Why are derivatives important

why are derivatives important

March 22, 2010

why taxes are important

When I started this blog several years ago, I wrote in my inaugural post that I thought it was important for people to be informed about taxes--how they work, who pays them, and why we need a tax system to support our governmental programs.  I thought it might be worth repeating parts of that, given all the misinformation abounding now about taxes.  For just a tip-of-the-iceberg indicator of the misinformation and lack of understanding that many Americans have about taxes, see Mark Thoma's Economist's View posting on Bruce Bartlett's analysis of the tea partiers' views about taxation: The Misinformed Tea Party Movement .  (In short, they think that the average American with $50,000 in income pays between 20-25% of gross income in federal taxes, whereas the actual amount is much less--less than 7% in federal income taxes and less than 15% in federal income taxes and social security taxes; they think that taxation raises revenues equal to about 40% of GDP, whereas in reality it is less than 1/4th that, they think taxes have increased under Obama whereas in fact they went way down because of the economic stimulus package that Obama and the Democratic Congress pushed through right after Obama took office.)

The following is from my inaugural post:

We Americans, like all other humans, are social creatures.  We live together in communities and are bound to total strangers by both shared values and shared risks.  We pay taxes to support a system that will ultimately benefit us, our

children, our neighbors and, yes, even those strangers on the other side of town or the other side of the continent.  We do so because our shared community cannot exist without resources--to pave the streets, pay the police, support medical research that may someday save us or a loved one from one of the terrible diseases of the twenty-first century, provide a chance for artists and musicians to flourish, and give at least temporary support for those who have lost their homes to a tragedy or lost their jobs to outsourcing.  We know there will always be some programs we may not approve of, and some expenditures that could be handled more efficiently in another way, but we understand that consensus government of a diverse population requires some mutual trust and mutual give and take.  Let's hope that this discussion can grow, so that we do not find ourselves burdened in the future with a tax system funded entirely off the backs of those who work, while the leisure class that lives mainly on inherited wealth and capital investments reaps the lion's share of the benefits of a free America without carrying a fair tax burden.

If our government is honest with us, we are willing, even eager, to pay our fair share of the tax burden to support it.  When our government is dishonest with us, or hides the true goal of governmental provisions behind meaningless platitudes or false promises or untrue distortions, we worry whether the overall system is truly fair. 

March 22, 2010 | Permalink

Source: ataxingmatter.blogs.com

Category: Bank

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