#7 – Dick Bernard: Thoughts on Taxation and Taxes

Since this is about taxes, the bottom line is at the end of this writing.
Today is Tax Day, April 15, 2009, the annual celebration of the loathing of taxes. This day there will be a new spin on an old theme: “Tea Parties”, apparently well organized and heavily publicized by certain media (thus, not spontaneous “breaking news”), and supposedly grassroots protests against the tyranny of “taxation [with] representation”, in the model of the Boston Tea Party of December 16, 1773.
It will make no difference to the angry orators and sign carriers today that U.S. taxes have always been enacted by representatives we imperfectly select. Those who dislike certain of their taxes will be doing a bit of street theatre today, and some probably even believe that some king from some foreign land is confiscating their goods.
(I have watched demonstrations for years, and been in some, and I’ll see how those in our area today compare with others I can remember). Almost without doubt, they will garner far more publicity than they warrant.
“Taxes” is a complicated issue, certainly not to be covered in a short essay.
In the end analysis, taxes are necessary and most everyone knows it. The pushing and shoving politically is around whether or not we should be asked to pay a little more, or a little less, and what our taxes will be used for. In my thinking, taxes are the dues we pay for living in a reasonably civilized society.
Every year I file taxes. This year was no different. This year was particularly interesting.
Monday, March 30, was our appointment with our tax man. I went in anticipating that we might owe as much as $4000 on federal and state. When we left, we were told we’d get a net refund of $21.
Odd how it is: We owed as much taxes walking in the door, as we did walking out, but not owing the $4000 made it seem like a refund. No, we haven’t rushed out and spent it – yet!
Earlier that same day, March 30, 2009, a guy had his mug shot on the front page of the Minneapolis paper. The headline was “Path from non-conformist cop to anti-tax adviser led to prison”. The guy hated taxes and will go to prison “for filing false tax returns and showing others illegal ways to avoid paying their taxes.”
The headline and story reminded me of the video someone gave me purporting to prove that the Internal Revenue Service is illegal, and that there thus can be no consequences for not paying taxes – they are, after all, “voluntary”. There’s even a “gotcha” sequence where a “reporter” makes a prominent politician squirm by demanding that he show the law where it says we have to pay taxes. The politician – a Republican if that makes any difference – looks like the deer in the headlights. It’s one of those “can’t win for losing” moments. The paraphrase: “Yes, you can go to jail for not paying taxes, , but I won’t show you where it says that taxation is legal.”
As previously stated, in my view, taxes are the dues we pay for living in a reasonably orderly society. There are lots of taxes I don’t like – I could get along without paying a substantial part of that one-third of my total tax bill that goes to “Defense”, for instance. But a society where each person could pick and choose what to pay for, and how much, would be a society in anarchy and chaos, and I’m not sure we’d relish that day. So, we choose to complain about what is, in effect, one of the essentials that makes our lives and the lives of others manageable. We have the best of all worlds: we can complain about it, without the accompanying responsibility to fix it.
So, how much taxes does the Bernard household pay? I’ve been interested in this bottom line for a number of years.
We are reasonably ordinary members of that massive class called “Middle”. We live pretty moderately.
When all the “pushing and shoving” of numbers was finished on March 30, about 7 ½% of our income went to Uncle Sam; and about 3 ½ % to our state. Our Federal and State tax burden was 11% of our gross income.
All things considered, I don’t consider that a terribly big dues.
Of course, there are all sorts of assorted tariffs and fees and even taxes that aren’t reflected in the federal and state numbers, including some purported taxes that are not taxes at all, like withholding for social security insurance and medicare premiums (that I paid for years, and now benefit from). On this tax day they’ll all be lumped in to one big crate, and by some magic by the end of the day it will seem that most of our money goes to taxes. That’s just how the game is played.
Bottom line: A whole lot of perfectly good tea bags will be wasted today. Some would want to decrease our tax burden from, say, 11% to 10%; others think our society (and ourselves) would benefit more if the tax bite was 12%. Great amounts of pious rhetoric will continue to be expended on all sides. Me? I wouldn’t miss the extra 1% – it could do a lot of good. My life wouldn’t be better with 1% extra in my pocket.