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As I do my daily social media surfing I am finding a disturbing trend- anti tax sentiment and one group or another thinking they should be exempt from taxes. We Americans are not among the highest taxed countries and despite the rhetoric, the wealthy do pay the great bulk of taxes.
Seniors seem to be the most vocal looking for tax exemption. Many feel they should be exempt from property taxes and of course, paying taxes on Social Security benefits. I am not referring to seniors living in or near poverty.
I find the calls to exempt seniors from property taxes most disturbing and illogical. Especially as property taxes are the primary source of school funding.
Income taxes on Social Security benefits contribute $50 billion a year to the SS trust and $35 billion to Medicare Part A trust.
To me, looking to avoid taxes without considering what they provide is like saying a family living on credit cards should not have to pay the bill at the end of the month because they earned or deserve what they purchased.
“Earned” and “deserve” are frequently used in posts. Living on a fixed income and inflation are common themes.
Exempting one group of citizens from taxes simply shifts more to another group. Frankly, I don’t think seniors deserve more consideration than a young working family trying to build their future.
Besides, no group of citizens (often without regard to income) receives more benefits, more special treatment, more discounts than seniors. Possibly as a result of a general erroneous mindset that seniors as a group are poor.
Preparing for retirement, a life-long process in my view, includes preparing for taxes of all kinds. The pages of HD are full of discussion on the subject. We all use the tax code to minimize our taxes, but we pay what is necessary – to provide vital services, to have good schools and to assist those in need. That how a good society works. Being fortunate by getting old does not exempt us from that responsibility IMO.
We seniors had a lifetime to prepare for living in old age, without a paycheck. If a person had modest earnings their working life, chances are that will not change in retirement, nor is it a surprise. We knew our income might not grow, we knew inflation was real, we knew we would owe taxes and should have known some would increase.
Sorry, it’s everyone in the pool in my book – while providing necessary assistance to those truly in need.
I agree 100% on the property taxes, but want to qualify the Social Security income tax: It should be steeply progressive, with people at the bottom-end paying little or nothing, and the wealthy getting hit much harder. Maybe an SS surtax on the rich guys.
Incidentally, the program is so mismanaged that I’m less moved by “Income taxes on Social Security benefits contribute $50 billion a year to the SS trust and $35 billion to Medicare Part A trust.”
The SS “trust” – Ha!, that’s a good one. <rolleyes> It’s strictly pay-go these days, guys and gals.
First, I should mention that I would be a big beneficiary if the tax on Social Security were eliminated. My 2024 income taxes, totaling a little under $9,000, would have been less than $4,000 if SS benefits hadn’t been taxed. It should also be noted that the limits in the complicated formula for the tax haven’t been changed since the tax was first implemented in 1984 and inflation has totaled about 300% in the 40 years since then.
However, I don’t think that eliminating it would be a good tax policy because it would be highly regressive. Lower income people pay little or no tax on their SS so the lion’s share of the benefit would go to those in higher income tax brackets.
Making a portion- the portion not funded by retirees – taxable income was a move to build up the SS trust. The income levels were not indexed so that the revenue would increase over time.
I agree, making it all tax free is regressive.
Actually, on the assumption that the 85% taxable level is accurate, I think everyone should have 85% of their benefit considered taxable income and then let the tax code determine if there are any taxes actually to be paid.
Sorry R.Quinn. I have lived in my house for 31 years. Last year on a 5 figure income I paid $13,600 in property taxes. It is morally wrong to have to pay rent each year to the government for the pleasure of staying in my home. Plus the rent goes up each year and the product quality declines.
oh the problems one has living in a high value property. Do you feel the same way about utilities because you have a bigger home or the insurance you pay?
I’m open to hearing how it’s morally wrong to pay your share of property taxes. Obviously you’ve got a nice house somewhere north of $1m, and/or you live in one of the high property tax states like California, New York, Massachusetts, or New Jersey. Nice things do cost money. And let’s not pretend you net worth hasn’t grown considerably with that home value either.
What is your suggestion to pay for all the services property taxes provide especially when most are in your own community?
Simple. Cap or stop property taxes when you have lived in your house for 30 years. Another suggestion would be to use school vouchers for school choice. Let’s face the truth: too many schools are merely expensive day care centers
Also your property taxes would pay the same thing for school vouchers, and for worse results, as per the research. I would suggest forgoing street maintenance, emergency assistance, and city plumbing and water if you’d like to reduce your property taxes.
Yup, that is simplistic. The quality of schools has little to do with the taxes paid for them. The average time people stay in one house is about 12 years.
I find your first point strange: in our state the best schools are in well to do areas with naturally high property taxes. In my case I have lived in houses for 17, 3, 2 and 31 years averaging 13 plus years per abode overall. The average of 12 years indicates how mobile American society is. However most settle down eventually and I believe 31 years of paying property taxes is more than fair.
Have you stopped driving on city/county roads? Will you be happy if the fire service doesn’t show up? Do you not benefit from the police? Those are only three of the things your property taxes are likely paying for.
Yup, strange how people forget to relate all the services they receive for the taxes they pay. You may be surprised how often I read the words “scam, rip-off, fraud” by people who didn’t get all they thought they were entitled to for their taxes or premiums.
I do wonder how much of the negative conversation about taxes comes about because of most Americans’ deep ignorance of how taxes actually work, and how much they really pay? I don’t know a single coworker that understands how to calculate their own taxes, they all just have a person that does it for them.
You have a good point.
I began paying taxes when I was employed at age 16. When I owned a home and paid real estate taxes I read the list and amounts of where those taxes went. Now, it is true that there is waste, fraud and corruption. Politicians who want to buy votes by spreading largess have created a very real problem. With recent revelations this problem is perhaps greater and more widespread than we realized. However, I do agree that we each need to pay for services rendered. Clean water, water and sewage treatment and related infrastructure, streets, street lighting and stop signs/lights, firefighters, police and schools etc. are all paid for via taxes. As far as I am concerned anyone who benefits from any of these services should be paying taxes. Period.
Even when our son was in graduate school and living on a stipend, he paid taxes. Not much, of course, but something. I saw an article this morning that our state is in the top 10 for property taxes. I do wish they were lower, now that we are retired, but we chose the house and area to live in. Our property taxes are one of our largest expenses now. Agree with the folks that said we need to educate the next generation. Chris
No argument from me here. Cutting taxes for one group leads to unanticipated outcomes in other places. I think as a nation we must be smarter in safeguarding how the money is spent which is why I find the DOGE concept interesting although I abhor the execution.
A giant bureaucracy is never going to be really efficient for two reasons. First, the people in charge keep changing and second there is no incentive to do so, just like in some non profits.
Every department has regular audits, reports are presented to Congress. We can read them. DOGE is a big splash nothing more, nothing new.
For example, Medicare has repeatedly been cited for failure to monitor claims, hence a high rate of fraudulent claims and why it takes so long to uncover schemes.
Medicare is prevented by law from doing pre-certification or approval. Even concurrent review is limited and when done, just relies on the provider certification of progress.
In other words it’s a blank check compared to private insurance and invites fraud minor and major.
But guess what would happen if it applied standard methods? Seniors and Congress would be screaming their heads off.
I think DOGE can win me over if they have high quality films of the work they are doing, you know like the department Kristi Noem runs that deports Venezuelan gangs to El Salvador.
I don’t personally know anyone who believes they should be exempt from paying taxes. I know a lot of people who think the rate they pay, particularly for property taxes, is much too high. Moreover, at least in my county, increases sought by the school board are nearly almost always rubber stamped.
During my career, if I wanted to create a new position, or start a new project, I had to document the heck out of why it was necessary, and how it would benefit my employer. And … if a position or project was no longer creating the impact it was designed to produce, I was required to document why it should continue to exist. I was held to account.
I see NONE of that with my local school board. There has been no correlation between increases in money spent and student performance. And for the very most part, the numbers demonstrate that across the country. The U.S. is near the top of the charts in terms of spend/student, and we are near the middle in terms of outcome. That should be unacceptable.
If the readers of Humble Dollar routinely paid the highest fees to invest in certain funds only to have them produce middling results, they would be the first to dump those funds for more efficient ones. Yet we are supposed to be support ever increasing property taxes to support schools that, for the very most part, fail to improve student outcomes? Really? Is it my patriotic duty to look the other way when the government – federal, state or local – is not accomplishing what it said it would with tax dollars?
So when I am asked to continually funnel more money in the form of property taxes to our schools, yes, I object. The process is broken. I want more up-front scrutiny in terms of why the new funds are necessary, and I want accountability for what impact the money is having on student outcomes. I don’t mind paying taxes, even high rates of taxes, if the money generates the outcomes promised.
Linking student academic performance to $$ spent on education is like linking $$ spent on dental care to oral care. Children come from families that vary widely in their ability to support their children’s academic growth (and provide dental care). Poverty and family mobility contribute to challenges children face. Not all children start school at the same readiness level. Not all children see their dentist with good oral hygiene practices. Education, public education, historically has been the great equalizer – starting in the 1870s – in our (US) society. As a retired educator who has no children in school, I willing pay taxes. It’s good for America!
How would you propose measuring outcomes then? How does America assess the return on its investment in public education?
For the most part, you are looking in the wrong place. A school system can only do so much with the balance up to the parents and family environment the student is exposed to.
I bet there are students who achieve good results in your system with the same teachers. My daughter was a teacher and other relative are. The stories they tell about parent’s actions or lack of are incredible.
Last fall their school system held its annual back to school night for parents to meet teachers, ask questions, etc. Not one parent showed up, zero. In many cases that is indicative of the basic problem.
Not only do few attend such meetings, but all too often it is the “fringe”, those with an axe to grind, or squeaky wheels who do attend. HOAs face the same problems.
One of the challenges is poor school attendance. My spouse did teach in several public school systems as part of her varied careers. One was a well-to-do upper middle-class community. It had a varied student population with more than 40 native languages among the students; a few spoke absolutely no English. Some migrants sent their children to school but as soon as the season was over, they returned to their country of origin, pulling the children out of school. The next year this cycle of limited attendance continued. Furthermore, there was a cultural position about education. Upon completing grade school the children were done and were expected to help support the family and contribute to remittances.
Wow…
Perhaps you should run for school board.
I generally agree with you. My biggest issue with taxes is the complexity. I would prefer a consumption tax instead of the mind numbing tax rules.
I agree Nick. In most developed countries the tax code is simpler and, in my estimation, more equitable. Intuit, the company that sells TurboTax, the Uber wealthy, and others have no interest in simplifying the tax code.
I agree, a well designed VAT would be fairer in many ways.
I have no problem with paying my fair share of taxes. Unfortunately our tax laws do not provide a means for “fair share”. I am an advocate for tax law reform or simplification such that the playing field is sufficiently level for everyone.
thats often mentioned, but it seems to me there are as many tax favors for the average as the wealthy but, of course, the benefits are relative to the money involved. Simplification for sure.
I’m not sure how balanced taxes are. The tax code favors lower income people with kids, especially in the form of refundable tax credits. (I acknowledge some fraud in this group, but overall the policies put food on the table and encourage needed procreation). Those credits fade away as incomes rise and kids grow up. Then there are the self-employed peeps who enjoy both legal and illegal deductions not available to others. We also have some people who derive the majority of income from investments as opposed to actual labor. These folks are the capitalists, and they enjoy reduced long term capital gains tax rates. Next come the well paid employees (think W2) and well off retirees (think 1099R) who don’t really have a place to hide; not much help in the form of tax credits and deductions. I suspect a good number of us HDers fall into this category. You guys and gals in this group do have a hefty tax load, and I applaud those of you who accept it without whining.
Don’t forget about deductions for generally well-off people like DC contribution deductions, mortgage interest deductions, HSAs also generally benefit higher vs lower incomes. Investment loss deductions. Charitable deductions too, and then estate tax exemptions for the very very wealthy. All of these cost the government a serious amount of revenue.
I agree with you and the other posters. Taxes are a necessary component of a civil society (do I need to mention Hobbes’ “nasty, brutish and short”?).
Taxes (should) pay for our safety – both national and local.
Taxes (should) pay for an educated citizenry – necessary (although not sufficient) for a democracy.
Taxes (should) pay for a healthy citizenry – necessary for a productive work force.
Taxes (should) pay for a basic safety net – so we don’t have thousands of people sleeping in their cars or on the street.
I leave it to the reader to consider how various countries meet these requirements.
I divided our federal tax paid by our total income, including the non-taxable portion of social security, to determine that we only paid 3.1% in federal and Ohio income taxes. By adding my property tax to the figure, I see I have paid about 8.5% in taxes. That does not seem like a bad deal to me, especially considering how much we seniors cost the system.
And like Phenom below, public education is important and I gladly do my part to support it, even though my kids never used it.
Generally agree but with some qualifications.
Property taxes, unlike income and sales
Taxes,are fixed costs and I would agree
To some consideration for seniors, e.g.
raises capped at 50 Pct of the general
Increase.
I think it is OK to help retirees stay in their
homes in high tax states if that is their preference.
In New York public sector retirees pay no
State income tax in their pensions. Private
sector employees only have a 20 K per
person exemption – a level that has not
been adjusted since the 1990’s –
best to look at the whole picture.
Yes, many people are taking very anti-tax positions lately. Narratives of government waste abound at the moment, and they are fueling sentiments in favor of additional tax cuts. Couple that with price increase like we’ve seen for the last couple of years, and you have yourself a perfect recipe for anti-tax sentiment.
I do agree wholeheartedly that we all need to do our part, and that nobody should be exempt from say property tax or SS income taxes, because it unjustly shifts the burden on to people who have to make up the shortfall.
We agree with this despite having never used the public education system. We benefit from having an educated work force and community, and everything our property tax dollars support.
Indeed we do.
An appropriate topic for this time of year. I agree. I must confess to also having felt the desire to avoid taxes; especially those taxes that result from being ignorant of some arcane provision of the tax code. But when I think about it, the tax base provides so many of the benefits of living in the USA that we all have come to expect and certainly need for a civilized society. Why should we expect to get all that for free? I share your sentiment you articulated so well in your last sentence.
Thank you for reading. With all their complexities taxes support our society and need to be shared especially by those of us who have enjoyed the benefits a lifetime.