Are we all in this together?
I had a really interesting 30 minute group conversation in my S-Corporation tax class today. I can’t remember how it came up, but we started talking about all of the American government’s financial problems. We started talking about what we need to do to fix it, where can the government find some additional revenue, where can we cut costs? This is when it got interesting. Prior to today, my general (albeit pretty uninformed) opinion/solution is to just tax the shit out of the really rich people. If you’re making millions, your tax rate should be like 70%, not 35%. This is obviously an exaggeration, because you start taxing people too much and they start losing incentive to get rich in the first place, plus the truly wealthy people run shit anyway, they would not be down for a 70% tax, lol. But in general, my opinion was that rich people don’t pay enough taxes, and if they paid more, maybe our country would be in better shape.
Then my instructor dropped some knowledge on me. Guess how much income you have to make to put you in the top 10% of U.S. taxpayers. We were all calling out numbers: 300,000! 800,000! 1 million! You know what the answer is? $110,000. If your income (for those who care, I’m talking about AGI, not taxable income) is at $110,000, you’re already in the 90th percentile. 110K?? Seriously, 110k ain’t shit. I mean it is, but it isn’t. Yeah, when so many people are unemployed or on welfare or riddled with debt, 110k is living large, but it’s not exactly what you consider ballin’ right? I bet you, WHOEVER you are, know a whole lot of people whose parents’ AGI easily exceed 110,000 on their tax return. So what does this mean? It means there really aren’t that many “rich” people. When I think of rich people, I think of boats, houses on the lake, have 4 cars in a 4 person family when one of the kids can’t even drive yet, you know? We might see these folks everywhere; on TV, magazines, chillin on their yachts on Lake Washington, but there really aren’t that many of them. So unless we’re going to make a list of all the people making 7+ figures, and tax them at 80% or something, it really doesn’t look like the solution is that straightforward.
Then my instructor (in a very politically correct fashion) stated that, economically, it’s a lot easier to generate significant amounts of revenue by taxing everybody a little bit more than to try to tax the shit out of the superwealthy. But then you think about the typical struggling American, scraping by, probably with an overwhelming mortgage payment every month, and you say, how can you possibly raise their taxes? They’re barely getting by! And that response is totally valid.
I stayed after class, and I thanked the instructor for that discussion, and we started talking about it some more. He was a little bit more frank with me when it was just the two of us, and when I asked him what he personally thought the solution was, he admitted he didn’t quite have one. But he did have an opinion on the general trend that he thinks is to blame for our predicament. This is going to be incredibly cliched, and I’m about as skeptical of fluffy, let’s-hold-hands-and-sing-kum-bah-yah-esque solutions to real life problems as anybody, but he said that we stopped thinking about “us” and started thinking about “me.”
He told me a story from many years back, when he, his wife and kids moved to a new neighborhood, and had a meeting with the administrators of the school his kids were going to attend. The administrators told him and his wife that their income was within a certain range that could qualify them for reduced or free school lunches for their kids, but it was pretty limited so the school district had kids take a test, and only kids who score badly enough on the test were eligible for the free lunches (this concept of poor dumb kids being more deserving of free lunch than poor smart kids is stupid to me, but whatever). They then advised my instructor and his wife to tell their kids to say, “I don’t know” to every question they’re asked (it was a verbally administered test), to ensure that they’ll qualify for the free/reduced lunch. He said he and his wife looked at each other, and said, “no thanks.” And they had their kids take the test to the best of their ability, and they didn’t qualify.
He also told me that there are government-funded programs to help families who miss a certain number of mortgage payments in a row, which has resulted in a lot of families who actually have the means to pay their mortgage payments, but are advised by their financial advisor to miss a few in a row intentionally in order to reap the benefits of these programs.
And then I thought of things from my own experiences. I remember in senior year of high school, our school-sponsored senior party cost $100 for a ticket, but someone found out that if you go talk to the counselor and say you can’t afford it, they’ll subsidize it to $20 for you, just like that. And then a WAVE of seniors started filing into their counselor’s offices, basically requesting that their ticket price be reduced to $20 too. You know where that other $80 comes from? The freakin government, from funding that public schools receive from the government. Yeah these kids were just in high school, they don’t really know better (arguable), blah blah. But the principle is the same: fuck the rest, I’m looking out for me. I can think of lots of other examples. And you know what? I don’t really blame people for doing these types of things. You gotta look out for you and yours, right? Who else is going to take care of you, the government? PFFT ninja please.
Everyone talks about how bureaucratic the government is, how money doesn’t go where it’s needed, but if you found a loophole somewhere that lets you not pay ANY taxes, wouldn’t you take it? Doesn’t pretty much everybody take it? And assuming they do, how are we ever supposed to use government funds to remedy this ugly situation that we’re in when everyone is sticking their hand into the cookie jar at every opportunity?
Let me extend this thought even further. Think about how idolized rappers are, and a LOT of them are idolized for being (supposedly) big-time drug dealers. What do drug dealers really do? They get rich at the expense of addicts, pretty much the bottom feeders of society. Yes, they have to be swifty and intelligent, be able to evade law enforcement, avoid getting killed by rival dealers, etc., but when you get down to the core of it, they profit off the downward spiral that junkies are on. They’re really no different, morally, than the giant corporations who open up a megastore in a small town, shove out all the mom’n’pop shops, and wipe out the employment of small towns in the process. But this “I look out for me” mentality is everywhere in our society. We’re told that if you “hustle” someone, you should be admired. It’s a dog-eat-dog world out there, get your piece of the pie or someone else will.
I don’t really have any answers or solutions, all I can see is that the system is broken, and it’s not isolated to a bunch of hypocritical politicians arguing about the left or the right. We’re all adding to the problem, and I really see no end in sight. And seeing as how I can’t really convince 250 million Americans to buy into a “us, not me” philosophy, I’m going to be out there trying to get my piece of the pie.
Sigh.
