Tax payer receipt

Love this idea.  Americans are so amazingly clueless about where their taxes go.  Via Ezra Klein, Third Way has an idea for a “taxpayer receipt”:

taxpayerreceipt.jpg

And here’s a bit of the spot-on commentary that goes with it:

For many Americans, the amount they pay in taxes is larger than any purchase they make during the year, but studies show they know almost nothing about where that money goes to.

This contributes to ridiculous beliefs, like the view that 20% of government spending goes to foreign aid, for example. An electorate unschooled in basic budget facts is a major obstacle to controlling the nation’s deficit, not to mention addressing a host of economic and social problems. We suggest that everyone who files a tax return receive a “taxpayer receipt.” This receipt would tell them to the penny what their taxes paid for based on the amount they paid in federal income taxes and FICA.

I’m sure this would not make a huge difference, but anything that would help to combat the phenomenally mis-informed beliefs of Americans– especially where federal dollars go– would have to be a good thing.  I do wonder what inane arguments Republicans would come with to oppose this.

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Tax rate illiteracy

Jon Chait points out this recent NYT article that just doesn’t seem to get the concept of marginal tax rates.  Lots of people don’t actually get this– but people writing about financial issues for the NYT most definitely should.  Especially, because I suspect that a fair amount of opposition to tax increases comes from misunderstandings of how marginal rates work.  Chait:

The article delves into the question of just who counts as rich. I think it’s a silly question. Rich is a relative question. It doesn’t mean you can buy everything you want. If you’re in the top 2% of the income distribution, then you are, relative to 98% of the population, rich. You are more able to bear the cost of higher taxes.

But put that aside. The main problem with the article is that it presupposes that individuals making $200,000, or couples earning $250,000, will pay higher taxes. They won’t. The tax hike only applies to income over that threshold. When you go from $250,000 to $250,001, you only pay a higher tax rate on that one extra dollar. Your taxes will go up by a few cents. If you earn $300,000, you will pay a slightly higher tax rate on the last $50,000 of your income — less than a couple thousand dollars.

Even people making half a million dollars a year won’t be “taxed at rates similar to those who make $5 million,” because only half their income will be taxes at the top rate.

It seems like the wntire tax debate has been conducted under a could of basic ignorance about how tax rates work.

Hmmm.  I think a lot of debates in this country are sadly conducted in “basic ignorance.”   Take for example, this Op-Ed in our NCSU campus newspaper which is stunningly ignorant and shamefully poorly written (and yes, by the same person writing a whole column on me, the liberal indoctrinator).  Literally nobody is suggesting that the government tell churches who they can and cannot marry, but that is the basic premise of this column on gay marriage.   And, I’m sure I spent at least several minutes covering these basic facts in the American Government class the writer took.  Ignorance—arghhhh!

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