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Tax and Borrow
Current Budget Projections
So why again does the CBO expect Individual Income Tax revenue to increase by almost 20 percent in 2006?
And why are we in debt? What ever happened to that mythical surplus that we heard so much about in the 2000 election? Could it have been a great big lie all around. Well, yeah. It always was. But that didn't stop us from spending it.
Tis the season for tax refunds. I always make the argument (contrary to popular thinking) that you would be better off not getting a refund. Whoa! Before you get too far ahead of me let me explain!
I say that if you paid too much in you effectively reduced your day to day income by that amount. You'll get it back as a lump sum. But its not the same as savings. You earn nothing on money withheld by the government. Its like a great big federal mattress that we let our loose change live until tax refund season.
I once got into a debate with co-workers over a Christmas fund option my employer was offering. They would deduct money from each check and keep it until Christmas and then return it to you. The argument was often presented that if you don't see the money you can't spend it. While this seemed a marvelous idea to some I thought it rather dumb. Why let your employer keep and earn interest off your money when you could be doing the same thing yourself? Why should we view our tax refunds as anything other than getting our own money back that was wrongfully kept from us?
I had several people, smart people tell me they like it when money is kept from them, so they can't spend it. That they would never have the discipline to not spend that money if they had it. Even if that meant they would be worse off had they simply put that money into savings.
I disagree, am I wrong on this one?
During the debate about tax cuts the issue was often framed in terms of "your money", meaning the taxpayer. You and me. When the govenment collects taxes, that is our money that they collect to do our collective will. But I am always amused that the debt that government incurs while spending more than we have given them is never our debt. So I ask you?
How can we benefit from a tax cut if that means we also increase our debt? Doesn't that simply mean that our government is willfully collecting less revenue than it spends? I agree that cutting revenue should be balanced by cuts in spending. But the trick here seems to be promising to cut taxes before we have any debate about what spending should be cut as a result. Its a little like having some guy come your door promising to improve the view out of your front window. You say ok, and he cuts down all your trees. A rational person would want to know the consequenses of their decisions. The tax debate is too often framed as "You want money dontcha!?" with anyone opposed to tax cuts seen as greedy spendthrifts that want to keep us from having a better view out our front window.
some numbers for ya... 2003 ones even.
791 billion in individual income tax revenue
710 billion in payroll (social insurance) taxes
Those numbers are about the same, conclusion: When we talk about income taxes we are only talking about HALF of the taxes that most people pay. We all know which tax is progressive and which is regressive right?
125 billion in corporate income taxes
144 billion in other?
Spending: Top four?
465 billion for defense
471 billion for social security
322 billion for interest on the debt
254 billion for medicare
There you go.
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