Folbre calculates tax payback year in NY Times Economix Blog

photo by Alan Cleaver

In a recent NY Times Economix blog, Nancy Folbre, UMass Amherst economics professor, calculates tax payback year.  This calculation is “the number of years beyond age 21 that it takes average taxpayers to fully repay the government (and their fellow taxpayers) for the public funds expended on them in their first 21 years.”  She argues that although some dislike paying taxes, it is important to understand that the government pays for us.  Paying taxes after the age of 21 is, in a sense, paying back the money that the government invested in us while we were young.  The benefits we receive from the government, for much of our lifecycle, far exceed the taxes we pay.

April 5, 2010
Tax Payback Year
By:  Nancy Folbre

It takes more than 17 years for average taxpayers simply to repay what older taxpayers invested in them.

You don’t have to take my word for it. If you’re willing to do some fairly detailed research and plug it into a spreadsheet, you can look back and estimate what the government has spent, to date, on you.

Then you can look forward and estimate what you expect to get from the government in health insurance, retirement and other benefits.

Then you can estimate your net taxes in each year — the difference between what you pay and what you get — and see how it varies over time.

Whether or not you like what you see, it will look very different than a picture based on taxes alone.

The Tax Foundation complains that Americans will pay more in taxes in 2010 than they will spend on food, clothing and shelter combined.

But young Americans and old Americans, in particular, will get more in benefits than they pay in taxes.

Let’s remember that we were all once young and hope eventually to grow old.

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