Tax Dollars at Work

I discovered the most magical place several months ago. It's a large building filled with books. Once you find the book you want to read you can borrow it for free, and when you're done you return it so that the next person can read it. You can also borrow DVDs, audio books, music CDs. It's so sustainable it's almost a collective, more socialistic than health care reform. It's the public library.

Back in college and grad school I went to various libraries all the time, but I'd somehow forgotten that they existed. I got into the habit of buying the books I wanted to read and then giving them away, because my house is full of books and I just don't have room to keep too many more of them. For some reason I just assumed that I'd have a long wait for any newly-published book, and that it wasn't worth it. The new penuriousness led me to the library last month, and I have to say that I've been pretty stupid all these years.

My taste in literature is clearly not shared by the other residents of my small city, because I've never yet had to reserve a new book and wait for it. And I'd completely forgotten how libraries subscribe to each and every periodical, and how they provide comfortable chairs for you to slouch into while reading all the magazines and newspapers you can handle in one sitting. There's even pencils and paper lying around in case you want to write something down. There's free WiFi, but there's also every reference book imaginable, so you don't need to rely on the vagaries of Wikipedia for information.

The bast thing about the library, though, is that it's free because my school taxes pay for it. I don't have children and have previously gotten incredibly annoyed each fall when my ridiculously high school tax bill arrived. At least now I can feel as if I'm getting a benefit for all that money. In fact, this is perhaps the only instance where I can hold in my hands a physical manifestation of my tax dollars at work.

Also, don't buy into the myths. If you see someone you know at the library and want to have a short conversation, go for it. I've never once been shushed.

Waiting On My Bonus

Our tax dollars are hard at work, paying performance bonuses to AIG executives. The debate over whether or not the bonuses should have been paid is now three days old and makes me sleepy, so I'm not going to join in. Instead, I would like to formally request that the federal government pay me a bonus for my stellar 2008 fiscal and executive performance. The highlights:

1. Having bought a new house in September 2007, I attempted to sell my old house at precisely the wrong time, and listed said house for too much money. In 2008, I continued to be unable to sell the old house and watched its value plummet. However, I did find tenants for the house, turning what was a street of homeowners into a street with a rental property and thereby further eroding the value of that particular asset. Bonus time!

2. I sold my business in August, 2008 and began looking for work in the fall, at precisely the time when the financial crisis hit hard. In other words, I have been looking for work in the middle of nationwide hiring freezes. However, because I was self-employed I do not qualify for unemployment benefits. My lack of employment is in this sense actually bringing added value to the American taxpayer by not costing him a cent. For this lack of planning and foresight I should be rewarded.

3. When my investments lost 35% of their value through the end of last October, I decided that the bottom had clearly arrived and let everything be, single-handedly averting a complete panic. Those assets have since lost even more value, demonstrating the sheer idiocy of a laissez-faire attitude toward the markets. This is precisely the kind of performance that cries out for a bonus.

4. Although I am careful to pay as little in taxes as possible, I believe I am entitled to receive much more in return than I could possibly put in over my lifetime. Isn't that how markets work? Where's my payout?

Surely these arguments are as persuasive as any given by the AIG Corporate Communications office. I shall assume that my check is in the mail.

Rock, Meet Hard Place

Here's a real-life political question. You live in a small city with depressed property values that has been almost entirely built-out. Tax revenue holds steady, while the cost of services continues to rise. With no new revenues, the only way the budget can be balanced while retaining necessary services (fire, police, street cleaning and maintenance) is to increase taxes every year.

The state has a program to encourage development in distressed municipalities. If voted for, it eliminates all state and local taxes for new or adaptive reuse projects in certain zones. On the one hand, passing these tax breaks is a way of encouraging redevelopment in the urban core, and when the breaks sunset promises the potential for increased revenue to the municipality. In 2011. On the other hand, for the 2009 budget to be balanced, both property taxes and earned income tax must be increased for the rest of us.

Do you support this program? Do you give tax breaks to developers while taxes go up for the rest of us? Or do you say no, and hope that developers will undertake projects in your city nonetheless? I'm completely on the fence on this one.

Letter to the President

Dear President Bush,

Where's my economic stimulus check? It's almost July already. I know my Social Security number puts me near the end of the list, but come on. All my neighbors have been happily filling up their gas tanks and buying eggs and milk, then putting the 68 cents they have left in the bank, while my refrigerator and tank remain empty. I've been dreaming all month of taking a trip to Wal-Mart to buy a few things I don't need that have been manufactured in China. Things aren't too great around here, and I need that check to help out.

Plus, President Bush, I've been bored. I just don't know what to do with myself if I'm not spending money! I shot my wad paying for heat this past winter. I know, I know, that was thoughtless and poor planning. I should have put something aside in order to help Kohl's meet its second quarter profits. What can I say? I'm a greedy Democrat, tax and spend and all that. You taxed me; where's my check so I can do some spending? Don't you care about Kohl's? This week "novelty" t-shirts made in Malaysia are on sale for $9.99 and I can't buy one.

Hey, thank you (and your predecessors) for the continuing, decades-long support of United Fruit, though. At least bananas flown up from South America are still cheap. Your unwavering support of pharmaceutical companies has also been a great help to a couple of my neighbors who work for Merck. I don't have much of a prescription plan and had to spend $300 for some Wellbutrin a couple of months ago, but that was just me doing my part for Q1 earnings. It's all good for me in the end, right?

But I digress. I'm honestly just wondering when I'll get that check. Here I am, ready and willing to buy something. Help me out already. I'll even buy some Budweiser to do my part at keeping those nasty Belgians at bay. Sorry I posted this letter on the web rather than putting it in the mail; without my stimulus I couldn't afford the stamp.

Love,
Elucidator

Happy Tax Day!

Unless you're a vampire and have been around for 3,864 years, paying your taxes today feels inevitable. The federal government didn't always levy income taxes, though; until the Civil War, the government was funded completely by tariffs on imported goods. An income tax was created to fund the Civil War, but was rescinded in 1872. Federal income taxes as we know them didn't begin until 1913, with the ratification of the Sixteenth Amendment.

If, like me, you end up owing something every year, April 15 can be depressing indeed. Here are a few tidbits to cheer you up. Today, the tax rate tops out at 28%, and with deductions and the lower rate on capital gains and dividends, the wealthy among us pay less tax than ever. In 1916, the income tax wasn't progressive, and was instead a flat 1% on incomes between $3,000 and $500,000, with a surcharge of 6% for incomes over $500K. Tax rates increased and became progressive by 1918 to finance WWI, then decreased again during the 1920s, with the top rate bottoming out at 24% just before the crash.

Anyone lucky enough to be earning money during the Great Depression was taxed heavily on it, with the top rate reaching 63% by 1932. To finance WWII, the rate went even higher, to 94% on incomes over $200,000. The top rate stayed at around 90% until 1964, when it was lowered to 70%. It wasn't until Reagan's economic policies came into effect in the 1980s that the rates decreased to the levels we now all know and love.

We're not all rich, of course, and the tax rates for the middle-class haven't fluctuated as much as taxes on the wealthy. I'm glad I'm not taxed 90% of my income, but then again I doubt my income would have put me in that bracket. The total tax burden for most Americans, combining federal, state, and local or municipal taxes, is 40%. Look at all we get in return: chaos in Iraq, bailouts of troubled lenders, and $600 a person to spend at Wal-Mart.

Too bad we no longer impose tariffs on all that Wal-Mart merchandise that's been made in China.