On a 22nd floor conference room in midtown Manhattan yesterday, I taught a two-hour financial literacy workshop to a group of teenagers from the READ Alliance. It was my second year collaborating with the non-profit organization, and most of the agenda mirrored last year’s topics of discussion: money management, banking, credit cards, college and taxes.
When I began the section on taxes, a few rolled their eyes. A few more suddenly had scouring looks on their face. One raised his hand and shared his frustration that “taxes suck”.
In that room full of impressionable young people, the future leaders of tomorrow, I started at the beginning. “Why do we have taxes?” The answer: to provide services to the American people. We talked about the public education system, the military, police, firefighters, roads, parks, libraries, welfare, Social Security, Medicaid and Medicare. I emphasized that every American pitches in by paying taxes so we can all benefit from these services.
When I began the section on taxes, a few rolled their eyes. A few more suddenly had scouring looks on their face. One raised his hand and shared his frustration that “taxes suck”.
In that room full of impressionable young people, the future leaders of tomorrow, I started at the beginning. “Why do we have taxes?” The answer: to provide services to the American people. We talked about the public education system, the military, police, firefighters, roads, parks, libraries, welfare, Social Security, Medicaid and Medicare. I emphasized that every American pitches in by paying taxes so we can all benefit from these services.
When I showed the slide about how federal taxes are used, the whole class was in disbelief about how much is spent on the military in proportion to other services. One girl couldn’t even wait to raise her hand before angrily blurting out, “why don’t we just stop spending so much on the military?!”
Given the nature of the workshop, I wasn’t about to indoctrinate these kids with my own political views (which would lean towards sharing that opinion), but took some time to tell them that while military spending is certainly a controversial political issue, it may also be part of the reason that we enjoy the freedoms that we do in America. Our national security and safety is extremely important, and unfortunately that comes at a price to American tax-payers.
In his January 1942 State of the Union Address., FDR told Americans, "War costs money, that means taxes and bonds and bonds and taxes. It means cutting luxuries and other nonessentials."
In a March 2011 CNN article, Nicolaus Mills writes, “Roosevelt was no egalitarian. He was committed to free markets and free enterprise. For FDR, the case for taxes rested on old-fashioned patriotism -- on the deeply held belief that interdependence and sacrifice were the cornerstones of American democracy.”
Sharing FDR’s sentiments, I finished up the section by explaining that in my opinion paying taxes is an American duty. Without taxes, among other things, there would be no public education, no national security and no social net if honest and hard-working people fall into misfortune. Yes, to me, paying taxes (assuming tax revenues are not abused) is patriotic, because like everyone else, I love this country and I want to every American prosper.
As I continue to read about our astonishing deficient and debt ceiling mess, I can’t help but wonder if all Americans are doing their fair share. Wharton economist and author of the blog, Freakonomics Justin Wolfers discusses his take on this question in his 2008 post, Taxes, Warren Buffett, and Paying My Fair Share, and reminds us that Warren Buffet, the world’s greatest investor and bajillionaire, pays about 17.7% in taxes, compared to his secretary who pays around 30% (mostly due to much lower capital gains and dividend tax rates). [Note: Buffet has continuously called on the government to increase taxes on the uber-wealthy and have individuals like him pay their fair share]. Apparently, even some wealthy GOP-supporters have urged Eric Cantor to increase their taxes.
As next week’s debt crisis deadline approaches, I hope that our elected officials can come to an agreement that a) doesn’t cut essential social services that contribute to the welfare of those in need. and b) considers asking those that can afford to pitch in a little more (the ultra-billionaires) to help us move forward and prosper as a nation. A US default would be a horrific mess leading to so much panic in the markets that a deeper financial crisis and recession will almost certainly occur.
I really don’t know what the economic environment will look like when those teenagers become taxpayers, or when it’s time for them to retire and need to turn to social security, but the decisions that are being made behind closed doors in Washington DC right now may affect us for a very long time. Our economic fate lies in a few very powerful hands; let’s hope they make some wise decisions…
Helpful article to understand the debt ceiling: http://www.bbc.co.uk/news/world-us-canada-14286606
