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April 18, 2024

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American tax system is not such a heavy burden for most citizens

For some time now, all across the country, community gatherings referring to themselves as “Tea Parties” have gotten together to protest the political inefficiency in Washington.

These groups have taken the Tea Party name as a clever reference to the 18th century Bostonians who protested what they believed was taxation without representation by pouring tea into the Boston Harbor. For those involved in modern Tea Parties, and indeed, many who would declare such protests as great acts of civic awareness, what I am about to say may shock you: It turns out our current level of taxation is pretty much exactly on pace with our current level of representation.

There is, for whatever reason, a prevailing notion lately that the tax rates in the United States have become so burdensome as to cripple many citizens’ ability to maintain a respectable livelihood. Some have gone so far as to throw out the phrase “socialist” at the top levels of the government.

It would surely surprise many to find, then, that the top marginal tax rate (taxation of the richest Americans) and the median-income tax rates (taxation more toward the average American) are both at historically low levels.

According to the Tax Policy Center, Americans both rich and poor are being taxed at a lower rate today than at any time since Herbert Hoover. In fact, the champion of the current desire for small government, Ronald Reagan, had higher tax rates than George H.W. Bush, Bill Clinton, George W. Bush and yes, even Barack Obama.

According to the Tax Policy Center, the top marginal tax rate in 1984, dead in the center of Reagan’s presidency, was 50 percent, and it is about 37 percent today. The median-income tax rate was roughly 10 percent in 1984, and is about 7 percent today.

The prevailing argument against taxation comes from the supposed benefits of privatization. The belief here is that when money is put into the hands of private organizations, they tend to be able to deliver higher quality services. This is, in many instances, simply not the case.

Here’s an open challenge: Write me two letters. Take one down to the post office in an envelope and take one to UPS or Fed Ex. See who charges you more to send a letter, see if one gets here any faster than the other — you’d be surprised.

Certainly, the burden of taxation is nothing to make light of, and our economic system has left many Americans in debt with very little means of self-recovery.

Taxation at the state and local level is also of concern, as communities struggle with maintaining decaying infrastructure and fragile job forces. However, any remedy is best applied by first accurately understanding the root of the ailment.

A recent article on the US economy in Time Magazine summed it up well. To paraphrase, the article stated Americans are more likely now than in any other time in history to demand public services while feeling no obligation to pay for them.

It is time we come together as a nation and invest in ourselves. Investment, of course, requires money. The solution is relatively simple, as it is simply based in the things we demand of our representatives. It would be political suicide in an election today to support tax hikes, but, at least at the Federal level, they may very well be necessary. No one likes the idea of losing more of a paycheck to tax payment for something they may never see benefits from.

But the next time we send a letter, have a drink of water from a tap, take a walk in a public park or walk the streets safely, we should remember all the good things taxes can do, not just the bad.

Respond to Matthew at [email protected]

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