tongue_smilie:

Insurance Companies, on the other hand, are not in the insurance business for altruistic reasons. They (and their investors) want money....lots and lots of money. They are big reason why we are in this mess.

 

There are simply no easy answers.

Edited July 18, 2012 by photojenic

[Frances]

No, I don't think it's about "tut-tutting" at these folks. Most of them are filing their taxes according to the law. But the law is messed up when half of Americans are not paying into the pot. Not only does that make half of us dependent on the other half, but it means the dependent half does not have the same kind of stake in government decision-making. It's not healthy for a community.

 

Personally I think that if you can't afford to pay into the system, then you should have to do some sort of community service to hold up your share. We should all be in this together. Right now we aren't.

 

But the federal income tax is only one of the many taxes in this country. Most do pay taxes: http://www.cbpp.org/cms/index.cfm?fa=view&id=3505

 

Close to half of U.S. households currently do not owe federal income tax. The Urban Institute-Brookings Tax Policy Center estimates that 46 percent of households will owe no federal income tax for 2011. [1] A widely cited figure is a Joint Committee on Taxation estimate that 51 percent of households paid no federal income tax in 2009.[2] (The TPC figure for 2009 also is 51 percent.) [3]

These figures are sometimes cited as evidence that low- and moderate-income families do not pay sufficient taxes. Yet these figures, their significance, and their policy implications are widely misunderstood.

The 51 percent and 46 percent figures are anomalies that reflect the unique circumstances of the past few years, when the economic downturn greatly swelled the number of Americans with low incomes. The figures for 2009 are particularly anomalous; in that year, temporary tax cuts that the 2009 Recovery Act created — including the “Making Work Pay” tax credit and an exclusion from tax of the first $2,400 in unemployment benefits — were in effect and removed millions of Americans from the federal income tax rolls. Both of these temporary tax measures have since expired.

 

In 2007, before the economy turned down, 40 percent of households did not owe federal income tax. This figure more closely reflects the percentage that do not owe income tax in normal economic times.[4]

These figures cover only the federal income tax and ignore the substantial amounts of other federal taxes — especially the payroll tax — that many of these households pay. As a result, these figures greatly overstate the share of households that do not pay federal taxes.

 

Tax Policy Center data show that only about 17 percent of households did not pay any federal income tax or payroll tax in 2009, despite the high unemployment and temporary tax cuts that marked that year.[5] In 2007, a more typical year, the figure was 14 percent. This percentage would be even lower if it reflected other federal taxes that households pay, including excise taxes on gasoline and other items.

 

Most of the people who pay neither federal income tax nor payroll taxes are low-income people who are elderly, unable to work due to a serious disability, or students, most of whom subsequently become taxpayers. (In years like the last few, this group also includes a significant number of people who have been unemployed the entire year and cannot find work.)

 

Moreover, low-income households as a group do, in fact, pay federal taxes. Congressional Budget Office data show that the poorest fifth of households paid an average of 4.0 percent of their incomes in federal taxes in 2007, the latest year for which these data are available — not an insignificant amount given how modest these households’ incomes are; the poorest fifth of households had average income of $18,400 in 2007.[6] The next-to-the bottom fifth — those with incomes between $20,500 and $34,300 in 2007 — paid an average of 10.6 percent of their incomes in federal taxes.

 

Moreover, even these figures greatly understatelow-income households’ totaltax burden because these households also pay substantial state and local taxes. Data from the Institute on Taxation and Economic Policy show that the poorest fifth of households paid a stunning 12.3 percent of their incomes in state and local taxes in 2011.[7]

 

When all federal, state, and local taxes are taken into account, the bottom fifth of households pays about 16 percent of their incomes in taxes, on average. The second-poorest fifth pays about 21 percent.[8]

It also is important to consider who the people are who do not owe federal income tax in a given year.

 

TPC estimates show that 61 percent of those that owed no federal income tax in a given year are working households.[9] These people do pay payroll taxes as well as federal excise taxes, and, as noted, state and local taxes. Most of these working households also pay federal income tax in other years, when their incomes are higher — which can be seen by looking at the low-income working households that receive the Earned Income Tax Credit (EITC).

The leading study of this issue found that the majority of households that receive the EITC get it for only one or two years at a time, such as when their income drops due to a temporary layoff, and pay federal income tax in most other years. The study examined the filers who claimed the EITC at least once during an 18-year periodand found that they paid a net of several hundred billion dollars in federal income tax over that period.[10] This finding shows that while some households will receive refundable tax credits in a given year whose value may exceed their payroll tax liability, they pay significant federal income taxes over time in addition to the payroll and state and local taxes they pay each year.

 

The remainder of those who pay no income tax are primarily elderly, disabled, or students.

 

The fact that most people who don’t owe federal income tax in a given year do pay substantial amounts of other taxes — and also are net income taxpayers over time — belies the claim that households that do not owe income tax in a given year will form bad policy judgments because they “don’t have any skin in the game.”

 

Furthermore, although the federal tax system is progressive overall, state and local tax systems are regressive and undo a significant share of that progressivity. There is nothing wrong with having one part of the overall tax system shield low- and moderate-income households, who pay substantial amounts of other taxes and generally pay federal income tax as well in other years.

 

To substantially increase the share of households that owe federal income tax, policymakers would have to take such steps as: lowering the personal exemption or standard deduction — which would tax many low-income working families into, or deeper into, poverty; weakening the EITC or Child Tax Credit, which would significantly increase child poverty while reducing incentives for work over welfare; or paring back the tax exclusion for Social Security benefits, which would subject more seniors with modest fixed incomes to the income tax.

Edited July 18, 2012 by Frances
add reference

[Joanne]

No, I don't think it's about "tut-tutting" at these folks. Most of them are filing their taxes according to the law. But the law is messed up when half of Americans are not paying into the pot. Not only does that make half of us dependent on the other half, but it means the dependent half does not have the same kind of stake in government decision-making. It's not healthy for a community.

 

Personally I think that if you can't afford to pay into the system, then you should have to do some sort of community service to hold up your share. We should all be in this together. Right now we aren't.

 

I pay in all year; I get it and more back.

 

I should be made to do *community service*? When, exactly? In between job one and two? Two and three?

 

I don't have the same stake in decision making? You've disenfranchised me?

 

Holy freaking wow.

[kalanamak]

 

(And those cigarettes and beer are going to be linked to healthcare costs that those folks needn't worry about paying for (or insuring against) because we taxpayers have it covered.)

 

Less in the end. Smokers die sooner and eat up less nursing home time and Social Security. I've long thought that after the states sued the tobacco companies, the TCs needed to turn around and sue for saving dollars spent on caring for the very, very old.

Edited July 18, 2012 by kalanamak
didn't, in the end

[SKL]

But the federal income tax is only one of the many taxes in this country. Most do pay taxes:....

 

To substantially increase the share of households that owe federal income tax, policymakers would have to take such steps as: lowering the personal exemption or standard deduction — which would tax many low-income working families into, or deeper into, poverty; weakening the EITC or Child Tax Credit, which would significantly increase child poverty while reducing incentives for work over welfare; or paring back the tax exclusion for Social Security benefits, which would subject more seniors with modest fixed incomes to the income tax.

 

I can understand the concerns about very poor people paying taxes (though they could still do some community service to be a part of the team). But 47% means there are many middle-class people who are also not paying. The tax brackets or eligibility for "poor" credits could be adjusted to change this outcome without taxing the poorest of the poor.

 

And yes, I know some of them pay "other taxes," but social security / medicare are really retirement savings / insurance which, unless they die before retirement, is guaranteed to pay them back. (Whether the guarantee will become meaningless a couple of decades from now, I don't know. They keep telling me they're going to go bankrupt the year I'm supposed to retire.:glare:) As for state/local taxes (SALT), I can't imagine how they could be as high as reported. I used to be a tax preparer and I never saw even moderate-income SALT rates that high. What is the denominator they are using to arrive at those %s? Taxable income after subtracting exclusions, exemptions, and deductions? Are they only counting the taxes that are itemized (most low-income folks don't itemize as it doesn't benefit them)?

[kalanamak]

But citing a couple of subjective anecdotes isn't "telling it like it is".

 

But it is so fist-poundingly satisfying. :001_smile:

[SKL]

I pay in all year; I get it and more back.

 

I should be made to do *community service*? When, exactly? In between job one and two? Two and three?

 

I don't have the same stake in decision making? You've disenfranchised me?

 

Holy freaking wow.

 

If you're getting it all back, why don't you change your w-4 so you stop paying it in? You're giving Uncle Sam an interest-free loan?

 

As for the community service, sorry, I do believe in a flat tax. I do believe everyone should contribute to something beyond their own family (unless they are disabled or elderly). Maybe not on a year-by-year basis, but certainly over time.

[happypamama]

I should be made to do *community service*? When, exactly? In between job one and two? Two and three?

 

 

 

Not to mention, who is going to watch the young children of the people who are doing community service? Pretty sure that if you're needy enough to get food stamps/etc., you can't pay for daycare for hours you're not actually working.

 

There are so many families out there who aren't trying to abuse the system; they're just struggling to pay for the basics that they were able to afford a few years ago, before their jobs/hours/salaries got cut, before prices on everything went up, before their homes' equities disappeared, etc. Please, people, be gentle to your fellow parents.

[SKL]

Not to mention, who is going to watch the young children of the people who are doing community service? Pretty sure that if you're needy enough to get food stamps/etc., you can't pay for daycare for hours you're not actually working.

 

 

They can bring their kids along and get them involved. That's what I've done.

[SKL]

Please, people, be gentle to your fellow parents.

 

I don't understand what's mean about being asked to contribute to the common good. It's not a punishment.

[happypamama]

They can bring their kids along and get them involved. That's what I've done.

 

Okay, I suppose that is true, depending on what "community service" it is. Soup kitchen sort of thing -- yes, probably. I always think of "community service" as something a bit, um, less pleasant, like picking up trash from a road. I would not want to do that while watching four young children. But I know I inquired a while ago about helping at our local library (they had a sign, requesting volunteers to help reshelve books and such), and they wouldn't take children at all.

[happypamama]

I don't understand what's mean about being asked to contribute to the common good. It's not a punishment.

 

No, it's not. That wasn't directed specifically toward your comment about community service, but it was a general comment, as this thread is starting to head down the road of "who's entitled to help and how poor do they have to be," so my reminder is just that we need to be understanding toward other people and realize that we don't know all of their circumstances. :)

[Joker]

They can bring their kids along and get them involved. That's what I've done.

 

I have not found one, single place that will allow me to bring children under 14. I have called, walked in, and tried everything. In my area there is not anyone that will allow me to volunteer with young children. Every place says because of liability they are not allowed. Not everyone can do community service as easily as you seem to think.

[SKL]

I have not found one, single place that will allow me to bring children under 14. I have called, walked in, and tried everything. In my area there is not anyone that will allow me to volunteer with young children. Every place says because of liability they are not allowed. Not everyone can do community service as easily as you seem to think.

 

Well, if it were part of the system, a way would be figured out. Whether that would include having someone there to watch the kids, or stuff that can be done at home, or structuring the activity so kids can be present.

 

I volunteer with a large organization which has many opportunities. The majority of opportunities are not conducive to bringing young kids along, but I keep hounding them and they come up with stuff. Last year my kids helped me to pack Thanksgiving food baskets for the needy. (The kids' job was to fill bags with donated Halloween candy :).) This year, I won't take them out of school, so we may choose the opportunity to go shopping (on flexible timing, using prepaid grocery cards) for needy families. When the kids get a little older, they should be able to help on weekend stuff such as cleaning/painting/landscaping projects.

[Frances]

I can understand the concerns about very poor people paying taxes (though they could still do some community service to be a part of the team). But 47% means there are many middle-class people who are also not paying. The tax brackets or eligibility for "poor" credits could be adjusted to change this outcome without taxing the poorest of the poor.

 

And yes, I know some of them pay "other taxes," but social security / medicare are really retirement savings / insurance which, unless they die before retirement, is guaranteed to pay them back. (Whether the guarantee will become meaningless a couple of decades from now, I don't know. They keep telling me they're going to go bankrupt the year I'm supposed to retire.:glare:) As for state/local taxes (SALT), I can't imagine how they could be as high as reported. I used to be a tax preparer and I never saw even moderate-income SALT rates that high. What is the denominator they are using to arrive at those %s? Taxable income after subtracting exclusions, exemptions, and deductions? Are they only counting the taxes that are itemized (most low-income folks don't itemize as it doesn't benefit them)?

 

They are not just counting state income taxes, but also sales tax, property tax, etc. At least in my state, income taxes start at a much lower income level than do federal taxes, and for computation purposes start with federal AGI, so the federal tax credits don't matter. When my husband was in grad school several years ago and we paid no federal income tax due to low to middle income and tax credits, we still paid a great deal in state income taxes and property taxes (our state has no sales tax, though).

[Crimson Wife]

I can understand the concerns about very poor people paying taxes (though they could still do some community service to be a part of the team). But 47% means there are many middle-class people who are also not paying. The tax brackets or eligibility for "poor" credits could be adjusted to change this outcome without taxing the poorest of the poor.

 

:iagree::iagree::iagree:

We were not poor in 2006 when we got a larger refund than our tax withholdings. Our income that year was around $50k. I don't believe that tax credits should be refundable except for the ones tailored towards low-income folks like the EITC.

[Frances]

 

As for the community service, sorry, I do believe in a flat tax. I do believe everyone should contribute to something beyond their own family (unless they are disabled or elderly). Maybe not on a year-by-year basis, but certainly over time.

 

But most do pay over time:

 

TPC estimates show that 61 percent of those that owed no federal income tax in a given year are working households.[9] These people do pay payroll taxes as well as federal excise taxes, and, as noted, state and local taxes. Most of these working households also pay federal income tax in other years, when their incomes are higher — which can be seen by looking at the low-income working households that receive the Earned Income Tax Credit (EITC).

The leading study of this issue found that the majority of households that receive the EITC get it for only one or two years at a time, such as when their income drops due to a temporary layoff, and pay federal income tax in most other years. The study examined the filers who claimed the EITC at least once during an 18-year periodand found that they paid a net of several hundred billion dollars in federal income tax over that period.[10] This finding shows that while some households will receive refundable tax credits in a given year whose value may exceed their payroll tax liability, they pay significant federal income taxes over time in addition to the payroll and state and local taxes they pay each year.

[tex-mex]

Well, if it were part of the system, a way would be figured out. Whether that would include having someone there to watch the kids, or stuff that can be done at home, or structuring the activity so kids can be present.

 

So... then, are you proposing a govt-funded childcare or babysitting program for those people who are on govt assistance to put in "their fair share" of community service but have young children under the age of 14 who would pose a liability risk for the club/group/organization allowing the person to volunteer? :confused: Dat sounds $$$ crazy expensive to support this new "babysitting" program from a taxpayer POV and akin to making your (community service) idea far more complicated.

[Crimson Wife]

This finding shows that while some households will receive refundable tax credits in a given year whose value may exceed their payroll tax liability, they pay significant federal income taxes over time in addition to the payroll and state and local taxes they pay each year.

 

Red herring.

 

The question is not whether individuals who receive more money back from the government ever pay taxes, but whether it is fair tax policy for this to happen in the first place. I do not believe it is except for the very poor. The percentage should IMHO be nowhere remotely close to 50% or even 40% but maybe half that.

[Frances]

:iagree::iagree::iagree:

We were not poor in 2006 when we got a larger refund than our tax withholdings. Our income that year was around $50k. I don't believe that tax credits should be refundable except for the ones tailored towards low-income folks like the EITC.

 

Most tax credits are not refundable, the most common refundable ones being the EIC and the child tax credit (for some lower income taxpayers only). Also, there are occasionally short-term refundable credits liking the "Making Work Pay" credit in 2009. I don't know the specifics of your situation, but I'm guessing you probably had other tax credits, deductions, and adjustments that brought your tax liability close to zero, and then the refundable credit(s) kicked in for you. And in my state, it would be nearly impossible not to pay state income tax on $50K in income, although your state may be different.

[Frances]

Red herring.

 

The question is not whether individuals who receive more money back from the government ever pay taxes, but whether it is fair tax policy for this to happen in the first place. I do not believe it is except for the very poor. The percentage should IMHO be nowhere remotely close to 50% or even 40% but maybe half that.

 

But as the article I referenced points out they do pay taxes, just not federal taxes for a given time period. And while federal taxes are progressive, most state and local taxes are regressive. If the federal taxes became less progressive and a higher percentage of filers had to pay, that would be in addition to the regressive state and local taxes. I don't think state and local governments would adjust their taxes to be more progressive. It's important to look at the overall percentage of people who pay all taxes and the combined tax rate. Just looking at federal tax rates and the percent who pay federal tax does not paint a complete picture of taxes and tax burdens in the US.

[SKL]

So... then, are you proposing a govt-funded childcare or babysitting program for those people who are on govt assistance to put in "their fair share" of community service but have young children under the age of 14 who would pose a liability risk for the club/group/organization allowing the person to volunteer? :confused: Dat sounds $$$ crazy expensive to support this new "babysitting" program from a taxpayer POV and akin to making your (community service) idea far more complicated.

 

It probably would be somewhat complicated, but so is any other method of getting stuff done. I'm sure it could be done in a way that pays for itself overall. Even if it just broke even, it's better than the mindset that a large percentage of Americans aren't expected to pitch in.

 

All this talk about taxpayers being selfish if they don't want to pay more taxes for everyone to have comprehensive health insurance - how can the same people say it's OK for many Americans to contribute nothing at all to the common good?

[SKL]

most state and local taxes are regressive.

 

I don't think this is accurate.

[AurieD]

To answer the original question (mostly):

 

I live in Australia.

 

We have a progressive income tax (the more you earn the higher percentage you pay)

 

We also have a Goods & Services Tax (GST) of 10% on all goods and services except necessities (water, bread, rent etc).

 

We also have a medicare levy of a flat 1.5% of taxable income, though those on very very low income are exempt from this.

 

We also have a medicare levy surcharge of an additional 1% for those whose family income is above approx $168,000 only if they don't have private health insurance (which you can get here for a lot less than in the US).

 

We also have several other taxes on things like fuel, cigarettes, alcohol.

 

I believe our health system is paid for from general revenue and the medicare levy.

 

The welfare queen, or in Australia "dole bludger", is not a myth. They do exist. But they exist in statistically insignificant numbers. Most people are on welfare because they need to be and most people would really rather not be. Changing the system because a small amount of people abuse it is pointless and expensive, you will always have those that abuse the system but they are so few that it is simply not worth worrying about.

 

On flat taxes:

 

Fair does not mean equal.

 

Someone on $20,000 a year can not afford to pay say a 30% flat tax because they then would not be able to pay rent and buy food.

 

Someone on $60,000 a year could usually afford to depending on their circumstances.

 

Someone on $160,000 could definitely afford to as at this stage the extra money is going to luxuries (in all but rare cases).

 

If we had a flat tax at a rate everyone could afford (to prevent high levels of poverty & homelessness) it would have to be a tiny amount. We then wouldn't have enough money to maintain roads and infrastructure, educate children, provide for national security etc let alone have a national health care system.

 

My family pays quite a high level of taxes. We can afford them. At this stage more money is more luxuries, not required to actually live. I would be willing to pay more if needed. Especially if it allowed disadvantaged children a better education that will assist them in breaking the cycle of poverty.

 

One last word, very few people stay on welfare or below taxable incomes for their whole lives. Those I am covering for in my taxes now may very well be those that cover for me in my old age if my superannuation (pension fund) goes south.

[Frances]

I don't think this is accurate.

 

And your source of information? I work as a tax economist and deal with this kind of data everyday.

[tex-mex]

It probably would be somewhat complicated, but so is any other method of getting stuff done. I'm sure it could be done in a way that pays for itself overall. Even if it just broke even, it's better than the mindset that a large percentage of Americans aren't expected to pitch in.

 

All this talk about taxpayers being selfish if they don't want to pay more taxes for everyone to have comprehensive health insurance - how can the same people say it's OK for many Americans to contribute nothing at all to the common good?

But who then becomes the one to begin sorting all of this mess out? Begin a new federal office like Homeland Security? Call it Homeland Babysitting?

 

Do you see where I am going with this? I truly do not mean to mock your suggestion. I am trying to listen. From a political POV, it sounds do-able. From a humanitarian POV, it sounds almost Dystopian.

 

Hmmm... in all seriousness, I cannot help but think that govt. funded babysitters sent to your home will end up like these creepy neighbors:

 

[Frances]

It probably would be somewhat complicated, but so is any other method of getting stuff done. I'm sure it could be done in a way that pays for itself overall. Even if it just broke even, it's better than the mindset that a large percentage of Americans aren't expected to pitch in.

 

All this talk about taxpayers being selfish if they don't want to pay more taxes for everyone to have comprehensive health insurance - how can the same people say it's OK for many Americans to contribute nothing at all to the common good?

 

But most are pitching in - you can't just look at the federal income tax for one year and base your arguments on that. There are many more taxes than the federal income tax and the system is dynamic, not static. Individual's incomes and circumstances change over time. In my adulthood there have been years when I paid no federal income tax (as recently as three years ago when my husband was in grad school) and now we are in the top 10% of federal taxpayers.

[SKL]

And your source of information? I work as a tax economist and deal with this kind of data everyday.

 

Well, I'm also a tax professional with a fairly extensive background, and I note that you also did not cite your source of information.

[Frances]

Well, I'm also a tax professional with a fairly extensive background, and I note that you also did not cite your source of information.

 

It's cited in the original article I referenced and there are numerous other studies available.

[Frances]

:

 

On flat taxes:

 

Fair does not mean equal.

 

Someone on $20,000 a year can not afford to pay say a 30% flat tax because they then would not be able to pay rent and buy food.

 

Someone on $60,000 a year could usually afford to depending on their circumstances.

 

Someone on $160,000 could definitely afford to as at this stage the extra money is going to luxuries (in all but rare cases).

 

If we had a flat tax at a rate everyone could afford (to prevent high levels of poverty & homelessness) it would have to be a tiny amount. We then wouldn't have enough money to maintain roads and infrastructure, educate children, provide for national security etc let alone have a national health care system.

 

My family pays quite a high level of taxes. We can afford them. At this stage more money is more luxuries, not required to actually live. I would be willing to pay more if needed. Especially if it allowed disadvantaged children a better education that will assist them in breaking the cycle of poverty.

 

One last word, very few people stay on welfare or below taxable incomes for their whole lives. Those I am covering for in my taxes now may very well be those that cover for me in my old age if my superannuation (pension fund) goes south.

 

:iagree::iagree:

[SKL]

But who then becomes the one to begin sorting all of this mess out? Begin a new federal office like Homeland Security? Call it Homeland Babysitting?

 

Do you see where I am going with this? I truly do not mean to mock your suggestion. I am trying to listen. From a political POV, it sounds do-able. From a humanitarian POV, it sounds almost Dystopian.

 

Hmmm... in all seriousness, I cannot help but think that govt. funded babysitters sent to your home will end up like these creepy neighbors:

 

 

I wasn't trying to use this thread for a whole manifesto of The World According to SKL, so I didn't get very specific in my earlier posts. I am not suggesting babysitters coming to people's homes. Maybe I was unclear. I was suggesting that some possibilities could be:

• Jobs done by many parents at the same location could offer a little nursery on site. They could have one or two parents (duly screened etc.) take care of the kids as their community service contribution. Parents could also perform some work at a school building while their kids are in the afterschool program / late room. Or at a park or library where the environment is kid-friendly.
  
• Some jobs could be done at home. For example, upon picking up one's kid at his subsidized daycare, the parent could take home a sack of laundry, wash it, and return it the next day. Folks with "skills" could do computerized tasks at home. Even some assembly jobs can be done at home.
  
• People could perform everyday tasks for elderly or disabled people and bring their kids along.
  
• There are probably lots of other reasonable possibilities.
  

Someone came up with the figure of 20% being the workable flat tax rate in the USA. (No, I don't have a cite.) Basically that's one day of a five-day work week. People who don't pay any tax can work 8 hours of community service.

 

I used to be all for the "progressive" tax system, but ultimately it isn't fair to make some people hand over the majority of their week to the government when others aren't contributing half a day. And it isn't fair to allow the majority, who pay little to nothing, to vote to increase taxes only on "those others" who already pay the most by far. A tax increase should hit everyone, just as a tax decrease should benefit everyone.

[Guest SparkleMotion]

Issues of "fairness" and who is or isn't "deserving" predictably crop up, and often in ugly ways, when the government rather than the consumer becomes master over healthcare decisions.

 

Now that the government is taking over healthcare in a big way here in the U.S.S.A., comrades, this becomes everyone's business.

 

But of course, "access" to healthcare (which everyone in the USA already had) or having guaranteed health "insurance" doesn't equate to actually getting health care. Oh, but the devil's in the details, right? ;)

[Laura Corin]

It's a tradeoff because the tax revenue has to come from somewhere.

 

Every country/state has tradeoffs. Many areas of the US have very high property taxes, but in the UK they tend to be much lower. That's why my husband looked at total taxes to make his comparison.

 

Laura

[Mrs Mungo]

Okay, I suppose that is true, depending on what "community service" it is. Soup kitchen sort of thing -- yes, probably.

 

Most soup kitchens don't allow kids to help serve directly because many of the men are sex offenders.

 

To the thread in general:

There is a big difference between "pay no tax" and "pay no income tax." Effective tax rates are better indicators of what people pay towards contributing to society. Not to mention, they get less back. Read Savage Inequalities.

[tex-mex]

I wasn't trying to use this thread for a whole manifesto of The World According to SKL, so I didn't get very specific in my earlier posts. I am not suggesting babysitters coming to people's homes. Maybe I was unclear.

:lol: :lol:

Okay.

Now that I know you do not have plans to take over the world, I'm listening. (Taking off tinfoil hat...)

 

 

I was suggesting that some possibilities could be:

• Jobs done by many parents at the same location could offer a little nursery on site. They could have one or two parents (duly screened etc.) take care of the kids as their community service contribution. Parents could also perform some work at a school building while their kids are in the afterschool program / late room. Or at a park or library where the environment is kid-friendly.
  
• Some jobs could be done at home. For example, upon picking up one's kid at his subsidized daycare, the parent could take home a sack of laundry, wash it, and return it the next day. Folks with "skills" could do computerized tasks at home. Even some assembly jobs can be done at home.
  
• People could perform everyday tasks for elderly or disabled people and bring their kids along.
  
• There are probably lots of other reasonable possibilities.
  

Someone came up with the figure of 20% being the workable flat tax rate in the USA. (No, I don't have a cite.) Basically that's one day of a five-day work week. People who don't pay any tax can work 8 hours of community service.

 

I used to be all for the "progressive" tax system, but ultimately it isn't fair to make some people hand over the majority of their week to the government when others aren't contributing half a day. And it isn't fair to allow the majority, who pay little to nothing, to vote to increase taxes only on "those others" who already pay the most by far. A tax increase should hit everyone, just as a tax decrease should benefit everyone.

 

Ds and I already do volunteer/community service in our city. Ds is now 17 and the city does a background check for us before we work in public places like the public library, citywide holiday events, interacting with guests or young children at the museum, etc. But we do this for his college resume.

 

Let's say the Public Library offered a childcare service for those who got called in by the Social Worker to do their # of hours community service. As a taxpayer, where does the money to create the Library's childcare program come from? Our city is yuppieville, average income is $65-75K annually, but we have been hit hard by current economic factors like foreclosures. Plus Gov. Perry called for an across the board 10-15% budget cut in the state. Due to a large number of foreclosures not bringing in property tax, there are no extra funds to hire new city workers. This year, there was a "freeze" for new jobs. In your scenario, where does the $$ for the childcare come from? State? Federal?

 

If approved and built, another concern I have are the numerous angry taxpaying moms who love to bring their child to library storytime but have trouble getting books checked out with little Johnny throwing a tantrum. Are you proposing the same childcare program for community service volunteers also watch (babysit) the yuppie Mama's kiddos too for free?

 

And earlier someone (I think Joanne) brought up a good point. You want her to do the community service laundry, IT help, Senior Citizen help, or assembly work in the middle of a busy work week? She already has more than one job and a serious health crisis with her husband. Or on her weekend when she has other commitments to her family? Or she should skip the visit to her husband in the nursing home because the Public Library really needs her help?

 

I really don't think this idea would work for a variety of reasons. Namely due to the fact you are using the excuse of being angry or unhappy with how your tax dollars work in the system. If that were the case and we were allowed to dictate how our tax dollars were used... man, I'd have a bone to pick over the knucklehead who decided homeschoolers cannot use public school clubs or afterschool organizations here in my area of TX.

 

**I'm heading to bed... looking forward to your reply tomorrow.

Edited July 18, 2012 by tex-mex

[Mrs Mungo]

Red herring.

 

The question is not whether individuals who receive more money back from the government ever pay taxes, but whether it is fair tax policy for this to happen in the first place. I do not believe it is except for the very poor. The percentage should IMHO be nowhere remotely close to 50% or even 40% but maybe half that.

 

The problem is in the current state of income distribution:

http://economix.blogs.nytimes.com/2011/05/24/where-do-you-fall-on-the-income-curve/

[Frances]

 

Someone came up with the figure of 20% being the workable flat tax rate in the USA. (No, I don't have a cite.) Basically that's one day of a five-day work week. People who don't pay any tax can work 8 hours of community service.

 

I used to be all for the "progressive" tax system, but ultimately it isn't fair to make some people hand over the majority of their week to the government when others aren't contributing half a day. And it isn't fair to allow the majority, who pay little to nothing, to vote to increase taxes only on "those others" who already pay the most by far. A tax increase should hit everyone, just as a tax decrease should benefit everyone.

 

I understand where you are coming from, I really do. But except for possibly the unemployed, I just don't see how it would work in theory for many people. Here's just one example. When my husband was in grad school for four years recently, I worked full-time, home schooled my son, and took care of all of the household work while my husband commuted two hours each day, attended classes, studied, and completed practicums. And during his last year of school, he was gone for up to six weeks at a time completing internships. We each easily worked 80 or more hours per week. My favorite hobby is reading, and I didn't read a single book for four years, except the ones I read with my son for school. I often joked during those years that I needed to clone myself.

 

I just don't see how we could have done eight hours of community service per week on top of that to make up for not paying federal taxes during that period. (Although as I said before, we did pay many other taxes). However, our income has now more than quadrupled, and we will pay very high federal taxes for the rest of our working lives, unless something unforeseen happens. And I'm sure over time, we will more than pay back the system for the years we didn't pay federal taxes. As stated previously, it's a dynamic not a static system and people's incomes and circumstances change over time. A progressive tax system is designed to lift people out of poverty, so they CAN contribute. Or you can have a regressive tax system, but with more money going to services for the elderly, disabled, and poor so they don't end up destitute and have a chance to escape poverty.

[ChocolateReignRemix]

Issues of "fairness" and who is or isn't "deserving" predictably crop up, and often in ugly ways, when the government rather than the consumer becomes master over healthcare decisions.

 

How is the consumer the master over healthcare decisions when dealing with an insurance company?

 

Now that the government is taking over healthcare in a big way here in the U.S.S.A., comrades, this becomes everyone's business.

 

But of course, "access" to healthcare (which everyone in the USA already had) or having guaranteed health "insurance" doesn't equate to actually getting health care. Oh, but the devil's in the details, right? ;)

 

Strange. I don't see Canadians having these problems. Could you cite some sources for this?

 

Medicare is provided by the government, yet the last survey I saw found either 8 or 9 out of 10 seniors were satisfied with the program, which I believe was greater than the satisfaction younger consumers had with private insurers.

[SKL]

And earlier someone (I think Joanne) brought up a good point. You want her to do the community service laundry, IT help, Senior Citizen help, or assembly work in the middle of a busy work week? She already has more than one job and a serious health crisis with her husband. Or on her weekend when she has other commitments to her family? Or she should skip the visit to her husband in the nursing home because the Public Library really needs her help?

 

I really don't think this idea would work for a variety of reasons. Namely due to the fact you are using the excuse of being angry or unhappy with how your tax dollars work in the system. If that were the case and we were allowed to dictate how our tax dollars were used... man, I'd have a bone to pick over the knucklehead who decided homeschoolers cannot use public school clubs or afterschool organizations here in my area of TX.

 

 

I work long hours (60hrs average) and am a single mom raising two five-year-olds, yet I find time to volunteer, and always have. Let's face it, most of the people not paying taxes are not working full-time, seven day weeks. There are always exceptions, but since when do we set policy based on the rare exceptions? Either we are all in this together, or we are not. The mentality that says I owe basically my entire paycheck to the government cannot simultaneously say that other able-bodied Americans owe nothing.

 

I disagree with your second paragraph. I have been in favor of a flat tax for some time now, and it really has nothing to do with how taxes are used, except to the extent that the people being taxed aren't the same people who vote on where the money goes. Everyone should have a stake in it at both ends.

 

See, I pay $10K/year for health insurance (and it's not the best around). Being a high-rate taxpayer, my tax bill is 2-3x the median family income, so basically my taxes support, say, 2.5 families. Add on comprehensive universal health insurance, which would probably cost more than $10K since my current insurance is NOT all-inclusive, and you have me paying ~$30K in extra taxes. So even assuming that I thereby get rid of my $10K premium, this board has just increased my expenses by $20K/year and expects me to be happy about it. Oh sure, that's not going to hurt a bit. Did I mention I'm a single mom with no other source of income? What bugs me is that it's so easy for other people to decide this on my behalf because it won't hurt THEM a bit. I'm supposed to have endless compassion for everyone else, but nobody even sees me as a human being. They just see me as a great big moneybag. Obviously if I'm paying that much tax I can afford to pay more, and more, and more. How dare I expect to have any control over where my earned income goes? How dare I re-invest to build my business for the future? How dare I expect to benefit from any positive choice I have ever made? I must be crazy.

[Crimson Wife]

Individual's incomes and circumstances change over time. In my adulthood there have been years when I paid no federal income tax (as recently as three years ago when my husband was in grad school) and now we are in the top 10% of federal taxpayers.

 

Again, this is a red herring. My family's income has gone up and down over the past decade as well as our life circumstances have changed. Some years we have paid relatively little, some years we have paid through the nose, and one year we got back more than we had withheld. That's irrelevant to the question of whether Federal income tax policy is fair when it exempts nearly half of the households and makes a small minority pay the lions' share.

 

I do actually support a progressive income tax. As incomes rise, the percentage of income paid in taxes should rise somewhat as well. It's just unfair how skewed the current system is.

 

Because of the volatility in my family's income in recent years, we have seen first hand just how messed up it is. One year our income was 1/3 of what it had been the previous year, but our tax bill was only 1/10 of the previous year's. Yes, we were financially much better off at the higher income, but paying an income tax that was 10 times higher is outrageous. :glare:

[Mommyfaithe]

Who's paying now... You are already paying for everyone that can't pay their own bill.

 

:iagree: that is the issue. I pay my taxes to cover those who do not or can not pay for their own ... And then I am forced to pay for my own insurance and my employees insurance too!

 

I would happily either just pay my taxes......and from what I have seen from countries with UHC, that would not include a huge increase....actually, with not having to pay a separate rate, plus co-pays, etc. It would cast me less....and I would have better coverage, my kids would have better coverage....and my neighbors would have coverage as well.

[Trez]

It's interesting. I can't say that we (my family in Canada) never grumble about our tax bill. My husband makes enough that we are in a very high tax bracket. Then we tell ourselves that we shouldn't grumble because it means we are making enough money to be taxed at this rate. I guess it's all how you look at it :lol:

[ktgrok]

No, I don't think it's about "tut-tutting" at these folks. Most of them are filing their taxes according to the law. But the law is messed up when half of Americans are not paying into the pot. Not only does that make half of us dependent on the other half, but it means the dependent half does not have the same kind of stake in government decision-making. It's not healthy for a community.

 

Personally I think that if you can't afford to pay into the system, then you should have to do some sort of community service to hold up your share. We should all be in this together. Right now we aren't.

 

I find it funny that most women on this board are stay at home moms with no substantial income of their own, and we support that. Then we complain that half of all american's don't pay taxes. If you don't work because you are taking care of your kids, homeschooling, whatever, no, you won't pay taxes.

 

And of course retired seniors, which are a huge and growing section of our populace, don't pay taxes. There is nothing messed up or broken about that.

[WishboneDawn]

But the federal income tax is only one of the many taxes in this country. Most do pay taxes: http://www.cbpp.org/cms/index.cfm?fa=view&id=3505

 

Close to half of U.S. households currently do not owe federal income tax. The Urban Institute-Brookings Tax Policy Center estimates that 46 percent of households will owe no federal income tax for 2011. [1] A widely cited figure is a Joint Committee on Taxation estimate that 51 percent of households paid no federal income tax in 2009.[2] (The TPC figure for 2009 also is 51 percent.) [3]

These figures are sometimes cited as evidence that low- and moderate-income families do not pay sufficient taxes. Yet these figures, their significance, and their policy implications are widely misunderstood.

The 51 percent and 46 percent figures are anomalies that reflect the unique circumstances of the past few years, when the economic downturn greatly swelled the number of Americans with low incomes. The figures for 2009 are particularly anomalous; in that year, temporary tax cuts that the 2009 Recovery Act created — including the “Making Work Pay†tax credit and an exclusion from tax of the first $2,400 in unemployment benefits — were in effect and removed millions of Americans from the federal income tax rolls. Both of these temporary tax measures have since expired.

 

In 2007, before the economy turned down, 40 percent of households did not owe federal income tax. This figure more closely reflects the percentage that do not owe income tax in normal economic times.[4]

These figures cover only the federal income tax and ignore the substantial amounts of other federal taxes — especially the payroll tax — that many of these households pay. As a result, these figures greatly overstate the share of households that do not pay federal taxes.

 

Tax Policy Center data show that only about 17 percent of households did not pay any federal income tax or payroll tax in 2009, despite the high unemployment and temporary tax cuts that marked that year.[5] In 2007, a more typical year, the figure was 14 percent. This percentage would be even lower if it reflected other federal taxes that households pay, including excise taxes on gasoline and other items.

 

Most of the people who pay neither federal income tax nor payroll taxes are low-income people who are elderly, unable to work due to a serious disability, or students, most of whom subsequently become taxpayers. (In years like the last few, this group also includes a significant number of people who have been unemployed the entire year and cannot find work.)

 

Moreover, low-income households as a group do, in fact, pay federal taxes. Congressional Budget Office data show that the poorest fifth of households paid an average of 4.0 percent of their incomes in federal taxes in 2007, the latest year for which these data are available — not an insignificant amount given how modest these households’ incomes are; the poorest fifth of households had average income of $18,400 in 2007.[6] The next-to-the bottom fifth — those with incomes between $20,500 and $34,300 in 2007 — paid an average of 10.6 percent of their incomes in federal taxes.

 

Moreover, even these figures greatly understatelow-income households’ totaltax burden because these households also pay substantial state and local taxes. Data from the Institute on Taxation and Economic Policy show that the poorest fifth of households paid a stunning 12.3 percent of their incomes in state and local taxes in 2011.[7]

 

When all federal, state, and local taxes are taken into account, the bottom fifth of households pays about 16 percent of their incomes in taxes, on average. The second-poorest fifth pays about 21 percent.[8]

It also is important to consider who the people are who do not owe federal income tax in a given year.

 

TPC estimates show that 61 percent of those that owed no federal income tax in a given year are working households.[9] These people do pay payroll taxes as well as federal excise taxes, and, as noted, state and local taxes. Most of these working households also pay federal income tax in other years, when their incomes are higher — which can be seen by looking at the low-income working households that receive the Earned Income Tax Credit (EITC).

The leading study of this issue found that the majority of households that receive the EITC get it for only one or two years at a time, such as when their income drops due to a temporary layoff, and pay federal income tax in most other years. The study examined the filers who claimed the EITC at least once during an 18-year periodand found that they paid a net of several hundred billion dollars in federal income tax over that period.[10] This finding shows that while some households will receive refundable tax credits in a given year whose value may exceed their payroll tax liability, they pay significant federal income taxes over time in addition to the payroll and state and local taxes they pay each year.

 

The remainder of those who pay no income tax are primarily elderly, disabled, or students.

 

The fact that most people who don’t owe federal income tax in a given year do pay substantial amounts of other taxes — and also are net income taxpayers over time — belies the claim that households that do not owe income tax in a given year will form bad policy judgments because they “don’t have any skin in the game.â€

 

Furthermore, although the federal tax system is progressive overall, state and local tax systems are regressive and undo a significant share of that progressivity. There is nothing wrong with having one part of the overall tax system shield low- and moderate-income households, who pay substantial amounts of other taxes and generally pay federal income tax as well in other years.

 

To substantially increase the share of households that owe federal income tax, policymakers would have to take such steps as: lowering the personal exemption or standard deduction — which would tax many low-income working families into, or deeper into, poverty; weakening the EITC or Child Tax Credit, which would significantly increase child poverty while reducing incentives for work over welfare; or paring back the tax exclusion for Social Security benefits, which would subject more seniors with modest fixed incomes to the income tax.

 

Thank you Frances. That was an excellent and well supported post.

[ktgrok]

Someone came up with the figure of 20% being the workable flat tax rate in the USA. (No, I don't have a cite.) Basically that's one day of a five-day work week. People who don't pay any tax can work 8 hours of community service.

 

.

 

I'm sorry, but the fact that you think low income people have the time and energy to add an extra 8 hours onto their workday shows you have no idea what life is like for the working poor. NONE. A huge number of people that this would apply to already work 7 days a week, often more than one job, to put food on the table and a roof over their head. You have no idea. I suppose that is a blessing.

[WishboneDawn]

I wasn't trying to use this thread for a whole manifesto of The World According to SKL, so I didn't get very specific in my earlier posts. I am not suggesting babysitters coming to people's homes. Maybe I was unclear. I was suggesting that some possibilities could be:

• Jobs done by many parents at the same location could offer a little nursery on site. They could have one or two parents (duly screened etc.) take care of the kids as their community service contribution. Parents could also perform some work at a school building while their kids are in the afterschool program / late room. Or at a park or library where the environment is kid-friendly.
  
• Some jobs could be done at home. For example, upon picking up one's kid at his subsidized daycare, the parent could take home a sack of laundry, wash it, and return it the next day. Folks with "skills" could do computerized tasks at home. Even some assembly jobs can be done at home.
  
• People could perform everyday tasks for elderly or disabled people and bring their kids along.
  
• There are probably lots of other reasonable possibilities.
  

Someone came up with the figure of 20% being the workable flat tax rate in the USA. (No, I don't have a cite.) Basically that's one day of a five-day work week. People who don't pay any tax can work 8 hours of community service.

 

I used to be all for the "progressive" tax system, but ultimately it isn't fair to make some people hand over the majority of their week to the government when others aren't contributing half a day. And it isn't fair to allow the majority, who pay little to nothing, to vote to increase taxes only on "those others" who already pay the most by far. A tax increase should hit everyone, just as a tax decrease should benefit everyone.

 

Fair is such a loosey-goosey and subjective word to use but at least it's easily countered. Several of us who pay what you might call more then our "fair share" have stated we DO think think it's absolutely fair.

 

Is there an economic and social case to made beyond the claim that it's not fair?

[ktgrok]

Funny...if you are unemployed and take advantage of government services you are mooching off of others and not being personally responsible? Does that mean that all of the unemployed moms on this board should not call the police if they are mugged, or drive on public roads, or utilize public parks and playgrounds? because you know...they aren't paying into the system that runs them. Ooh, and should they also not allow any of their children to ever attend public school? Or maybe the kids can go half days, since if dad works one half of the family is contributing? Or if the house catches fire, can they call the fire department to put it out? Maybe put out half the fire, since only Dad pays taxes? Mom is a free loader not pitching in her fair share, after all.

 

blech.