Taxes

Lifestyles of the rich and famous?

I wrote those two lines first thing this morning, so that I could be sure the post was dated today even if I didn’t get to write it until tomorrow. On the way to school I imagined a class structured around who pays what kinds of taxes. When I saw Maura she thought it was a good idea. We put together the following spreadsheet (in about 12 minutes).

 

income
wages	0
capital gains	0
		percentage
types of taxes	taxable base	federal	state	tax
wages	0
capital gains	0
social security
medicare
sales
gas
real estate
tobacco
other

My plan was to have each group of students role-play a taxpayer, filling out the table for a student, a CEO, a teacher, a plumber …

I knew there would be a lot of explaining necessary since I hadn’t covered income tax yet. So I started there – and it took just about the whole class.

State tax was easy – a fixed percentage. Then I told them how federal income tax was computed – found the 2011 brackets and rates on line and worked a few simple examples. I tried to make the principle clear in words: when you make more, you don’t just pay more, you pay at a higher rate.

I’m appalled (but not surprised, since it happens every time) at how many of my students think that is unfair. Everyone should pay at the same rate. The most vocal among them also believe that the total tax burden is too high – that if taxes were cut the government would have to spend less and then the deficit would go away! It was hard to separate the discussion of where tax money comes from from what it goes to.

I did a little history (current deficit soars when Bush cuts taxes on rich and borrows to pay for Iraq – in WWII taxes went up to pay for the war). I don’t think I made much impact.

We did talk a little bit about capital gains tax (it’s better to buy and sell stuff than to work for a living …) and about social security tax (the cutoff makes that regressive).

I never got to the role-playing. There’s an exam on Thursday. I don’t know whether I’ll come back to this next week, or move on.

The good news – students were surprised at the complexity of the tax structure, and agreed that it was something they ought to know about. They found the class interesting. I think they now kind of believe that you should have some idea of what you’re talking about – maybe even quantitatively – to inform your political/economic decisions. (I try unsuccessfully to keep my own politics out of the classroom.)

The bad news – it looks good for Herman Cain’s 999 proposal, at least if my students were watching the news and voting. Maybe it’s a good thing they’re not paying much attention …

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