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Taxes: A poor Investment for Your Money |
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I am a middle class American, and as such I pay in a 30% tax bracket as I am sure the majority of people do. As in anytime I spend my money I want to see what return on investment I receive for my expenditure of income. After taking a close look the reality is taxes are an investment.
Now in no way am I suggesting no taxes, what I am suggesting is an adjustment in what I am getting in return. I live in a state where I am taxed on 3 different levels
Lets take a look at each level and see what I recieve for my investment.
Local: I live in an extremely expensive local tax community, but for those taxes, I do receive local schooling for my children (some people confuse this with free education, but as we know nothing is free). Police Protection and Fire, local police officers are always a welcome site when you need them. The permit and zoning board keeps me from having a McDonald's built next to my house, and the my sewer is run by the local government. (Water here is privately contracted)
Satisfaction Rate: 80% The last 20% is missed because it is extremely expensive. But I am primarily satisfied because all of these services I have needed at sometime or another and as such I feel I am getting something for my money.
State: I pay state income taxes and for that investment I receive the following, lower state subsidized college costs. State police and security protecting the highways.
Now what they say they give me.
Highway Services: that is an interesting claim especially since the a large number of highways here are toll roads.
Medical Care: Last time I checked I pay for my own health insurance:
Unemployment Insurance: I pay more into this system then I will ever use. The max that I can even get paid is not enough to even cover my house expenses.
Satisfaction Rate: 40% and I believe that is a gift. The only reason I am not giving it a 10% is because I understand that my money is paying for services that those less fortunate are using. But should the gap be so large that I feel so little of an impact for my expenses paid?
Federal: This is my largest tax expenditure of all and yet I receive little to no impact on my bottom line. I do receive security services from the military and other security services from other Agencies, but besides that the impact is nothing. No medical care, no dental, not much of anything. Yes some of the money come backs to me via state aid, but as we can see from the previous section that is not such a good return either. When I reach retirement age Social Security and Medicare will be almost nothing, that why I have to fund my own retirement in a 401k.
Satisfaction Rate: 5% The 5% is only there because I feel our military should be properly staffed and have the best equipment also I understand some of those taxes come back to my state.
Conclusion: What am I paying for? As you can see the level of impact and satisfaction go down directly in adverse to the amount of money invested. How can this be? How is the lowest dollar amount invested actually returning the highest return. The answers will not be easy to come by but we need to determine them.
How about lets start by making 401k withdrawals tax free. Thats right, and double the contribution limits per year. Let me fund my own retirement without the government taking there cut, that sounds like a much better investment then funding the goverments pyramid scam known as Social Security.
What are your thoughts, and experiences?
--BW
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