Taxes, “Fair Share,” And Asking The Right Questions
As we come closer to the day that the United States economy will apparently experience a free-fall off of a “fiscal cliff,” we are hearing more and more about how the government should be handling income taxes- and one recurring phrase in this conversation is “fair share.”
In a news conference the week after he won the election, President Obama explained what the American people are looking for him to accomplish in his next four years in office:
“[The American people] want to make sure that middle-class folks aren’t bearing the entire burden and sacrifice when it comes to some of these big challenges. They expect that folks at the top are doing their fair share as well.”
Nancy Pelosi, the House Minority Leader, made a similar comment earlier this past week:
“Voters sent a clear message to Republicans in the election: we must stand up for the middle class and ensure the wealthy pay their fair share.”
Comments like these have made me seriously question this whole concept of “paying one’s fair share.” And the more I think about it, I really am troubled by the idea of one person dictating exactly what constitutes another person’s “fair share.”
Let me explain my thoughts here with some examples, introduced by this very simple principle: the more one’s income is taxed, the less disposable income one will have. Less disposable income will mean a decrease in overall standard of living- whether that means a smaller living space, less expensive food choices, elimination of the use of certain services, forgoing vacations, or no longer purchasing expensive, luxury items.
So, when we talk about a person paying their “fair share” of income taxes, we are really talking about how much money this individual (or family,) should be willing to sacrifice from their own budget in order to provide revenue to the government- also known as taxes.
But “sacrifice” is another term I am not comfortable with when it comes to the tax conversation. And I think this goes both ways- for the poor and for the rich.
Personally, I do not believe I have the authority to declare that it’s not really a financial sacrifice for a person making $26,000 a year to pay $3,900 in income taxes, nor can I say it is a huge financial sacrifice for someone making $1 million to pay $150,000. I am convinced that it is not my place to judge what is a sacrifice for another person and what is not.
For example, in our current financial situation, I would say that it would be a sacrifice for me and my husband to not go out to eat at least once a month. However, it’s not even a thought in our minds to have a maid regularly clean our home.
But who am I to say that it should not really be considered a sacrifice for a family making one minimum-wage income to forgo eating out once a month if they feel this is an important part of their family time? And who am I to say that it should be considered a sacrifice for a wealthy business man with a very busy schedule to stop having his house cleaned once a week, even though he really prefers not to deal with that so he can enjoy the little free time he has?
Ultimately, I think it is all too subjective. All of our views about what another person’s “fair share” should be come from our own experience and our own concept of what is or is not a sacrifice for us. This is simply not a valid way of deciding how much we should all be paying in taxes.
So instead of throwing around vague terms like “fair share” or endlessly arguing that higher taxes on the rich will only hurt our economy more, I want to see our government wrestling more seriously with the real questions at hand here. Questions like: what is really needed to help our economy grow- and what is the government’s role in that, if any? How can we help our struggling citizens get back on their feet financially without resorting to giving handouts? How much do we need to balance our budget, and what should really be included in that budget?