(Some very interesting points, and a good test for the Green Party’s ten key values. – promoted by eli_beckerman)
There are many theories out there about how we ended up in the economic situation that we are in. This is a very bad situation and it has affected many people and it is looking like it is going to get worse before it gets better. Now I am not an economist but I too have a theory of how we got into this mess and I can sum it up with one word, GREED!
Americans have been living beyond their means for a long time now and I will call it what it is, sinful. We need to be good stewards of the gifts that God has given us and that does not include getting into more debt then we can handle. Yes the mortgage crisis lead to part of this but no one forced your hand to sign the loan application. As I wrote yesterday we need to start taking personal responsibility for our actions and that would include getting into debt. Americans today have more personal debt than any other time in history. By the way I am including myself in this as well.
During this past election cycle here in Massachusetts there was a statewide question on the ballot to roll back the state sales tax from 6.25% to 3%. Thankfully the question did not pass. If it had it was estimated that the Town of Southbridge would loose approximately $9.5 million in state aid. Okay my question is this, why is the Town of Southbridge, or any Town for that matter, relying on aid from the state? It was reported in today’s Boston Globe that the Commonwealth of Massachusetts stands to loose money in Federal aid in the coming years as well. I ask the same question, why are we relying on Federal Aid? We are living beyond our means.
I believe is local control and that problems should be solved at the lowest possible level. With this in mind, when the Town starts the budget process it should not include any possible funding from any other source other than the revenue that the Town brings in, if we cannot live on that then we are living beyond our means. I, like most of you, get a paycheck each week. That is all the money I have for the week and when it runs out, it is gone. I cannot look to anyone else for money to get me over the hump; government should be run the same way.
Governments at all levels gather funds through taxes, property tax, meals tax, sales tax, income tax and the like. Each level of Government should exist on what funds are gathered at that level if not then cuts will need to be made. I realize this is pie in the sky but I believe if we want to get back on track we need to do this.
There has been much discussion the last few days about taxes and tax cuts. The highest earners in the country pay the least amount of taxes, so the argument goes. Taxes are never fair and taxes are a necessary part of life. I support a flat tax with no deductions for anyone, this way everyone pays their fair share. Just for example let us say the income tax rate is 15%. At the end of the year you would pay 15% of your income in taxes regardless of how much you make. No deductions for anything. I floated this idea on Facebook the other day and someone said that churches and other charities would stop getting money. Well I do not want people donating to my church because of the tax break; I want people giving to my church because they have an obligation to give money to the church. A Biblical obligation!
National debt is the highest it has ever been. Massachusetts is facing a $2 billion budget deficit and it is projected to get worse. We need to start living within our means, it will be difficult at the start, and of course I am not saying we should do this over night it needs to be phased in. That was my objection to the tax roll back question that it was too much too fast.
We need, at a personal level, to be good stewards of all that we have. We should not be living beyond our means, we should avoid personal debt at all reasonable costs, and we should pay down all credit cards and avoid using them to live on. We should look at streamlining our lives and consolidating things. Begin saving money and spending less. And we need to remember to be attentive to our spiritual disciplines of prayer, fasting, worship, tithing and serving. We need to live a more simple life and get back to basics and stop living beyond our means.
Cross posted at www.frpeterpreble.com
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would that mean that there would be no more regressive taxes like the sales tax,property tax etc?
Would it include all income including dividends, interest, capital gains etc?
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Hi Peter,
A couple of comments about your ideas.
1. I live in Boston. There is a lot of wealth in my city and quite a bit of it, we’re not allowed to tax because it is a non-profit (example: all of the colleges and universities)
There is also a lot of poverty in my city and a lot of people have needs for many services.
It’s a lot easier living within your means if you life in Dover, Newton, and Wellesley then if you live in Boston or Chelsea, where I had lived for most of my life.
2. While it is true that low-income people pay a much higher percentage of their income in taxes than rich people and while it is true that a flat tax would be a step in the right direction, a flat tax is still not progressive.
Let’s take your 15% flat tax as an example. Let’s say that I’m a low-income person living in Boston and I am the sole provider of 2 children, and my salary is $30,000/year. That means that I would have to pay $4500 in taxes. It doesn’t matter that I can’t afford it and that $4500 would be a major burden.
Let’s take a wealthy couple who have a child and they live in Wellesley. Their combined income is $2 Million/year. So their tax burden would be $300,000. No problem-they would still be rich.
Now let’s combine your two ideas together. Who would be living in a community that could afford great services, including a wonderful school system for their child?
This is not my idea of tax justice.
What I think we need is to reduce the tax burden on middle an low-income people and tax the shit out of rich people.
Mike Heichman
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Towns have to rely on state and federal grants for a variety of reasons:
1. Town residents pay more taxes to the state and federal governments than the town gets back. This leaves the residents unable to pay enough additional taxes to fund town activities.
2. Towns are mandated to spend money by the state and federal governments. For example, elementary and secondary education are the responsibility of the state, but the states requires towns to pay much of the cost.
3. Towns have very limited powers to raise revenue — they can only levy taxes if the state permits them to do so, and usually the state does not permit it. This applies both to particular taxes, e.g. a tax on hotel stays to pay for the costs of providing public safety in tourist areas, and to general taxes, e.g. the “Proposition 2-1/2” limits on the property tax rate.
4. Ethically, public education, public health, etc. should be available to all, equally, not only to those who happen to live in rich towns. Having the state tax income and then redistribute the funds on the basis of need equalizes things.
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I want to dispute a little of how you portray the working middle class and living beyond their means.
First of all, in 2006 a 2 bedroom ranch on a 1/4 acre lot ranged from 185,000-205,000 in some parts of Western MA. At 7% interest, a mortgage payment for this is $1231. Then add the $185/mo property tax plus $50. mo for insurance and right off the top of the middle class modest paycheck is $1466. That does not include water/sewer, or garbage collection. I don’t find the idea of buying a two bedroom ranch to be overreaching or willfully living beyond ones means. At the time, the story was that prices were only going up so buy now or it will be too late.
Also, many families deeply in debt are in debt because the only way they could pay medical bills was with credit cards. Together, the health care and health insurance industries have been pillaging people beyond belief, first with high premiums, then with high deductibles, co-pays, and an awful lot of “uncovered” services.
I could go on and on about utilities, transportation costs,
food and other basic needs costs soaring off into eternity, much of which happened when gas was at $4./gallon. Everything in the country went up because of that, fuel recovery fees were everywhere (and still in place in some circumstances, even though gas is less than $3. now) Heating oil, electricity and propane were household budget killers – they still are.
I think that there are probably some people who went overboard, but I think the MAJORITY of people in this country were simply trying to live a low-key, modest American life but were trampled upon by the new out of control profit motive that has swept through our country like an out of control wild fire over the last 10 years.
I think what really needs to happen is that there should be some reality brought back to making living affordable and within what our means really are.
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According to the 2009 American Consumer Expenditure Survey (a collaboration between the Bureau of Labor Statistics and the US Census Bureau):
Aggregate Expenditures and Income
Annual aggregate expenditures (Share of total by household income quintile)
$5,929,795,000 8.8 12.8 16.8 23.2 38.5
Money income before taxes (Share of total by household income quintile)
7,596,016,000 3.1 8.6 14.7 23.3 50.2
Income after taxes (Share of total by household income quintile)
7,341,782,000 3.3 9.0 14.9 23.4 49.4
Average Expenditures and Income
Average annual expenditures per household quintile
$21,611 $31,382 $41,150 $56,879 $94,244
Income before taxes (average per household quintile)
$9,846 $27,227 $46,012 $73,417 $157,631
Income after taxes (average per household quintile)
$9,956 $27,275 $45,199 $71,241 $149,951
The difference in the above figures come from the subtractions of savings and investments from all income groups (not expenditures) and the additions from the use of credit and loans. Money income before taxes includes income transfers (Social Security, Food Stamps, Unemployment Insurance, Worker’s Compensation, Disability, other forms of public assistance, and charity). Income after taxes also includes tax rebates and credits that can actually increase income.
If living beyond your means signifies spending more than your income, well yeah the bottom 40% does that and the middle 20% barely saves anything. A cursory internet search will show which income quintiles have seen gains in income over the past 30 years. And the overall tax system is de facto flat, making very little difference in the share of after tax income in a progressive or regressive direction.
The more detailed info can be found here: http://www.bls.gov/cex/2009/sh…
and
http://www.bls.gov/cex/2009/ag…
The main page is here: http://www.bls.gov/cex/