Taxes, Attitudes, and "Common" Sense

Personal Money Planning |

By Gary Silverman, CFP®

When it comes to “fair” taxation, attitudes about taxation as a whole can play a large part in our deep divisions on this issue. First, consider that taxation should never be thought of alone; in other words, I think that most people would think it’s not right for the government to tax us unless it is also spending money to help us out in some way. Therefore, a complete discussion of taxes must include the discussion on spending.

I took a coffee break since the last sentence because I was trying to think of anything the government spends money on that everyone agrees is a good idea. I came up with nothing. Now, that doesn’t mean that a particular item is particularly controversial—just that not everyone agrees with it. Believe it or not, while most would agree with the statement: “The government should spend money on roads,” there are some folks out there who think we shouldn’t have roads. Rather, they’d like to go back to the days of trails naturally forming from walking and the movement of animals.

While that’s an extreme example, if we instead stated: “The government should spend my money on any road anywhere of any design,” then I’m guessing few would agree. In between the “any road” and “no road” camps you’ll come across people who want to beautify the highways and others who want no money for anything other than the pavement itself.

And that leads to the first tax attitude I want to broach: Waste and Want. This is captured by two phrases you’ll hear: “The government needs to do something about…” and “The government is wasting money on…”. In the end, one person’s “do something” is another person’s “waste.”

Take the Circle Trail that’s just about completed around my city of Wichita Falls. It’s a nice wide walking/biking path. I love it. I use it. Most of the people I hang out with use it. But some friends of mine think it is a waste. They say that most folks never step foot on it. This is true.

In my opinion, it’s a nice addition to our city. It is used by myself and my acquaintances, promotes healthy activities, and is an attraction to people and companies considering locating here. The opposing opinion says that since the trail is not a necessity, the money should either stay with the taxpayers or pay for a more pressing need.

Of course, there’s a bit of disagreement on what’s a pressing need.

In summary, while there are a few items on the government’s spending list that the vast majority of people agree with, 1) not everyone agrees, and 2) there is a lot of disagreement on the details.

Now that we can agree that we all disagree, we’re ready to look further at the attitudes around two questions: Who do we get the money from, and who do we spend the money on? Or we will…next week.

Gary Silverman, CFP® is the founder of Personal Money Planning, LLC, a Wichita Falls retirement planning and investment management firm and author of Real World Investing.