A Taxing Problem

This evening one of my family members sent us a link to a video put together by a college student who explains the federal budget using pennies.  Each penny represents $400 million so that a coffee table full of pennies represents the budget.  The student then shows how President Obama's recent pledge to cut $100 million from the budget amounts to nothing (1/4 of one penny) on a table filled with about 10,000 pennies.

Assuming that the math is true and that he's done a good job converting everything, the video certainly makes a valid point.  You can't cut the budget by making such (relatively) small cuts.  Of course, the video ignores the ginormous elephant in the room which is that the Republicans (with Obama's cooperation) recently added about 2000 pennies to the table by extending the tax cuts for millionaires and billionaires.

I replied, reminding him of that fact, and he sent me back the typical, "If you want your taxes to go up, then good for you." reply, and suggested that we're over-taxed.  My reply was threefold.

One, effective federal taxes in America right now are historically low, lower than they've been for about sixty years.  Among modern, industrial nations our tax rate is near the bottom.  To say that we're overtaxed is ridiculous, especially considering that we're currently fighting TWO wars.  I thought that when a country went to war its people were expected to sacrifice?  How about some financial sacrifice to pay the costs of war so that we don't lose what people are laying down their lives to protect?

Two, I'm not a millionaire nor is my relative.  So to argue that I want my taxes to go up when I complained about taxcuts for the rich isn't particularly on point.  I was  in favor of middle class tax cuts.  You know, the tax cuts for those who are really hurting?  The Republicans held those hostage to give tax cuts to the rich.

And finally, I'm a federal employee.  My wages are currently frozen and likely to remain that way for the next several years.  Typically, federal wages go up from 1-2% each year to maintain their value versus inflation.  So, with the wage freeze, I am now effectively losing 1-2% of salary per year.  This is effectively a tax increase but only on federal workers.  So why isn't the rest of the country sharing this burden?