For first-time readers, this blog is set in the future (sometime after 2020).  This entry assumes the Revenge Revolution has occurred.  For more information about the anticipated 5th revolution in the US — the Revenge Revolution — and more background about the author, Entry #1.  One another note: almost all characters appear in a number of entries, with many entries building on previous conversations.  You’ll catch on quickly.  Thanks for your time and interest…and comments. 

Scene: Jordan having coffee with Greenie, a friend who attended the same grammar school.

Greenie: “Jordan, it’s been a while. I think the last time we had coffee was with JC.”

Jordan: “That was months ago. How ya’ doing?”

010414_1635_16TeachingS2.jpgGreenie: “Getting back into circulation. Had some tough times. You know, family issues. By the way, thanks for the note.”

Jordan: “You’re welcome. Glad life is getting better.”

Greenie: “Moving on, I need some advice.”

Jordan: “From me?”

Greenie: “I need to understand some economic issues. Nothing personal.”

Jordan: “I’m not good at personal advice. And some people in Washington don’t like my professional advice.”

Greenie: “Well, I do. So there. What I really need to understand is taxes. What is the real tax burden?”

TurtleneckJordan: “In total or by income group?”

Greenie: “By income group. There’s a lot of babble inside the beltway about a flat income tax. Mostly among Republicans, but even some Democrats seem to support the idea.”

Jordan: “And what’s your concern? Flat tax seems fair, doesn’t it? Everyone pays the same percentage of income. What could be more fair?”

Greenie: “You sound like one of the talking heads on Fox News. The argument assumes that income tax is the only tax.”

Jordan: “You and I know it’s not the only tax…but focusing on income tax makes a great sound bite.”

checklistGreenie: “Coming in on the train I made a list of different kinds of taxes…and I probably missed some.”

Jordan: “What’s on your list?”

Greenie: “Income tax – federal, state and for some people, local income tax. Then there are taxes for Social Security and Medicare.”

Jordan: “Just to clarify, Social Security and Medicare are technically insurance programs but for this discussion, leave them as taxes.”

Greenie: “Don’t start confusing me. To me Social Security and Medicare are taxes. I also had on the list sales taxes, excise taxes – you know, your phone bill, property Tax_Time_Clip_Arttaxes, plus all those fees you have to pay for different things. Those seem like taxes to me.”

Jordan: “You mean like the fees you pay when you rent a car?”

Greenie: “Yes. I rented a car in Houston and taxes and fees were 30-35% of the total bill. That seems outrageous. Have I missed any taxes?”

Jordan: “Business taxes. Every year my consulting business has to pay a licensing fee to the state and then pay another fee to file an annual report. That’s on top of the income taxes.”

Greenie: “Speaking of licenses, what about the fee for license-plate renewal and what about the fee for renewing your driver’s license?”

Jordan: “Your list is a great start. We probably have the taxes that affect most people.”

Greenie: “Has anyone ever calculated how much of someone’s income all these taxes and fees account for? If you think about it, many of these taxes and fees might be more of a burden to lower-income groups. I wonder if taxes in the US are more regressive than progressive.”

Jordan: “Hold on. If I sound like a talking head on Fox News, then you sound like a screaming liberal.”

Greenie: “I’ll take that as a compliment.”

Jordan: “Yes, there are some estimates of tax burden by income quintile. Wanna take a guess at the percentages?

Greenie: “If I’m close will you buy me another coffee?”

Jordan: “Have as many refills as you want.”

Greenie: “You want my guesses or what the Republicans would say?”

Jordan: “First, pretend you are a Republican. I know it’s hard, but just pretend.”

flat tax cartoonGreenie: “Republicans would claim the top two quintiles pay most of the taxes. That’s why the system is unfair to higher-income earners and there should be a flat tax.”

Jordan: “The top two quintiles pay most of the taxes because…duh…they earn the most money. What about payment as a percent of income?”

Greenie: “I’ll bet for lower-income people, taxes as a percent of income are a lot higher than most people realize.”

Jordan: “Why? Give me an example.”

Greenie: “Property tax. The flat-tax crowd focuses on income tax. But if you rent, you still pay property taxes. Your rent is a bit higher every month…plus there is no deduction on your income tax.”

Confused Clip ArtJordan: “Alright, give me your guess – all taxes as a percent of income. Guess by income quartile…I mean quintile.”

Greenie: “Here goes. Lowest quintile, probably 15-20% of total income in taxes. The top dogs, maybe 25-30%. The rest of them someplace between. How’d I do?”

(To be continued)