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Financial Literacy - Taxes
No new taxes? Why not?
Politicians who pledge no new taxes are either neglecting the facts or making promises they can't or shouldn't keep.
Taxes made easy

Interview: Adam Hughes

Your organization promotes activism; what can taxpayers do to proactively affect tax policy in their best interests? Write their Congressmen?

Talking points
What is the OMB?
AMT delay
Capital gains tax
Estate tax problem
Rich vs. poor
Starve the beast theory
Recession threat
Progressive tax
Activists' role

That's a good first step. They should be calling their lawmakers on both the federal and local levels. They can ask questions of them, maybe visiting with their staff. They can sign up for OMB Watch e-mails, too.

I don't think a lot of people weigh in on tax policy. There are a lot of children's activists and environmental activists, but not many tax activists. I guess it's not sexy enough.

We need to do a better job educating people that taxes go to pay for stuff. If someone in their family gets Medicare or Veterans benefits or they drive on new highways, these things are good and taxes pay for them. And most people recognize the need for those types of services. What they sometimes forget is that taxes, their own taxes, are important in making those services possible. People need to pay for them.

We were talking earlier about how tax increases are an automatic taboo for most politicians. We need to support politicians who are willing to pay for benefits through taxes. We shouldn't pass benefits or tax increases willy-nilly, but if we like the prescription drug benefit, we all need to pay for it.

Perhaps people who are in most need of benefits, like prescription drug benefits, are least in the position to pay for them. It might be easier to say "let someone else pay for it."

That's not always the case, because as with the Medicare prescription drug benefit, everybody gets that. As soon as you turn 65, everybody gets it. That's part of why it's been so difficult for President Bush to change Social Security, because everybody gets it, so everyone says no to benefit cuts.

Sometimes your taxes don't pay for something you want but they pay for something someone else wants. We need an attitude that we're all in this together.

Any parting thoughts?

Consider during the campaigns if someone says they're not going to raise taxes, ask them why. Not only after they're elected but before the vote. That's the crucial time to do it.

Taxing the rich more, while necessary, will not solve our problems.

I also hope I didn't come off as saying that rich people need to pay more taxes. Rich people pay a ton of taxes. Everyone's going to need to chip in a bit more. And we're going to need benefit reductions.

What we've seen in the last six to seven years is a drastic reduction in the amount people at the top of the income spectrum pay, so we'll either need to hold steady and not reduce taxes at the top anymore or to reverse those tax cuts. We're also going to need to find other ways to make changes in our fiscal situation. Taxing the rich more, while necessary, will not solve our problems.

-- Updated: Dec. 26, 2007
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