Budgeting Like a Sensible Family
Peter and Mary Sensible and their three children live with Peter’s father and aunt in a comfortable house in a comfortable town.
Peter is an executive at an engineering company. Mary is a high school teacher. Peter’s father, Bill, an energetic seventy-year-old, works part-time as a cashier. Bill’s sixty-two-year-old sister, Isabelle, is confined to a wheelchair and no longer works. The children attend public school.
The cost of running their seven-person household is considerable. Although the mortgage is paid off, insurance and local property taxes are very high.
The Sensibles keep the house in good working order. The old furnace was replaced recently, and the roof will be re-shingled this summer.
Although the family eats together at home most nights, the food bill keeps going up (and two of the children are teenagers with big appetites).
The Sensibles’ budget calls for $140,000 a year to maintain the house, cover regular expenses, and save for household emergencies.
Peter’s take-home pay is about $200,000 a year. Mary, who has spent her entire career teaching, brings home about $35,000. Grandpa Bill’s part-time job at minimum wage has a net pay of $4,000. Great Aunt Isabelle receives a monthly Social Security disability payment.
How would you allocate the responsibility for contributing to household expenses? Clearly there are numerous options.
Let’s consider three very different scenarios.
Scenario A. Should the $140,000 be spread equally across the four adults, meaning that each would be asked to contribute $35,000 a year? Peter could easily cover his share. His wife could barely manage it. It clearly wouldn’t work for minimum-wage Grandpa or his sister.
Scenario B. How about a percentage based on take-home pay? What if Peter contributed 30% of his pay, Mary 20% of hers, and Grandpa 3% of his? Those percentages initially sound reasonable. But look at the actual results. Peter would be responsible for $60,000, Mary $7,000, and Grandpa $120. That would total only $67,120 –-not enough to maintain the house properly, but they could get through the next few years by postponing maintenance, reducing insurance coverage, cutting back on food and utilities, using their credit cards, and not planning for emergencies.
Scenario C. Most families without hesitation would pool their resources based on ability to pay. As the primary income earners, Peter and Mary would both contribute heavily to household expenses, but Peter far more than Mary because the household can’t maintain itself properly without the much bigger contribution that his salary allows. Even after setting money aside for their children’s college years and their own retirement, they would still have money left over for personal investments, vacations, and charitable donations.
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When it comes to budgeting for our country, we face choices similar to these, and political parties have very different answers.
Democrats believe that all Americans –- regardless of earning power –- are entitled to food, shelter, health care, and education, and that public funds are needed to maintain public infrastructure and public services, including schools, transportation, scientific research, water, safety, etc.
Our philosophy is that those who have much more money than they need must contribute substantially more in taxes, because otherwise there are simply not enough funds to bring about the kind of society we all want to live in.
Just as Peter Sensible benefits from a house that’s in good repair, so –- with a more sensible tax policy -–this country’s richest would benefit from improved infrastructure, proper maintenance of public assets, better public health and safety, a better educated workforce, and a reduction in crime that is possible with better opportunities for all.
Over the past generation, the richest Americans’ contribution to public services has been greatly reduced as a result of huge tax cuts for those with very high incomes.
The constant complaining about taxes has been a smokescreen, allowing income to shift from the middle class to the rich and causing sensible public investment to be neglected.
The “safety net” is in shreds, infrastructure is crumbling, and the economic well-being of most Americans is diminished.
The next time you hear Republicans talk about “no new taxes” or a “simplified tax structure,” consider the implications for our whole society.
