We got our taxes done a bit early this year, so I’m naturally trying to put the whole subject out of my mind. But it is a good day for a some big-picture observations on how this country taxes itself to pay for the government services we (collectively) want. And perhaps no observation is bigger than understanding the very different nature of different types of taxes levied by different levels of government.
On the first point, every time you hear some conservative whining about the unfair burden of income taxes on the rich, or the injustice of low-income “lucky duckies” avoiding income taxation, you should remind them and yourself that other federal taxes–notably the payroll tax–is for a majority of Americans the biggest pound of flesh. And it’s insanely regressive, insofar as payroll taxes are levied at fixed percentages with an exemption (at least from Social Security taxes) for earned income above an arbitrary “cap.” And then there are the trends in where federal taxes are harvested, as explained by MoJo’s Edwin Rios:
In the last 60 years, the share of federal tax revenue from individual tax income has remained relatively stable. Meanwhile, the share from payroll taxes has steadily increased while corporate taxes’ share has declined. While companies complain about steep taxes, consider that major US companies have stashed billions in profits overseas, beyond the reach of the IRS.
The fairness picture is far worse at the state and local levels, where taxes (often levied on consumption and real property as well as or in lieu of incomes) are almost perfectly regressive–i.e., a higher percentage of income is spent on taxes the lower you go on the income scale.
So maybe well-off folk get a more painful pinch on April 15. But everybody else gets nickeled and dimed far more every day of the year.
