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Archive for July, 2011

What the average American says to themselves? “I’m so rich, I’m just like those billionaires who don’t pay no federal income taxes”

Posted by bert5 on 19 July 2011

I’ve always wondered about the Republican argument that people don’t want taxes raised on the rich.  They say that this is because they (Americans?) are aspirational and always thinking about when they might be that rich.  Let me try to follow that reasoning…

$40,000/yr might sound to some like a lot of money.  When the President Obama says he won’t raise taxes on people making less than $250,000 , I gotta think that people in the $40,000 range must say to themselves, in a thought of pure ego preservation: “Hey, I’m not far away from that tax hike.  I mean I’m not good at math, but with a few raises I’ll reach that income level and then, I’d be really upset about all those taxes I would be paying.”

Nevermind that $250,000 is one massive 525% raise away affecting these folks.  If they were to get a consistent 5% raise every year, they’d be 38 years away from hitting that tax hike (with inflation adjustments, probably even longer, at 2% inflation, it’s something like 62 years), and these people would probably be 10-20 years past their retirement age by then.

But let’s set the record straight to the rationalizers: if you aren’t paying federal income taxes, you are some of this country’s working middle class, just slightly above the poor.  You aren’t rich.  Depending on where you live, you might be barely getting by.

Is this another case of psychology where people don’t want to foreclose future options if they can avoid it?  In this case, the future option is to be making a ton of money without paying taxes on it.  There must be a way to combat this nonsense. Maybe we should generate some pride and attention around this idea:  If you make $250,000 a year, you are helping make it so that people making $40,000 can continue to pay no federal income taxes, and make it so that the paltry $40,000 sum is actually a living wage!  Be proud of paying your taxes, and helping out the old $40,000/yr you.

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[Aug 2012] Now, I think there is a better explanation from this NYTimes Opinion piece.  Just like the lottery, people love to imagine themselves as rich.  And while they’re at it, why not really imagine what it would be like.  So: “Well, I’d really hate to be taxed, I think.”  Nevermind, that it’s pretty close to impossible to get to the level of wealth where such a thing would be a serious concern especially if one is only earning the average income in the US.  No one likes to imagine oneself as poor (and ignorant), not too much fun in that, though actually I found it an interesting experiment.

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