Should You Pay More Taxes if You Make More Money?
I’ve been asking myself this question a lot since the issue was such a big deal in the presidential debates. I know a lot of people disagree on this but I think it’s one of those issues that’s worth exploring no matter what side of the coin you fall on.
Movin’ On Up
When I got a raise at my last job, I jumped from one tax bracket to the next. My taxes went up and I was a little bummed out. Part of me thought to myself, “Darn, if only they would’ve given me a raise that kept me just under the threshold.”
Then I read up on how taxes work and I realized that the whole bulk of my paycheck wouldn’t be taxed at this higher rate—only the amount of it that goes beyond that point. This is an important point. Check out Money Chimp’s bracket page for a clearer perspective on this. My paycheck went up $4,000 but my taxes only went up $1,000—which is not that big a deal in my eyes. Why? Because I was still getting a pretty significant raise.
Not everyone thinks it’s “no big deal.” For one, the government has shown that they’ll sometimes spend our tax dollars pretty irresponsibly. So when our taxes “go up,” the first thing a lot of us think of is that politicians are throwing that money away or doing useless things with it.
I Think We Should Pay More
I just think this makes sense. You’ve heard it over and over if you’ve watched the debates and heard the commentary surrounding it: “The top 10% of wage earners pay 70% of the taxes in the US” (from this source). Why is that? A lot of people have different opinions, but when it comes down to it it’s rather simple: they can afford it.
And if we taxed everyone the same amount, there would be less taxes to go around—a lot less. You can tax the rich more, but you can’t tax the poor more—there’s just no money to go around there.
Joe The Plumber
Listen, I’m no tax expert, but it’s pretty clear to me that the current system works: if you make more money then hey congratulations! Yay for you! Now you’ll pay more taxes because you have more money to go around and you will be contributing more.
If you saw the debates, you heard about Joe the Plumber and his ambition to buy the plumbing business he works at. He was unhappy that his taxes would go up under Obama’s plan because he would be making over $200,000. To Joe: That’s awesome! You’re lucky you’ll be running your own business and doing so well for yourself. Are your taxes going to go up? They sure are. Under this system if you don’t want to pay more taxes then just don’t make any more money.
But Why Should I Pay More? It’s Not Fair
This is the big argument I hear when I talk to people. Some people think that it’s not fair for them to pay more into the tax pool just because they’re making more money. I understand, to some extent, but these people don’t realize the context under which taxes are being paid. If everyone got taxes at the same rate, then the amount of taxes collected would plummet. The country couldn’t function.
When it comes down to it, I believe people should pay accordingly to what they make. And besides, lookat the jumps in brackets—it’s not that big a deal. It also becomes less of a deal the more money you make: if I’m ever making over $357,000 I’ll gladly pay 35%. No complaints there.
I’m eager to have a healthy discussion about this topic, let’s just try to—as opposed to the politicians—keep it civil.