Posts tagged with: tax

Blog author: jcarter
Tuesday, April 15, 2014
By

7figures[Note: ‘7 Figures’ is a new, occasional series highlighting data and information from a variety of surveys and reports.]

1. The average federal tax rate for all households (tax liabilities divided by income, including government transfer payments) before taxes is 18.1 percent.

2. Households in the top quintile (including the top percentile) paid 68.8 percent of all federal taxes, households in the middle quintile paid 9.1 percent, and those in the bottom quintile paid 0.4 percent of federal taxes. (Quintiles — fifths — contain equal numbers of people.)

3. Social insurance taxes (e.g., Social Security, Medicare) account for the largest share of taxes paid by households in all but the top quintile.

4. The U.S. tax code is approximately 2,600 pages long (about 1.5 times longer than Tolstoy’s War and Peace and 2.5 times longer than Ayn Rand’s Atlas Shrugged).
(more…)

636_debt_ceiling_0When it comes to political policy, Christians in America have a wide-range of opinions about what should be done. Even when we agree on a general principle, we tend to disagree about how that informs our policy choices. We recognize, for instance, that we have an obligation to care for the poor but differ on the type and degree of government involvement.

Such differences can lead us to believe that there is nothing we can agree on. But I don’t believe that is true. There are indeed some issues that all Bible-believing Christians should be able to agree on.

One such area of potential agreement is paying debts. The Bible is clear that believers are to pay what we owe. The Apostle Paul tells us, “Pay to all what is owed to them: taxes to whom taxes are owed . . .” (Romans 13:7). Similarly, the Psalmist warns that, “The wicked borrows but does not pay back . . .” (Psalm 37:21). And Proverbs tells us, “Do not withhold good from those to whom it is due, when it is in your power to do it. Do not say to your neighbor, “Go, and come again, tomorrow I will give it”—when you have it with you.” (Proverbs 3:27-28).

The Bible is clear that when an individual incurs a debt they are required, to the best of their ability, to pay what they owe. But does this same principle apply to governments?
(more…)

Blog author: jballor
Tuesday, February 19, 2013
By

My friend John Teevan of Grace College sends out a monthly newsletter, “Economic Prospect.” He passes along this in the current edition:

I found this note from a newly retired accountant (age 66) who has not gone on social security yet. His income as a part-time accountant in his town was $60,000.

“My income is $60,000 and my IRS taxes are 10,000, my FICA deduction is $8,000, my state income tax is $2500, and my property tax is $6000. So I pay a total of $26,500 in taxes leaving me $33,500.

However, I have additional costs that I would like to (but can’t) deduct from my income. As I watch ‘government accounting’ I realize that these should be considered real costs.

I have saved $200,000 and invested the money in bonds earning 1% ($2000).

I could have invested that money in CDs earning 5% (10,000), but as the Fed has lowered the interest rate the cost to me is the difference: $8000.

In addition I am now entitled to social security and at my level of income over the years I would have received $28,000 this year, but I have chosen not to take Social Security saving Uncle Sam that money.

So I have contributed a total of $36,000 to Uncle Sam in foregone interest and foregone Social Security payments. Who got the benefit of that $36,000?

Uncle Sam; not me.

So if I add up my total contributions to the government this past year I paid $26,500 in taxes and paid $36,000 in lost income. These two come to $62,500…more than the $60,000 I earned.

While I enjoy my new job, when I think about this, I start to feel like one of Pharaoh’s slaves toiling to roll immense stones up from the Nile to his pyramid.”

Send John a message if you’d like to be added to his “Economic Prospect” list. It’s always a great read.

As occurrences of preventable diseases increase and the debt deepens, some look to “sin taxes” as an easy to solution to both problems. Thirty-three states have even gone as far as to implement a soda tax in an attempt to curb obesity. At first glance sin taxes seem to be a good idea, but they can actually cause more harm than good.

The Mercatus Center at George Mason University has just published a working paper on sin taxes and their negative effects. The study was conducted by Adam J. Hoffer, William F. Shughart II, and Michael D. Thomas.  They have found that taxing specific goods or services based on perceived “negative externalities their consumption generates”  is an ineffective source of revenue.

The authors summarize their findings in a recent U.S. News and World Report op-ed:

  • Lobbying: Millions of dollars have been spent to thwart taxation of the soft drink industry’s products and to prevent existing taxes from being raised. In 2009 alone, the industry spent more than $57 million on lobbying. Such lobbying expenditures are socially wasteful. How much money is now being spent attempting to block Mayor Bloomberg’s ban on 32-ounce soft drink containers?
  • Regressive taxation: Far from being income-neutral, such taxes are regressive because their burden falls most heavily on people with the fewest options—the poor. Low-income households who continue to purchase goods that are sin-taxed will have even less money left over to spend on other items.
  • Revenue not used for its intended purpose: Sin taxes raise revenue by transferring money from those who continue to buy the taxed items straight to the coffers of the public treasury. Taxing sin might be reasonable if the revenue from these taxes was used to address the underlying negative consequences of consumption. In the real world, however, money generated by the tobacco settlement financed general spending and not smoking cessation programs or treating smoking-related diseases. The social security trust fund has been replaced with treasury IOUs, and the highway trust fund filled by taxing the sin of driving will fail to meet obligations as early as 2015.

You can read the entire working paper, “Sin Taxes: Size, Growth, and the Creation of the Sindustry” here. Acton president and co-founder, Rev. Robert Sirico has also written about the consequences of sin taxes. You can read his “Hate the Sin, Tax the Sinner?” here.

This week I wrote about the dignity of paying taxes (among other ways of contributing to social flourishing). But as we know, not all taxes are created equal. Indeed, as Antony Davies and James Harrigan write this week at US News, “Politicians are in the business of buying votes with tax breaks and sweetheart deals for their preferred constituencies, and they have to offset these deals by taxing disfavored constituencies at increased rates. The longer this game is played, the more convoluted the tax code becomes.”

As I argued previously at Capital Commentary, this amounts to a kind of back door social engineering (as well as playing favorites, picking winners, and so on). The fundamental purpose of taxation is not to buy votes and give preference to lobbies and special constituencies. Instead, as I write, “The point of taxation is to raise funds to enable the government to fulfill its moral, political, and social responsibilities.” Such a view is ultimately at odds with a Utilitarian theory, which considers taxation to be a tool rather used “to maximize overall well-being in society.” Matthew Weinzierl argues for greater attention to a theory of Equal Sacrifice, which on Weinzierl’s account “assumes individuals have the first claim to their output, and that they voluntarily agree to form societies that collect taxes in order to purchase public goods.”
(more…)

On his albums Bruce Springsteen may pose as a working-class hero. But as Bruce Edward Walker notes, in his real life he’s a crony corporatist:
(more…)

Blog author: jcarter
Thursday, March 15, 2012
By

As society becomes more secularized, the calls for churches to pay their “fair share” become more vocal. Erik Stanley, senior legal counsel for the Alliance Defense Fund, explains why churches should remain exempt from paying taxes:

Why is your church tax exempt? Why should it continue to be tax exempt? If I were to sit down and ask you these questions, would you have a clear and coherent answer? I suspect this is something we seldom think about. After all, tax exemption for churches has always been given and we assume, because of its historical longevity, it always will be given.

The fact that many Americans cannot explain why churches are tax exempt indicates a forgotten history and is emblematic of a society that has systematically devalued the church as a beneficial societal institution.

Read more . . .