Sunday, April 13, 2008

Singles pay more taxes

I'm a working man and a small-town bitter guy and all, and recently I received my federal 1040 tax form. And since this is tax week, I thought I'd inspect the Decider's regressive monetary policies.

Bush's capital gains tax cut is one such scam. A capital gains tax, as you may know, is a tax investors pay on items like stock dividends and real estate profits. The tax is generally paid by wealthier individuals. The capital gains tax isn't on work income but investment income.

Because the tax hits the rich harder, a key Republican theme has been to slash or eliminate this tax. Like the UnfairTax now, this was a Holy Grail of conservatives' tax policy in the '80s and '90s. But Bush finally did what so many others before him couldn't do, by cutting the capital gains tax (a change that expires in 2011, when they can make an issue of it again and blame opponents for "raising taxes"). The capital gains tax is now lower than the income tax, so if you earn a living from actual work, you pay more taxes than if you live off stock profits and dividends.

This isn't just regressive. It's fiscal mismanagement. It's effectively a tax increase on everyone else: Folks like you and me end up either paying more taxes or receiving fewer government services to pay for Bush's tax "cut."

Want more regression? Peep the singles penalty. That's right, there's a singles penalty. If you're not married, you pay more taxes:

This graph, by the way, isn't something I pulled out of thin air. It's on Wikipedia:

The red line is what you pay if you're married. The black line is what you pay if you're single. Unless your income is virtually zero, singles pay more. But the singles penalty is especially steep if you make slightly more than zero but are still very low-income. Note that bracket creep tends to come much sooner if you're unmarried.

It used to not be as bad, but politicians acted like it was, just to win votes. They claimed there was and still is a "marriage penalty." But it's a lie. In the American tax system, there has been no "marriage penalty" in recent years. In fact, there was a singles penalty. Not only that, but if you were married, you could choose whether to file separately or jointly - a choice no single person had.

In short, the "marriage penalty" was a big hoax. All the "marriage penalty" meant was that the singles penalty was deemed to be not big enough. A few years ago, when the Bush regime and Congress "reduced" the "marriage penalty", that really meant they made the singles penalty worse. Everyone in America who pays income taxes was either lied to or ripped off: Married people were lied to by being told they were paying more, and single people were fleeced to "reduce" this alleged disparity.

Not only is this hoax a political stunt. It's a backdoor method of gutting the progressive taxation system. Obviously, a married couple - who may have 2 incomes - may make more money on average than a single person. As the graph shows, the progressive system is still there - but it's eroding. The ruling party hasn't outright replaced the graduated tax with a flat tax, because it's not politically feasible - but this "marriage penalty" gimmick is.

So hey, let's try to get Congress to reduce this singles penalty a little bit, just to make it fairer to all. (Not like Congress gives a shit, because it's easier for them to just deny it.) Nothing personal, but the least we can do is stop pretending that this discrepancy doesn't exist (especially when there's a graph staring the world in the face).

1 comment:

  1. Yes, you are right. Taxes should be lowered across the board. These clowns in Washington confiscate too much of our paychecks and then the state and local governments stick their filthy hands in our wallets again and again for more in the form of sales tax, gasoline tax, hotel tax, sin tax, luxury tax and property tax. We're taxed and then taxed again and again.