Thursday, April 27, 2006

You Get What You Pay For



Mark Hyman and many conservatives complain about taxes. I can only wonder: why don’t they love their country?

Most recently,
Hyman announced “Tax Freedom Day,” the day when (according to right wing think tank, the Tax Foundation) average Americans have worked long enough to pay off their federal, state, and local taxes.

There are problems with using the Tax Foundation as a resource for tax statistics. As the
Center for Budget and Policy Priorities has pointed out, the Tax Foundation’s “Tax Freedom” day is based on numbers at odds with those provided by non-partisan organizations, such as the Congressional Budget Office. They play with the numbers to give a falsely high estimation of the amount of taxes that the average American pays.

But there’s a larger issue. Notice the words that the Tax Foundation and Hyman use: Tax Freedom Day, the time when Americans have paid off their tax burden. Taxes take a bigger share of our earnings. The language conjures up images of taxes as imprisonment, as dead weight that must be lugged around, or outright theft.

Those metaphors distort reality. The truth is that taxes are the biggest and most direct way the majority of Americans serve their country. It’s the way we help provide for the future welfare of the nation.

Does that mean we need to be jumping up and down for joy at the idea of paying taxes? Of course not. But I’m sure most soldiers don’t wake up with a smile on their face when they hear reveille at the crack of dawn, and there’s certainly no shortage of complaints about the unpleasant aspects of military life. But they put up with it because they realize these are parts of a greater good: serving their country.

And while taxes might be unpleasant, consider the alternative: no roads, no police, no fire department, no national defense, no food inspection, no standards for worker safety, no public schools . . . none of the services we all rely on to varying degrees to make our lives safe, pleasant, and possible.

Speaking of public schools, let’s look at them as an example of what taxes get us. Hyman lists several states that have the highest and lowest tax “burdens,” according to the
Tax Foundation. For giggles, I looked up the Morgan Quinto rankings of the “smartest states,” which is an index based on a host of variables related to the quality of public education in the states.

As you might guess, the states that tend to have higher rates of tax contributions from citizens tend to be closer to the top of the “smart” list, while those with low contributions tend to be closer to the bottom. Specifically, 6 of the top 10 “smart states” are also in the top ten of the Tax Foundation’s list of state tax “burdens.” Five of the bottom 10 in the smart state list are also in the bottom ten in terms of tax contributions. The correlation isn’t exact, but looking over sets of data from both Morgan Quinto and the Tax Foundation over the last few years bears out the trend: when it comes to public education for our children, you get what you pay for.

So paying taxes helps ensure the continued welfare of the country, contributing toward the continued strength of the nation, a nation that, through the contributions and sacrifices of past generations, has provided us with so much. Sure, we don’t want to pay more than our due. After all, how many soldiers volunteer to tack on an extra mile or two to an all day march? Yet that doesn’t mean they aren’t committed to serving their nation.

But those who think tax breaks (particularly for the wealthy) are inherently good and who portray paying taxes as imprisonment or theft think they should be able to enjoy the fruits of living in America without making a contribution.

To them, I say: America—love it or leave it!

And that’s The Counterpoint.

Hyman Index: 3.03

8 Comments:

At 5:02 PM, Anonymous Anonymous said...

Ted:

Amen! Amen! Amen!

This era of conservatives are the biggest bunch of self-centered louts I've seen,

So-called conservatives wail and moan about the 18cent/GALLON of federal tax on gasoline, as they see it as a big rip-off. Funny, we will spend 100's of billions over in Iraq for Bush's little Oil War -- and THAT is not seen as a tax??? Oh no, it's better to charge ALL citizens for BushCo's military adverturism, rather than those who supposedly benefit - oil users.

And then there's the cleverly named "Death Tax" relief -- which in over 90% of the cases goes to the very wealthy.

This crop of Republicans have totally given up on the more benign form of republicanism -- one that used to acknowledge the important notion of serving the Public Good.

We will all sink under the load of selfish behavior. Bush touts the recent 5% growth in the economy while ignoring the fact that the median income has been declining for the last few years.

Argh.

 
At 10:37 AM, Anonymous Anonymous said...

Ted,

I remember listening to Rush Limbaugh's all-too-short 3 hour radio show and hearing a woman call in with a comment.

She was a loyal dittohead but had a concern. She was responding to Rush's insistence that he pays too much in taxes and that it presented a disincentive [disincentive for what? filing honest tax returns?]. The caller was concerned that, given the sacrifices that our troops are making in Iraq that it seems that all should be doing what they can. She argued that paying taxes without making big complaints (like on his national radio show) goes against her idea of shared sacrifice.

Rush really was spewing on this one. First accused the caller of not listening. But then, he perhaps realized that he sounded like an ingrate multi-millionaire and tried some "don't get me wrong" lines. But in the end, he complained about his tax burden.

Why is it "okay" for the poorer among us to give their all and a terrible injustice for the more well-heeled to give their "some"?

 
At 12:32 PM, Blogger Ronald said...

Be sure to see the Tax Foundation's response to CBPP here:

http://www.taxfoundation.org/publications/show/1406.html

FYI, in 2003 CBO estimates a total federal tax burden of 19.8 percent (http://www.cbo.gov/ftpdocs/70xx/doc7000/12-29-FedTaxRates.pdf), while the Tax Foundation estimates it at 18.7 percent—one full percentage point lower (http://www.taxfoundation.org/files/sr140.pdf).

So how it true that TF's figures are "at odds with those provided by non-partisan organizations"?

 
At 8:35 PM, Blogger Ted Remington said...

Wow! An actual TF'er here in the flesh! Nice to have a coherent dissenting voice.

I took a look at the response, and while I'll want to do some more follow up, it looks like the TF defense of its numbers acknowledges the basic thrust of the CBPP criticism: that "tax freedom" day is an economy-wide stat. What CBPP (and I) find troubling is the packaging of "tax freedom" day as somehow representative of when the average taxpayer is "free" to make their own money. But of course it's not.

But that's really a secondary point to my main problem with TF, which is not statistical or economic, but rather rhetorical and ideological. The whole framing of taxes as a "burden" which we "free" ourselves of is inappropriate and misleading, and the poltical agenda that lies behind such rhetoric is one that damages the essential fabric of democracy.

tjr

 
At 9:25 PM, Blogger Ted Remington said...

Two more things in response to the poster from TF:

As CBPP has noted, Alan Greenspan himself has pooh-poohed TF's method of coming up with its numbers.

From the CBPP website:

"Greenspan Warns Against Seriously Flawed
Approach Tax Foundation Uses

In a 2002 Congressional hearing, Federal Reserve Chairman Alan Greenspan warned that the type of approach the Tax Foundation uses — dividing total tax receipts by the Gross Domestic Product (or a similar measure), to determine the overall average tax rate (i.e., to determine the percentage of total income in the nation that is paid in taxes) — is simply not valid. Greenspan flatly stated: “you can't use tax receipts over nominal GDP as a tax rate."

Chairman Greenspan explained one reason that such an approach is improper: although capital gains taxes are counted as part of federal tax receipts, the capital gains income on which such taxes are paid is not counted in GDP. The Tax Foundation uses a closely related Commerce Department income measure — NNP, or Net National Product — that also omits capital gains income. Counting capital gains taxes as part of tax receipts, while failing to count as income the very capital gains income on which these taxes are paid, distorts — and inflates — average tax rates."

Additionally, the very specific example you use about the discrepency between the CBO and the TF estimates (i.e., the specific year 2003) reveals another little known fact about the TF formulation of tax freedom day: it's based entirely on speculation. The reason for the discrepency in 2003 was not because TF chose to use more conservative (no pun intended)numbers, but because their speculations ahead of time ended up being wrong. "Tax freedom day" is little more than guesswork--sloppy and misleading guesswork at that.



In addition, for readers who would like to see a bonafide tax lawyer rebut the TF claims above, see Linda Beale's blog, where she takes apart the same argument made by a TF commenter on her site (perhaps the same person).

Check it out here:
http://ataxingmatter.blogs.com/tax/2006/04/the_tax_foundat.html

tjr

 
At 9:28 PM, Blogger Ted Remington said...

Oops...that should have been:

http://ataxingmatter.blogs.com/
tax/2006/04/the_tax_foundat.html

 
At 4:03 PM, Anonymous Anonymous said...

The idea that the phrase "tax burden" is somehow ideological or "conservative" is profoundly ignorant. That's straightforward language from any public finance textbook. Do a Google search for "excess burden of a tax" and look around. It's a mainstream economic term.

In fact, even the IRS named it's model for estimating compliance costs of the tax system the "Individual Taxpayer Burden Model":

http://www.irs.gov/pub/irs-soi/toder.pdf

 
At 11:43 PM, Blogger Ted Remington said...

Sorry, but you're simply wrong on this. Just because a phrase is commonly used does not mean it is not ideological. In fact, some of the *most* ideological phrases are precisely those we accept as being neutral and transparent.

The word "burden" carries very specific metaphoric connotations, connotations that are in no way inevitable or more valid than any of the infinite numbers of connotations other metaphors bring to bear. "Burden" privileges certain ways of thinking about the process of assessing and paying taxes, while obscuring other aspects of the process.

The fact that "burden" is such a widely used term speaks to the power of the ideology behind it, not a lack of ideological content.

This isn't a terribly abstract or esoteric point, Anon. It's elementary linguistics.

tjr

 

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