It’s hard to like taxes. Maybe that is why there is such an effort to hide them.
Payroll deduction grabs your income taxes before you see your paycheck. Your employer invisibly matches the Social Security and Medicare payments that are withheld from your regular pay; that employer share is a largely unseen part of your wage package.
You may pay your property taxes separate from your mortgage payments, but few renters calculate the share of their monthly check that goes to their landlord’s property tax bill.
Similarly, you usually don’t mentally adjust for the sales tax added to most purchases. That’s especially true for the big chunk added at the pump to the cost of a gallon of gas.
If there is an attempt to shroud taxes with white noise, it’s not all that successful. Many of us get riled up about taxes, especially when we are pretty sure those guys are wasting big chunks of it. A local political candidate once said, it’s almost as though people think government budgets have a line item for Waste.
When it formed, the Tea Party stood for Taxed Enough Already Party. Pretty hard to take issue with a group that wants to stop the government’s hand from digging too deeply into our pockets. Tax-raisers, after all, are never satisfied. As those 20th century philosophers The Beatles sang, “I’m the taxman. And you’re working for no one but me.”
But is that really the case? With apologies to Jonathan Swift, let me modestly propose that during my serious tax-paying life – beginning with my first job out of college in the early 1970s and taking off in earnest with home ownership in the early 1980s – the tax burden didn’t grow that much, and may actually have declined a bit.
Obviously I was paying more annually by the time I reached retirement than I did decades earlier, if only because I was making more and my home was worth more. Still, the tax rates were more onerous when I wore a younger man’s clothes.
Property taxes for school operations today are less than 20 percent the rate they were when I first entered the world of homeownership. Today’s owner of a $250,000 home is paying $750 a year in taxes for school operations. Under the former tax rate, that annual bill would be $3,750 or more. As part of that deal, sales taxes were raised two cents on the dollar. But you would have to spend $150,000 a year on taxable goods for your increased sales taxes to match your property tax savings.
With one notable and short-lived blip, the state income tax has hovered at a little bit more than four percent for a half century. Politicians like to get all hyper when that rate changes slightly, but really we should all be so fortunate as to live in a world in which a one-tenth-of-one-percent income tax increase is our biggest worry.
Today, the graduated federal income tax rate tops out at 39 percent; the top rate was 70 percent in 1980. That might lead you to think that the highest earners have done very well with the way the tax code is written. And you might be right.
Pulitzer Prize winning author Matthew Desmond writes in “Poverty, by America” that over the last fifty years personal income in this country has increased by 317 percent while federal income has only grown by 252 percent.
What these numbers suggest is that if tax collections had merely remained stable and mirrored income growth, there would be a lot more money available for things like health care, road repair, schools, government housing, food programs, and the like.
There would also be more tax revenue if wages hadn’t stagnated for significant sectors of our labor force. Meanwhile, those at the top are earning much more and, thanks to a friendly tax code, they are keeping much more of it in their pockets – tucked safely right next to their well-controlled politicians.
