Merry Tax Day!

I found two good posts about taxes: one describes why we need them, and the other describes how much of your taxes go to pay for something you probably don’t even think about.

First, the ‘mystery’ budget item: servicing the interest payments on the federal debt. From hilzoy (italics mine):

Total Receipts: 2,407
Total Outlays: 2654
Total Deficit: 248
Total Spent On Debt Service: 405.9
— Yes, that’s right: had we simply paid our bills on time, more or less, we would not only not be running a deficit, we would have $157.9 billion dollars to either refund to taxpayers or spend on some new program. For instance, we could have universal health care coverage for this amount of money. Think of it: we could all have health insurance, without having to pay one cent above what we’re paying today. No more wondering what will happen to your health coverage if you lose your job. No more wishing you could take a different job, which you can’t because the job you want has no health insurance, or because you have a preexisting condition. No more just not having any health insurance at all. All for free — if only we had not run up deficits in previous years.
Debt Service as a percentage of receipts: 16.9%
Yes, that’s right too: about one in every six dollars that we pay in taxes goes to pay not for anything useful, like fixing bridges, but for debt service. Stupid, boring, utterly pointless debt service. I wish those anti-tax organization that talk about “Tax Freedom Day”, or whatever they call that day when you’ve earned enough to pay your taxes and get to keep the rest for yourself, would be honest enough to have two days: “taxes for actual government services freedom day”, which would come when we’d paid the taxes that don’t go to debt service, and “taxes we pay only because we were dumb enough to listen to Grover Norquist and the rest of you idiots freedom day“, which would come when we’d finished paying off the rest.

Keep in mind, when Reagan took office, the federal debt was at $1 billion. Today, it is $8.9 billion. To see the damage different presidents did, here’s a nice graph for you (and you’ll notice that, by the end of Clinton’s second term, the debt had stopped growing). But despite that depressing bit, Matt Stoller explains why “taxes for actually government services” matter (italics mine):

Personally, I find banking fees, high cable and internet charges, health care costs, and credit card hidden charges much more abrasive than taxes, because with those I’m just being ripped off to pay for someone’s summer home.
Patriotism is about recognizing that we are all connected in a fundamental moral and physical sense, that the war in Iraq is our war, that poverty in New Orleans is our poverty, that public funding to cure cancer comes from each of us and not just the scientists who have made it theirs. The tax burden we face is a very small price to pay for the privilege of taking responsibility for our own freedom and our own society. And the hatred of taxes on the right comes from a hatred for this responsibility. It’s childish and immoral and unAmerican.
Now, what is a problem is the complexity of our tax system. Complexity is a tool that powerful elites can and do use to intimidate and control people without access to capital and connections. With modern technology, there is just no reason for this complexity anymore except the business coalitions that push for specific tax breaks and the politicians who love them. This complexity not only upsets and disempowers people like us, it empowers the powerful to skip out on their tax burden.

Something to keep in mind: most of the science you hear about on these here ScienceBlogs is funded by taxes. Just sayin’.
Merry Tax Day.

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2 Responses to Merry Tax Day!

  1. Edward says:

    Mike – your numbers above are wrong: those numbers should be TRILLIONS not billions. Your numbers are 3 orders of magnitude too small. What is really ironic is that one of Reagan’s sound bites was something like: “Don’t vote for Carter – he will push the debt over $1 Trillion.” The graph shows the truth: Reagan and Bush I and II have done more to bankrupt this country than any other US Presidents.

  2. Joshua says:

    Taxes are a Great Thing. I hadn’t made the connection to service fees like Matt Stoller did, but I think it’s an excellent point. We gladly pay those, and they really don’t exist for any reason other than lining the pockets of the company stockholders. Taxes, on the other hand, benefit everybody, and are spent by elected representatives who answer to us, the taxpayer, rather than an appointed CEO who answers to rich stockholders who just want to get richer for the sake of it.
    At least in theory. Personally, I’d be much happier about paying taxes if half of our budget in this country weren’t spent on “defence”. (I’m resisting the temptation to replace that with “military-industrial complex”, but the latter probably is the right term, particularly in the days of Reagan and Bush.)

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