Follow the money part 1

The western front of the United States Capitol...

The western front of the United States Capitol. The Capitol serves as the seat of government for the United States Congress, the legislative branch of the U.S. federal government. It is located in Washington, D.C., on top of Capitol Hill at the east end of the National Mall. The building is marked by its central dome above a rotunda and two wings. It is an exemplar of the Neoclassical architecture style. (Photo credit: Wikipedia)

In order to understand the conversation in Washington, DC, it is necessary to follow the money. Taxes, who pays and how much will be the subject of the conversation at least until the election and probably afterward. Unless you understand a few facts, you will not be able to separate fact from fiction, and the GOP will be airing a lot of fiction.

One large talking point for the GOP is that half of Americans don’t pay Federal income taxes. That may be true, but it is not true for the reasons implied by the GOP that we are a nation of freeloaders who live off the government dole and should work harder. Everyone who works pays Social Security and Medicare taxes which hit the poor more than anyone else. These are called regressive taxes and are the opposite of progressive income taxes which in my opinion are the fairest taxes of them all.

At some point in the past, a bargain was struck in Congress not to raise the minimum wage which the poor depend on. That allowed business to pay everyone lower wages, from the poor on up the wage scale. To offset the shrinking value of the minimum wage, the Federal government started crediting low wage earners with an earned income tax credit which reduced or eliminated their Federal income tax due. The earned income tax credit is only given to those who are working. The unemployed are not eligible. Now the GOP wants to continue with an inadequate minimum wage and take away the earned income tax credit. That is a double whammy to the working poor.

To my mind, the solution would be to pay a living wage so that the poor earn enough to live a decent life and earn enough to pay income taxes as the conservatives say they favor. Then we can phase out the earned income tax credit.

Please see Follow the money part 2

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  1. Pingback: Taxes | A German Expat's Life in Texas

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