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Old 04-09-2010, 08:32 AM   #21
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Part of the problem is how these taxes are paid. Nobody has to file a form paying their Social Security tax, they just pay it either through lower wages or a type of "garnishment". If folks had to write a check for the SS taxes owed on April 15, no one would be claiming these aren't real taxes.
I agree. Too many taxes are hidden and billions are sucked up with not very many people noticing.
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And somehow we still ignore the 15% in Social Security tax to pay for "the big game".
I don't disagree that the 47% not paying FIT aren't taxed in other ways like SS. It's that most of them just ignore all of those strange deductions on the stub and look at what the payout is on the check. What I want is for them to fill out the damn forms for FIT and realize that they are being taxed, and maybe start to wonder what the heck those people in Washington are doing with their money.

Besides, SS taxes come with the message "It's just a little bite now, but we'll take care of you in your old age so you won't have to worry about doing that for yourself."
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Old 04-09-2010, 08:40 AM   #22
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This thread comes just as I've decided to spend the day trying to get out of preparing my taxes. I always wait until the last minute....
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Old 04-09-2010, 08:40 AM   #23
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It's that most of them just ignore all of those strange deductions on the stub and look at what the payout is on the check. What I want is for them to fill out the damn forms for FIT and realize that they are being taxed, and maybe start to wonder what the heck those people in Washington are doing with their money.
Absolutely. If everyone had to write a check at the end of the year to pay for the cost of their government, people would think harder before voting for benefit increases (or foreign wars, or tax cuts for those with the highest incomes).

But I've also read that many people compare their net paycheck to their gross and assume the difference is taxes. But the difference also includes health insurance, dental, 401(k), etc. Many people may assume they're getting taxed more than they are.
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Old 04-09-2010, 08:42 AM   #24
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But if they're not paying FIT they have no skin in the big game. They are just recipients of the largess of the House of Lords in D.C. Congressional representatives who are buying their votes. If all they're doing is waiting for Uncle Sam to mail them a check they have no reason to be concerned about responsible government, they're just watching the wheels spin on the government's slot machine waiting for three cherries to pop up. I don't care if they kick in $5, but everybody needs to pay something. Government's job is not to take care of people, it is to focus and concentrate our efforts in accomplishing things we need done, but can't do as individuals or small communities.
What evidence do we have that lower income people are any less concerned about responsible government? Poor people, middle class people and rich people vote the way they vote based on a wide variety of reasons. You have poor Republicans and rich Republicans. Same with Democrats. You have a large group of people who never even vote. To say those who don't pay federal income taxes as a group are just waiting for the three cherries to pop up is a very insulting view of that group.

Skin in the game means you have something to lose. That is why you have people make down payments on homes and cars. The concept is a stretch when applied to taxes as our taxes don't buy any sort of control. I had no more control over my representatives when I paid six figures in income taxes than I did last year when I paid none. And in both cases I held the same political positions.
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Old 04-09-2010, 08:43 AM   #25
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Absolutely. If everyone had to write a check at the end of the year to pay for the cost of their government, people would think harder before voting for benefit increases (or foreign wars, or tax cuts for those with the highest incomes).
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Old 04-09-2010, 08:56 AM   #26
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Skin in the game means you have something to lose. ... I had no more control over my representatives when I paid six figures in income taxes than I did last year when I paid none.
True, and a good point, IMO.

But if everyone had skin in the game, maybe there would be enough critical mass of votes to make a difference?

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Old 04-09-2010, 09:31 AM   #27
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Skin in the game means you have something to lose. That is why you have people make down payments on homes and cars. The concept is a stretch when applied to taxes as our taxes don't buy any sort of control. I had no more control over my representatives when I paid six figures in income taxes than I did last year when I paid none.
The question isn't one of direct control of representatives but rather which ones you vote for. Being a tax *payer* instead of only a tax *consumer* means you are more likely to vote for the "fiscal sanity" candidate instead of the "free lunch" candidate. Too many people get elected by promising a lot of people something for "nothing."

So if everyone realized the lunch wasn't free and they knew *they* would be helping to pay for the programs they wanted, IMO that would be a good thing.
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Old 04-09-2010, 11:09 AM   #28
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The question isn't one of direct control of representatives but rather which ones you vote for. Being a tax *payer* instead of only a tax *consumer* means you are more likely to vote for the "fiscal sanity" candidate instead of the "free lunch" candidate. Too many people get elected by promising a lot of people something for "nothing."

So if everyone realized the lunch wasn't free and they knew *they* would be helping to pay for the programs they wanted, IMO that would be a good thing.
I am not persuaded. There rarely are clear fiscal sanity candidates or free lunch candidates. And what is fiscal sanity? I think that health care reform that doesn't kow tow to the insurance lobby and makes sure that everyone has the ability to get affordable care is fiscal sanity. Others disagree. To say taxpayers are more likely than non-taxpayers to vote for a fiscal sanity candidate is questionable as we probably can't even decide what is fiscal sanity.

I pay for programs I want, I pay for things I don't want. Just like every voter who pays taxes. My politics have been fairly consistent my whole adult life, through the poor years and the rich years. In years I paid taxes and in years I did not.

I also don't think either party can make a good claim to fiscal sanity. I think too many people get elected by being obtuse and then bowing to lobbying interests. And not enough elected officials show leadership and creativity, instead they run their lives by polls. The question is whether having more people pay federal income taxes would change that dynamic. I don't know that it would. I have a heard time visioning people who make very little money but paying a token in income taxes change their behavior in such a way our political climate will change. I only know that the amount I pay in income taxes does not change my voting behavior nor my positions.
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Old 04-09-2010, 11:41 AM   #29
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"Those lucky SOBs. I'll show them. I'll stop working and cut my gross by $50K so I can save $10K in taxes."

But won't that leave you $40K poorer?

"Yeah, but I'll pay less taxes."
Sounds like a song sung on our forum frequently. "I'm FIRED now. Thanks to much lower Fed income taxes due to no w*rk income, I was able to cut the chains holding me in my cubicle and achieve the freedom of ER."

Isn't that what we do here?
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Old 04-09-2010, 11:55 AM   #30
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There rarely are clear fiscal sanity candidates or free lunch candidates.
There are some, but you're correct that most of them are chameleons that try to be all things to all people while being sufficiently nebulous to hide their true nature.
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And what is fiscal sanity? I think that health care reform that doesn't kow tow to the insurance lobby and makes sure that everyone has the ability to get affordable care is fiscal sanity. Others disagree.
I prefer to think that I disagree that the health care reform we got is either fiscally sane or will accomplish affordable health care for all. But that is another discussion. And by sane I don't mean is health care reform something we should or shouldn't be spending money on, I mean "if we're going to do this thing, how do we get the most for the money we're spending?"
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To say taxpayers are more likely than non-taxpayers to vote for a fiscal sanity candidate is questionable as we probably can't even decide what is fiscal sanity.

I pay for programs I want, I pay for things I don't want. Just like every voter who pays taxes. My politics have been fairly consistent my whole adult life, through the poor years and the rich years. In years I paid taxes and in years I did not.
For me this is not a political discussion. No doubt that we could find things to disagree about when it comes to what our tax dollars are spent on, but I think that even on those kind of programs in which we don't agree if government should be spending any money, we can agree on value received for the money spent. I can look at programs that I firmly believe are proper uses of tax dollars and still find waste, abuse, and fraud.
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I also don't think either party can make a good claim to fiscal sanity. I think too many people get elected by being obtuse and then bowing to lobbying interests. And not enough elected officials show leadership and creativity, instead they run their lives by polls.
I absolutely agree. There are members of both parties that I would happily help tar and feather and then carry them out of town on a rail. No need to pick by party, we can choose lots, go in alphabetical order, or catch the skinny ones first and go after the fat ones later (they'll be easier to catch then) - or should that be the just plain fat ones first and the tubs of lard later?
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The question is whether having more people pay federal income taxes would change that dynamic. I don't know that it would. I have a heard time visioning people who make very little money but paying a token in income taxes change their behavior in such a way our political climate will change. I only know that the amount I pay in income taxes does not change my voting behavior nor my positions.
Again, it's not about politics. It's about our money and the power it buys, and that should concern all of us. I think that it's wrong that the scalawags in DC are dividing us into donors and recipients, the haves and have-nots, the rich and the poor, the righteous and the wronged, liberals and conservatives, even Republicans and Democrats, etc and so on. We are all of those things, but we are also all participants in this weird experiment of self-rule.

From what you've written here, I think that you believe as I do, that those people in Congress spend a lot more time worrying about how to stay in power than they do about living up to the principles that they claim to stand for. The fact is that they're no longer just obfuscating, they've moved on to dividing. And whether it's Fox News or MSNBC, the media is playing the game and making millions. The end result is that we're all picking sides on issues that may or may not be worthy of genuine debate, but we're all ignoring the real game being played out on that former swampland along the Potomac - Power. And we're also forgetting that they're playing that game with our money.

I understand people well enough to not expect miracles here. But we're all being manipulated here, and it's too damn easy to fool the non-FIT payers by taking them out of the process completely. Not filing forms and not paying FIT, or filing the forms and getting what appears to be "free money" in the form of a refund of their withholding - makes it easy to be fooled about the true nature of government taxation and spending. An underclass is either being created or solidified and they're being trained to vote for the guys who made them that way. And on the opposite side are the people who are being fooled into thinking they're footing the entire bill and that is the only thing they need worry about - and don't forget to vote for the right party. Meanwhile a ruling class has been created or solidified and they play their little games with our money and lives.
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Old 04-09-2010, 12:15 PM   #31
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The question is whether having more people pay federal income taxes would change that dynamic. I don't know that it would. I have a heard time visioning people who make very little money but paying a token in income taxes change their behavior in such a way our political climate will change.
Plus 1 to everything Leonidas posted, also -

Well, a little anecdotal evidence that could probably be backed up by some study/survey (maybe the Freakonomics guys?):

I recall a company picnic that offered free hot dogs. The organizers were appalled at the waste. Then they switched to charging a token amount (10 cents, 25 cents or something), and the waste went way down. So in this case, a token amount did make a big difference in behaviors.

I don't know if it would help in politics, but I tend to think so. And we might actually get a better selection of candidates (or better behavior from the current ones), if they knew the majority of their constituents actually cared about fiscal responsibility because they now had some 'skin in the game'.

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Old 04-09-2010, 02:19 PM   #32
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Plus 1 to everything Leonidas posted, also -

Well, a little anecdotal evidence that could probably be backed up by some study/survey (maybe the Freakonomics guys?):

I recall a company picnic that offered free hot dogs. The organizers were appalled at the waste. Then they switched to charging a token amount (10 cents, 25 cents or something), and the waste went way down. So in this case, a token amount did make a big difference in behaviors.

I don't know if it would help in politics, but I tend to think so. And we might actually get a better selection of candidates (or better behavior from the current ones), if they knew the majority of their constituents actually cared about fiscal responsibility because they now had some 'skin in the game'.

-ERD50
Agree. Of course behavior would be influenced if all people pay some FIT. And that would be a good thing as noted above. To deny that behavior would change is to deny the obvious.
I often hear how it's my patriotic duty to pay my very high taxes. Why deny those making less (the 47%) of feeling similar pride? It would give them more of a right to have a voice than IMO they have now.
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Old 04-09-2010, 03:22 PM   #33
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OK - so eliminate the standard deduction and all exemptions. That's what it would take.

Of course, such a thing would apply to everybody and raise everybody's taxes.

I suspect most of the folks (if they are young or temporarily unemployed) not earning much today hope to earn more in the future, and when they do they will be paying more taxes. So I don't assume they see a huge benefit in paying little today because they assume (or hope) they will be paying plenty in the future.

Retirees on the other hand - sure, if they can get by on less than $33K or so per year, then they can happily enjoy their tax paying days being over. Except that I suspect they own a house and pay property taxes, registration on the vehicle, taxes on the fuel they buy, sales taxes, etc. I suspect most of them still care.

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Old 04-09-2010, 03:55 PM   #34
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I'll quote BO on this one: I know these people pay sales tax, RE tax, etc. But if they're not paying FIT they have no skin in the big game. They are just recipients of the largess of the House of Lords in D.C. Congressional representatives who are buying their votes. If all they're doing is waiting for Uncle Sam to mail them a check they have no reason to be concerned about responsible government, they're just watching the wheels spin on the government's slot machine waiting for three cherries to pop up. I don't care if they kick in $5, but everybody needs to pay something. Government's job is not to take care of people, it is to focus and concentrate our efforts in accomplishing things we need done, but can't do as individuals or small communities.
Absolutely true. Fainess is debatable; since when is life fair? But incentives are clear. These people have every incentive to vote for more and more government programs, as they benefit and do not pay. Also, many of these non payers of income tax get various kinds of other than cash subsidies, as well a who knows how much criminal or other off the books income.

It never has worked; it never will work.

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Old 04-09-2010, 04:07 PM   #35
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I don't think it takes a genius to figure out that a system where half the people pay so much in taxes that the other half pays nothing is not sustainable, much less fair.
It's kinda like school taxes for me. I have no children. So why do I have to pay school taxes? If someone can ever logically explain this to me, I'm all ears.
I get steamed about school taxes because I actually had to set up a special bond fund to provide top cover for this extremely high involuntary expense in my FIRE budget. I don't mind paying county property taxes because I am the recipient of county services (road plowing, waste management, LE, emergency services, etc).
But what do I get for my school taxes? Nada.

End of rant.
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Old 04-09-2010, 04:13 PM   #36
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It's kinda like school taxes for me. I have no children. So why do I have to pay school taxes? If someone can ever logically explain this to me, I'm all ears.
I used to question this one all the time, too. Then I rationalized it by reminding myself that I need all these young 'uns to get well educated, get good jobs and eventually pay for my Social Security checks...

And since my wife is "semi-employed" by the local school district as a substitute, I figure the school taxes are writing her checks, too.
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Old 04-09-2010, 04:21 PM   #37
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Plus 1 to everything Leonidas posted, also -

Well, a little anecdotal evidence that could probably be backed up by some study/survey (maybe the Freakonomics guys?):

I recall a company picnic that offered free hot dogs. The organizers were appalled at the waste. Then they switched to charging a token amount (10 cents, 25 cents or something), and the waste went way down. So in this case, a token amount did make a big difference in behaviors.

I don't know if it would help in politics, but I tend to think so. And we might actually get a better selection of candidates (or better behavior from the current ones), if they knew the majority of their constituents actually cared about fiscal responsibility because they now had some 'skin in the game'.

-ERD50
What anecdotal evidence? Why would make a person's values change if they paid $10 in taxes or a $100?

The hot dog analogy and the "skin in the game" slogan do not fit. The year I paid six figures in income taxes gave me no more control over what my representatives voted for than the year I paid no taxes. Hot dogs were eaten and wasted both years. And it isn't like requiring a down payment on a house so you don't skip out on the mortgage. We don't get to chose the house or the mortgage. Most of us live in the US because we were born here and very few of us can leave. We all have skin in the game.

And I still don't see any indication that poorer people care less about "fiscal responsibility" than richer people who pay federal income taxes. No indication at all. How much does the average taxpayer care about fiscal responsibility? How often does it change their voting behavior? And as I said, who can even agree on what it is? You certainly can get taxpayers complaining about taxes and wanting them lower, but that isn't necessarily fiscally responsible. It may be irresponsible.

Non-taxpayers don't vote as a block, their issues and opinions vary just ours vary. If anything can be said about the voting habits of a group, as a group very poor people tend not to vote. Paying a few bucks in taxes is not likely to change that. Why would it? They have learned that it just doesn't matter a whole lot to them who is in office.

I have no idea why people think that it is obvious that behavior would change and the political climate would change.

One of my sisters when raising her daughters paid no income taxes and got earned income credit. Now she has no dependents and pays a smalI amount of taxes. Her politics are the same--she is alienated and never votes. Never. Sees no point. In contrast, I have voted every year since I was of age. My political behavior has not changed based upon whether and how much taxes I pay. I vote for the same kinds of candidates and care about the same types of issues, unaffected by whether or not I pay taxes.
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Old 04-09-2010, 05:14 PM   #38
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If the skin in the game were true we would expect to see voting behaviour change as the income levels rise – higher income, more skin. There is clearly no such trend in the US.

Who defines what counts as “skin”? Why not payroll taxes, sales taxes, liquor / gasoline / tobacco, etc. How about property taxes? Owners can vote, renters cannot? This slope is not slippery, it's treacherous.

Polls consistently show high levels of voter discontent with congress but high levels of support for the poll responder’s specific senator or representative. IOW, most people (even some people here) seem to feel it is someone else’s problem.
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Old 04-09-2010, 05:45 PM   #39
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Who defines what counts as “skin”? Why not payroll taxes, sales taxes, liquor / gasoline / tobacco, etc. How about property taxes? Owners can vote, renters cannot? This slope is not slippery, it's treacherous.
"Skin in the game". Who really has skin in the game? Who really "counts", is "patriotic", has true concern for the country's welfare?

This reminds me: Once upon a time you had to be a land owner in order to vote in the US. Oh - you had to be male too - male landowners only. Supposedly only these individuals had a vested interest enough to be informed enough to be "qualified" to vote.

But over the centuries this has been gradually modified to include all adult (non-felon) citizens for the current "one person, one vote". Because the country's laws affect us all.

And guess what - everyone is subject to federal taxation as well, provided they make enough money. This is means tested every year!

But personally I think the "who pays, who does not pay federal taxes" is a red herring, because who does/doesn't probably changes quite a bit every year, and over a lifetime I doubt many get through life without paying taxes at all.

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Old 04-09-2010, 05:50 PM   #40
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The hot dog analogy and the "skin in the game" slogan do not fit. The year I paid six figures in income taxes gave me no more control over what my representatives voted for than the year I paid no taxes. Hot dogs were eaten and wasted both years.
No, I think you still are missing the point. The point is not that Martha or ERD50 should expect to get more control if/when they pay more taxes. The point is that if more people were paying, more people would be more concerned about fiscal responsibility. It is the majority that have power at the voting booth.

Back to the hot dog story - it didn't affect me in the least. I'm not the type to waste food, 'free' or not. But that was not the case with some people, and it made a difference when looking at the entire group. I think we would see a similar response if more people had more skin in the game when it comes to taxes and fiscal responsibility.

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