Economy Are your taxes fair? Eric Ringham April 8, 2011, 5:00 AM Apr 8, 2011 43 comments If you haven’t filed your state and federal tax returns yet, you’ve only got about another week to do so. Because of how the weekend falls, the deadline this year is April 18. Today’s Question: Are your taxes fair? 2010 Governor's Race ‹ Older How would a federal government shutdown affect you? Newer › What was your first job? Browse by category Education Health Economy Politics/Government Culture Religion/Ethics Science/Technology Transportation Race/Gender Environment/Energy Security International affairs Immigration Media Military About the blogger Eric Ringham firstname.lastname@example.org Ron About which taxes are you asking? Income taxes? Property taxes? Sales taxes? Corporate taxes? Payroll taxes? Capitol gains taxes? Estate taxes? Sam Well, I have no issues with my federal taxes. I am retired and have a very low income and the Fed. seems to take that into account. Unfortunately, Minnesota doesn’t seem to care so my state taxes are 1000% higher than the Fed. Given my very low income, MN should be ashamed. Audrey F. Decent roads cost money. Libraries cost money. Bridges that don’t fall down cost money.Hey, I’m poor. I’m also very privileged and very grateful. Where am I going with all this, you wonder? So do I. Essentially, yeah, my taxes are not unfair. What I DO object to – and you know what’s coming, right?- is the money spent on YET ANOTHER sports facility, funded by incremental and almost unnoticeable additions to one tax or another. GRRR. GO TWINS. And take the Vikings with you. Clark Yes., my taxes are fair. If they increase, the looney left will just figure out a new way to waste taxpayer money. Josh Nope. In everything but property taxes, I should probably be paying more. Rich No. Taking from the masses to give to the wealthy just doesn’t seem right to me. America needs to do away with the current income tax code and replace it with a consumption tax, a carbon tax, and an income tax which is a simple, deduction-free tax which treats all sources of income equally. Laura Absolutely. Do I agree with everything every level of government spends our money on? No. But there is no possible way I could live as comfortable and safe a life on our low-middle income for our family of four without the benefits of “collective payment” for things like safe streets, safe water, clean air, good schools, excellent parks, etc, etc. Those are things everyone deserves. Steve for the most part they are fair, but property taxes keep going up and the tax code needs to be reevaluated and restructured properly for the good of us all! Dan I would like to see more people pay taxes. 47% of Americans do not pay Federal taxes.* If everyone paid some taxes, I believe legislators would do a better job of allocating resources. Are my taxes fair – no. Should my Federal taxes be higher – yes. Minnesota state tax should be lower. Dakota County taxes – just right. It pains me that my young children will be paying for failed policies in the 2000’s and 2010’s well into their old age. * http://money.cnn.com/2009/09/30/pf/taxes/who_pays_taxes/index.htm Brian My personal income tax is unfair. My family is in the upper income bracket…I could and should pay more! Property taxes are never fair to me…way to regeressive! Make the people who can afford it pay more! James Our tax laws are corrupt. We need a straight income tax of X% (put in whatever SINGLE digit makes this country work) No loop holes, no credits, no off shore banking, no cheating— PERIOD. If you don’t follow these simple rules… GET OUT OF THE COUNTRY. If you make $10 you pay $0.90 (State and Fed), if you make $1,000,000,000.00 you pay $90,000,000. Simple… ∑ DTOM Art Schoot I do not think my taxes are fair for several reasons. I am 68 years old and have lived in my home for 30 years. I believe I have paid nearly double in taxes what I paid for my home. I always hear that my home is the most expensive thing I will buy? Actually, taxes are the most expensive and give the least in return. My income taxes are not fair either, primarily because I am “LUCKY” enough to have retirement income and therefore the social security I receive and have already paid taxes on is now again being taxed. I also resent the fact the individuals have to pay an alternative minimum tax, while corporations like GE pay no income tax. I realize they pay many many other taxes, as individuals do, but they should also pay some income tax. Alison No. The poor end up paying more and are the least able to pay. A question underlying this discussion is whether our compensation structure is fair. Taxes could be spread more evenly if the gap between rich and poor wasn’t so extreme. Under our current system we pay many workers wages which are inadequate to support a family. At the same time the highest paid employees are paid hundreds, ocassionally thousands, of times more than an average worker. These highly paid executives are rewarded for cutting costs, often done by reducing pay and benefits to their employees or cutting employees entirely by moving their jobs overseas. E. Flynn Personally, I think this is kind of a stupid question. Most people cannot distance themselves far enough from their own self-interest to give an unbiased answer. Besides, is that really the question we want people to address? Wouldn’t this be a better question: is it fair, or right, that those at the top of the income strata pay a smaller percentage of their income in taxes than the rest of the population? Our tax structure is regressive — there’s no question about that. But is that regressive tax structure fair, is it appropriate, is it just? Those are better questions to ask people. Tom No, State taxes aren’f fair in the respect that wealthy Minnesotans pay less of a percentage of income in taxes than a middle class person such as myself. Governor Dayton is correct. We need to raise taxes on the wealthy so that they are at least paying their fair share. Andy My taxes aren’t an inordinate hardship, though they would be fairer if the rich and corporations paid their fair share. On the other hand, I wouldn’t mind paying more for things like high-speed rail, better mass transit or true universal health care GaryF Which states have the “rich” pay their fair share? How are those states budgets doing? How are their economies doing? Richard I do not object to how much I pay in taxes. I do believe the distribution of the tax burden is unfair. Apparently, I paid more in taxes than General Electric and several other large corporations. I don’t think that is fair. I also do not think it is fair that members of my family whose wealth is considerably greater than mine pay a lower percentage of their income in taxes than I do. Rep. Paul Ryan’s proposed budget is more of the same. He wants to cut taxes on the wealthy, leave taxes on the middle class the same, and raise the cost of health care, education and retirement for the middle and lower income classes. Scott Yes, I think my personal taxes are fair. I am a low-income student and pay very little in taxes, I also make very little. I pay a fairly large portion of income in comparison to what I have after I pay for basic food, shelter and other essentials. As I make more in the future I’ll gladly pay more. I’m happy to pay for roads, schools, police, fire and all the other things government provides. Too many people forget that what they get from government are mostly things they like even if they get frustrated by specifics. I don’t think the system is fair. I don’t think I should pay less, but people making $100,000+/year really ought to be paying more. The people making $250,000+/year really need to step up and pay for the things that allow our society and them to be very rich. People who do well need to be asked to give back. Generation of wealth is collective and not just due to an individuals actions. matthew Without considering others’ tax liability, I would say, “Yes, our taxes are fair.” My wife and I had a combined adjusted gross income (AGI, or gross income minus deductions) of around $145,000. Our effective tax rate had us pay in a significant amount. However, I happen to know that we currently have near record low taxes at the combined local, state, and federal level. For instance, we currently have a highest marginal rate (irrelevant to us) of 35% at the federal level. That is significantly lower than historical highest marginal rates. For instance, under Eisenhower, that highest rate was 91%. Under Nixon, 77%. Under Ford, 70%. And even under Reagan, 50%. However, Tax Act, the online tax preparation service we used, stated that while our gross income put us at the 89th percentile, our AGI put us at the 99th percentile. That tells me that there are millionaires and billionaires ending up with an equivalent AGI (again, gross income minus deductions, credits, exemptions, etc…). Granted, my wife and I do not have children who we can claim as dependents. And while we own our home such that we can claim the mortgage interest deduction, we have little left to pay and very little goes towads interest. Nevertheless, although I have no problem paying taxes given the needs of public works, defense, and the truly needy, I do have a problem when I consider the miniscule taxes the ultra wealthy pay as a percent of their income. The people need to know that the very wealthy usually own an S-Corp, LLC, or LLP in either spouse’s name, such that they can claim a “business expense deduction” come tax time. Friends of mine who own these pass-through income business entities claim deductions for things the rest of us pay for out of pocket without any deduction, such as gas, lodging, meals, and even rounds of golf that are claimed as “entertainment” expenses connected with their “business.” These small business owners then pay very little taxes because the cost of their golf rounds lowers there AGI to a number far below ours. THAT IS THE TRUTH! So, my answer to today’s question is yes my taxes are fair, but not when compared to what’s going on in other households and corporations. clark The rich already pay 75% of all federal taxes. Every state that has a very high marginal tax rate on the wealthy saw their revenue drop in past three years. Most of the wealthy have incomes based on incentives. Stock options, bonus payments and if your a lawyer, billable hours. In recent recession, high income earners saw their income drop by 50% or more due to incentive based base. Far more then middle income wage earners on a percentage basis. Higher tax rates on the wealthy by Dayton will not solve the problem other then make the looney left happy. When the next recession hits and expected revenue drops as incomes of wealthy drop, where will Dayton obtain his income? Mark Daytons Ebonics math?? More proof Dayton is an idiot Matthew As a follow-up to my post below, people need to know that the business expense deduction is why your small business owning neighbors can afford season tickets to the Twins and Vikings. The costs for sporting events (and other similar events) can be claimed as a business (client entertainment) expense that is totally deductible come tax time. Another example of how the poor and middle class are getting squeezed out of the picture. Ticket prices are determined like all other goods nad services — supply and demand, and we’re competing against fellow citizens who have an LLC or S-Corp registered with the Secretary of State’s Office and a tax ID. As long as there business expense deduction don’t exceed profits by one dollar, they can use this trick year to year and pay very little taxes. Sadly, these are usually the same people who attend “tax fairness” rallies hosted by the likes of Michele Bachmann, Grover Norquist, and Phil Krienke. SPREAD THE WORD ABOUT THIS FOLKS. Matthew Response to Clark: Clark, South Dakota is the envy of Minnesota’s GOP because of their 0% corporate and income taxes. Please then explain why they lead the nation in rate of poverty growth. Clark, for many years now, Ireland has boasted the lowest corporate taxes in the world. Please then explain why they’ve had 13% unemployment for severla years now and are currently seeking a bailout from the EU and IMF. Clark, rich folks do pay 75% of the dollars collected by Treasury. However, that’s not because of the progressive tax. Right now, we have a regressive tax at the federal and state level. For instance, in MN, the richest tne percent of Minnesotans pay an effective state tax of 10.3%, while the poor and middle class have an effective rate of 12.3%. At the federal level, our country’s third richest man, Warren Buffet, pays a lower effective tax rate than his secretary does. That’s the truth. Look it up. So, the 75/25 statistic is a reflection not of tax unfairness for the rich, but a reflection of income disparity in our nation. It’s simple math. The richest 400 Americans make more money than 150 million Americans combined. That a billionaire pays 75 cents for every 25 cents paid by me is simple math. But know that the billionaire enjoys a lower effective rate than I do. That’s a fact. Next! Joe You here how the rich are not paying there fair share. Well in the Minneapolis school system it cost over $16,000 a year to educate a child. So a family with three children, would run over $48,000 every year. My brother in-law is such a person they just made under $50,000 last year. They got back from the Federal government over $4,000 more then they paid in. So it seems to me the rich are all ready paying for the services of the rest of us. Another thing people need to realize is that if you own a small business and your books show you made $200,000 it dose not mean you have that in cash. If you were to go buy a piece of equipment lets say for $200,000 cash you would be able to depreciate some of that money but what you couldn’t it would show as income. Then owner of the company would have to pay income on that amount of money even though is spent. Also you here about how effective tax rate is higher on the lower income. This is not a valid argument. The rich pay a higher percentage income then everyone else. The more money you make the more you pay simple as that. Stan Joe, if your brother in law is really getting a $4,000 tax refund and only making about $50,000 he needs to review and adjust his with holding. I am sure the family could use an extra $333 per month in cash. Unless the is something “feel good” about getting the Easter Dividend, why make the Federal government a tax free loan? Paul- St. Paul My Minnesota tax burden was, on balance, easier to bear and more fair before eight years of Pawlenty. At the federal level, I’d be happy to let all of the Bush tax cuts expire, including the measly few dollars I receive every two weeks. Add my scant handful of dollars to the minimal amount most of us get to the much larger amount that those in the top brackets get and we could put a serious dent into our debt crisis. Matthew Joe, just because your brother is getting a tax refund doesn’t mean he’s not paying taxes. It simply means he’s paying in too much throughout the year. And as to your other point about taxes of the rich, apparently my previous comments were either undread or misunderstood. You’re a good example of why the problem persists and goes unnoticed. Perhaps we should discuss the state of education in the country? Travis Matthew, Perhaps we should discuss the state of education in this country…for your benefit. Joe’s comment was “They got back from the Federal government over $4,000 more than they paid in”. Joe isn’t saying their periodic withholdings are too high. Next! Deb I net approximately $12,000/year. I don’t mind paying income taxes, as one can afford to do so if they have a job. I have a difficult time paying property taxes (over $5,000/year, which was once $127/year). I think property taxes are not fair. They are way too high for people once they retire. I think we need property tax reform, especially for those over age 65. Yeng Her Why can’t we just do flat tax on everything? It’s so simple. Oh wait, that thing called TARP … lol. Jim No, my taxes are not fair. I do not mind paying my taxes, for they pay for our common good, and the level is not unreasonable. But until our tax code is rewritten to eliminate corporate loopholes and the deductions that favor one special interest group or another — in other words, until all citizens (rich and poor) and all corporations (multi-nationals and small businesses) are paying THEIR fair share, no one’s taxes can be unfair. Steps in the right direction: Let all Bush tax cuts expire. Eliminate corporate loopholes. Flat-tax corporations. Eliminate personal tax loopholes. Greg D’ Roseville - compared to the tax-dodging wealthy … Nope. Alison To address this whole question of small business taxes being tied up with personal taxes shouldn’t we devise a system to separate the two? Then you could get taxed on the money you take out of the business and don’t use to re-invest in it. Kevin VC Those who gain most from the benefits of this country should pay more to keep it going. I am in favor of Progressive taxing. Right now I would say no. No one is a Island onto themselves. And it looks like its becoming even more unfair. Steve the Cynic It’s hard to tell, because there’s so much misinformation and truth-twisting by extremists and conspiracy theorists of all sorts. Here’s what I do know, however: I could afford to pay more and still live comfortably. I feel sad for folks like GaryF and Clark, who seem to think that monetary rewards are the only kind that count, and for my friends on the left who think that mere redistribution will make everyone better off. This whole discussion would be a lot less contentious if more people would realize that money won’t make you happy. Whether you resent the rich for having more than you do, or you are rich and find yourself fretting about how to keep all your wealth (and amass more), there comes a point where money is not the solution to your problems, but instead, money is your problem. Clark Steve the cynic Being wealthy does not make you happy, but it sure is a a much better place than the alternative which is poor. Steve the Cynic Taken literally, Clark, your post seems to say that being rich and being poor are the only two possibilities. I’m sure you’re too smart to actually mean that– to succumb to the fallacy of the excluded middle. There is in fact such a thing as being satisfied with enough. Regarding the things that make life fulfilling, money is largely irrelevant once you’re comfortable. Things like the company of your friends and family, the sight of a beautiful sunset, singing a song, writing a poem, telling a joke, reading a book, making something beautiful, and the pleasure that comes from being generous (not just with one’s money) do not require any great wealth. Or maybe you’ve been too obsessed with amassing and keeping your wealth that you’ve failed to notice such trivial, unimportant things as these. Mike G Given all the taxes I pay collectively (payroll tax, social security tax, medicare tax, state income tax, city tax, county tax, sales tax, real estate tax, interest income tax, capital gains tax and paying the numerous state and federal “fees” that are really taxes under a friendlier name . . . I end up paying over 50% of of income to “the government”. I’m in the top 10% of earners in the country and definitely pay more than my “fair share”. The top half of income earners in this country pay virtually 100% of the income tax burden and if I recall correctly, the top 10% of income earners pay nearly 60% of the nation’s income tax. How about the various governments that are supposed to work for us actually cut spending and programs that are not essential to safety and security? That would be a huge savings and a great place to start earning my trust as a tax payer. Sure government jobs will be lost, but so will the entitlement burden that goes with them. Besides, the unessential laid off government workers can do what we, the majority, in the private sector do during hard times; we find new jobs or migrate to where the jobs and benefits are located. If anyone with a shred of self respect handled themselves fiscally like the government does, we’d all be morally and socially bankrupt. EXAMPLE: If I lived beyond my means like the government does and handled the difference between my spending and my income like the government does I would need to apply the following governmental logic to cover the gap: First, freeze my spending . . . after I raise it 10% from the current year’s level of course. Second, ask my boss for a huge pay raise without merit in order to keep pace with my spending (i.e. ask the tax payers to pay more). Third, ask my creditors (credit card companies) to increase my credit lines in order to keep pace with my spending despite carrying a huge balance with my creditors already at prevailing interest rates. “Just keep raising my credit line please so I can pay you off” (i.e. asking foreign banks and domestic banks to lend more to the Feds, state and municipal brain-trust in the form of treasuries/bonds). What a friggn’ joke – so yes, I’m paying enough in taxes thank you very much. Is my share “Fair”, not really. I’m getting a raw deal honestly and paying more than my “fair share” for being fiscally responsible. Like the saying goes, “no good deed goes unpunished”. Mike G Kevin VC I thought this was interesting addition that adds to my answer of No. http://thinkprogress.org/2011/04/09/main-street-richest-taxes/ You only need so many millions to make ends meet…. Mike G i know my opinion goes counter to most who read here and listen to MPR; however, I’d like to thank you for not erasing my post. Yes I fully believe and support my post here 100%. I’ve made similar posts on the “Gather.com” forums for MPR and have been surprised by the intolerance of some of the writers who ultimately removed my contributions. Yes my views were counter to the writer’s viewpoint, but they were respectful and I did not use foul language nor insult anyone directly. My posts were deleted solely because that didn’t fall in line with the writer’s opinion, and I have to think it’s because I’m conservative/libertarian and not towing the “progressive” line. So thank you MPR for allowing both sides of the issues have a voice. steve this is really tough question because my combine income is less than 60k and taxes are really high and everything is going out but then again mn has a great culture so it is worth it. i am a very active person with alot of skills so i guess my taxes are fair! Clark Mathew: Here is another fact: If you confiscate every dime of the richest 400 amercians, every penny, it would not cover one year of the obama deficit, not one year. These people did not win a mythical lottery as you suggest but took risk and received a reward for their risk taking. Move to cuba where your socialist ideas will be welcome Steve the Cynic “These people did not win a mythical lottery… but took risk and received a reward for their risk taking.” Except, of course, for that portion of their wealth that was inherited, or due to their getting a huge head start by virtue of being born into a wealthy family that could send them to good colleges. Then we have to ask whether what they did to “earn” their wealth really added that much value to the well-being of humanity. I.e., did society get fair value for the money that was transfered to those folks? Did they create as much wealth as they got, or are they just economic leeches?