Thursday, August 28, 2014

Does how you pay taxes affect how you feel about taxes?

It’s fair to say there is a significant difference in the reaction to paying taxes between social classes in the U.S. While no one is thrilled about having to pay taxes, it is primarily the rich who lobby for lower taxes; poor people contact their representatives mostly for other issues. So given that rich people have a stronger aversion to payer taxes, I am curious if there is a difference in the way taxes are paid by each class and if there is a correlation between payment method and attitudes.

The majority of taxes paid by most people are garnished from their wages before they receive their paychecks. In other words, the taxes they shell out never directly pass through their hands so they don’t experience the feeling of directly paying the government for government provided services. But the majority of the income earned by rich people is through returns on investment. How are taxes paid on this income? Do these taxpayers personally make direct payments to the IRS? Do they feel as if they are paying the government (mostly federal) for services (mostly local) they don’t receive?

If the way rich people pay taxes fosters a sense of resentment towards the government, are there ways to change how taxes are garnished to minimize this effect?

On a related note… How are tax payments managed in Scandinavian countries where taxes are much higher than in the U.S.?

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