As the Legislature debates how to fund our government and I send off a couple of checks to the IRS and the Minnesota Department of Revenue, I offer some observations about taxes.
After working diligently to prepare my tax returns, my friend, financial adviser, former farmer, and sharp-as-a-tack accountant informed me that we would have to pay a higher marginal tax rate than Mitt Romney. I suppose being pushed into a higher tax bracket is not such a bad thing, because it means we make a decent living.
In 2011, Mitt Romney paid $1.9 million in taxes on $13.7 million in income, for an effective rate of 14.1 percent, or about 9 percent lower than the 23 percent rate that we paid to the federal government in income and Social Security tax, and 11 percent lower than the small part of our income that was taxed at 25 percent. Having just recently felt the devastation of the 25 percent tax bracket, we cannot wait to suffer the pain of the 28 percent tax bracket. As I said, when we pay higher taxes it means we have more money.
Perhaps one day, we will earn enough money, $450,000 in adjusted taxable income, to feel the pain of the new top rate of 39.6 percent. I hope we get there soon so I can commiserate with those who have to suffer under such a crushing burden. Oh dear reader, imagine, if you can, the suffering of families that earn more than $450,000.
In 21 years, no rate increase
I started my career in 1992. Since then, my federal income taxes have never gone up. I feel the need to repeat that, in the 21 years I have been working full time, I have never seen a rate increase on my federal taxes. Indeed, I have seen my income taxes go down slightly due to the Bush era tax cuts and reductions in Minnesota’s income tax rates in 1999 and 2000.
In the more than two decades that I have been working, my taxes have gone down while college tuition has more than doubled, our nation has fought two long wars without raising taxes to pay for them, inequality has dramatically worsened, poverty has gone up, bridges have fallen down, and our roads have deteriorated.
Inscribed above the Internal Revenue Building in Washington. D.C., are the words, “Taxes are what we pay for a Civilized Society.” The thrust of this idea is attributed to Supreme Court Justice Oliver Wendell Holmes. I agree with Justice Holmes.
Tax fairly, spend wisely
So I say to the Minnesota State Legislature, it sure would be nice if those at the very top paid the same rate that I do. After working for 21 years and seeing only lower income taxes, I am prepared to pay more, but I also want fairness. So be brave, legislators, and generate the new progressive revenue needed to make Minnesota civilized again. Then spend the money wisely on education, health, and infrastructure.
Jeff Kolnick is an associate professor of history at Southwest Minnesota State University.
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