Tuesday, 2 August 2011

Just curious...

When I was little, my parents used to tell me how important it is to live within one’s means: don’t borrow too much; credit cards are evil and so on. Now, I know that personal finances cannot be compared to the state economy, but still, I’m curious and I have a question for my American (and Greek ones too, why not?) readers. Don’t take this the wrong way, please – our societies are very different, and there are some things I find really hard to understand… and if I’m wrong about something (the probability is high), feel free to educate me.

So, to the question. If a country is in enormous debt – how is it going to pay it back without raising taxes? The outflow of money seems to be really big, but how about the inflow? Maybe I’m not very clever, but I fail to see the logic here…  If money goes out, money also needs to come in. Politicians are talking about saving money, but how are they going to achieve that? What expenses are going to be cut? What expenses SHOULD be cut?  And now to an even more sensitive question: what’s so wrong about paying taxes?

And now while we are at it: how much tax does one pay in the US? And what do you get in return?





Anonymous said...

I'm not an economist, but I don't see how we can get out of this mess without raising taxes. It makes sense.

There is a lot of anger towards the government; much of it is an ideological split, so any suggestion by the Left is automatically rejected by the Right and vice-versa.

Taxes are a strange thing in the US. It's almost like we operate like 50 small countries. While Federal taxes may be small, everyone also has to pay a State tax, which differs greatly from State to State. Each State sets its own property, income and sales tax limits.

The idea of "no new taxes" or not raising taxes is very appealing to a lot of people, but does not make much sense. It's all politics. If they really wanted to save money, they would cut defense spending, their own paycheck (which will never happen), start taxing the oil companies and the wealthy.

But, what do I know...?

Anonymous said...

Eh, there are two schools of thought on the matter.

One is to keep raising taxes but the result of that is that eventually you will tax your people to the point where they can no longer live within any means.

Otherwise they can cut taxes, giving the people more money to spend, giving small businesses more freedom to create jobs and providing people the opportunity to be philanthropic.

As far as how taxes work it's different in each state. We all pay federal taxes, but local taxes differ and what you get for those taxes differ as well. My parents live in a different county than I do on a very small plot in a city suburb and pay 3 times the amount of taxes as my mother in law that has 80 acres of land.
They also pay more than Chris and I do and we have 1.25 acres.
That's related to property taxes which include school taxes. Depending on what school district you're in you're required to pay a certain amount of taxes to that school, which ,IMHO, is bullshit.

Income tax is also, IMHO bullshit. Not to mention unconstitutional.

The rate of federal taxes you pay is in relation to how much money you make and whether or not you're married or have kids or can be considered "head of household".

There are also sales taxes collected on various items according to state regulations (some states tax everything, some states only tax clothes, some tax nothing and the rate of taxes differs according to county, my mother pays 7% sales tax, I pay 6%)

Not to mention there are various taxes on other ridiculous stuff, like a 10% drink tax in the county where my mother lives and a 10% entertainment tax that is tacked onto ticket purchases.

As far as the US ever being capable to getting itself out of debt, the fact is that it's unlikely. We've positioned our self as a nation that creates nothing and consumes everything. We're now a nation of illiterate, overweight people that feel entitled to everything but don't feel they have to play by any rules.

Personally my politics are: hands off my money, hands off my land and hands off my guns.

It suit me well out here in the country :-)