A Taxing Dilemma
Be wary of strong drink. It can make you shoot at tax collectors... and miss. ~Robert Heinlein
The Robin Hood myth is often used as a way of justifying the transference of wealth from the rich to the poor. In reality, it's a story about how the government (the king and the aristocracy who were, in fact, the government) used their power to enrich themselves. It was the corrupt government that Robin Hood was fighting—and heavy taxation was the issue.
The story of Jesus is, likewise, seen as a wealth redistribution parable for Marxist-minded folk, but it was essentially the Pharisee, the Sadducee and the corrupt priesthood that were described as the enemy of the poor Jewish peasants in the Gospels. They were the government, just like Robin Hood's corrupt aristocracy. It was the relentless taxation used to produce a radical disparity of wealth, as evidenced everywhere in Jerusalem, that was Jesus' primary target. The Romans, yet again, were another layer of tax redistribution.
Between the ruling elite in Jerusalem and the Romans, with whom many of Israel’s leaders colluded, poverty and illiteracy became the overwhelming norm in the world of Jesus' time—and military power, as well as the varying layers of taxes, were the primary method used to achieve that goal.
The Pharisees didn't begin as corrupt rulers, but increasingly became that way as they grew in power. They began as something akin to home bible study teachers helping to preserve the Jewish identity in the face of the Roman occupation. As their popularity grew, however, they were changed by the love of money and power. What started with the best of intentions was corrupted and the people eventually became their enemy—the sheep to be managed by treacherous shepherds.
What then, is the lesson that history is attempting to teach? That power corrupts, and that absolute power corrupts absolutely?
From Aristotle to Christ and on to the present day, the story has always been the same. Greed, whether for more money or power, or both, will always need governmental force in order to extend its cause. There is no more powerful institution in the world than government. It is always the greatest threat to the people. Not corporations, nor the rich, but the collusion of the two. The wealthy, moneyed interests, empowered by government, that is at issue. It is the ability to tax, and the police power necessary to enforce it, that is the primary method used. It, apparently, has always been that way and, unless we’re willing to learn from the past and change our present course, it probably always will be.
The story of Jesus is, likewise, seen as a wealth redistribution parable for Marxist-minded folk, but it was essentially the Pharisee, the Sadducee and the corrupt priesthood that were described as the enemy of the poor Jewish peasants in the Gospels. They were the government, just like Robin Hood's corrupt aristocracy. It was the relentless taxation used to produce a radical disparity of wealth, as evidenced everywhere in Jerusalem, that was Jesus' primary target. The Romans, yet again, were another layer of tax redistribution.
Between the ruling elite in Jerusalem and the Romans, with whom many of Israel’s leaders colluded, poverty and illiteracy became the overwhelming norm in the world of Jesus' time—and military power, as well as the varying layers of taxes, were the primary method used to achieve that goal.
The Pharisees didn't begin as corrupt rulers, but increasingly became that way as they grew in power. They began as something akin to home bible study teachers helping to preserve the Jewish identity in the face of the Roman occupation. As their popularity grew, however, they were changed by the love of money and power. What started with the best of intentions was corrupted and the people eventually became their enemy—the sheep to be managed by treacherous shepherds.
What then, is the lesson that history is attempting to teach? That power corrupts, and that absolute power corrupts absolutely?
From Aristotle to Christ and on to the present day, the story has always been the same. Greed, whether for more money or power, or both, will always need governmental force in order to extend its cause. There is no more powerful institution in the world than government. It is always the greatest threat to the people. Not corporations, nor the rich, but the collusion of the two. The wealthy, moneyed interests, empowered by government, that is at issue. It is the ability to tax, and the police power necessary to enforce it, that is the primary method used. It, apparently, has always been that way and, unless we’re willing to learn from the past and change our present course, it probably always will be.
A common question by many on the Left is “why don’t the rich pay their fair share in taxes?”
The simple answer is that the rich pay everything but a small percentage of all income taxes. The top 1% of wage earners pays 37% of the nation’s income tax, while the top 15% of earners pays 85%. Approximately one half of the country (47% to be exact) pay no income tax at all. So much for the old canard that the rich don’t pay their fair share. But that won’t stop people from resurrecting the lie to gain an advantage. These numbers aren’t hard to find. So, why do they keep beating a dead horse? Because it’s about higher taxes for everybody, not just the rich—and with it, greater government control.
“How about people like Warren Buffett? He pays less income tax than his secretary does. How’s that fair?”
Warren Buffett’s income isn’t based on a salary like his secretary’s, but comes from capital gains. This means that he has no guaranteed income, unlike most people who earn a regular paycheck. His wealth comes from investing money with the hope that it will eventually be profitable. And, like all such investments, there’s no guarantee that it will. He may invest for months, even years, with no financial return until he sells his business or stock at a profit. Meaning; if Buffett buys a company or stock and sells it for a $50,000,000 gain, he’ll pay approximately $10,000,000 in capital gains taxes. That amount will certainly be less if he reinvests his profits. Like all professional investors whose livelihood depends on continued investing, he'll buy a new company or stock and create more jobs, producing an immediate benefit to the economy. But, no matter how you choose to look at it, in the end, the amount paid in taxes will be a hell of a lot more than his secretary pays in terms of actual dollars and cents—and by a radical margin.
Capital gains laws don’t just affect men like Warren Buffett. They also impact average people. If you sell your home in order to pay for retirement or sell a stock to pay the bills, capital gains taxes can be the difference between a comfortable retirement and a marginal one. In fact, they’re far more likely to negatively impact average people than billionaires like Buffett.
This is only one of the many popular fallacies regarding taxes. Mitt Romney, for instance, may pay a smaller percentage of his income in taxes than a single person with no deductions because it comes primarily from capital gains. Very few people, however, actually pay taxes based solely on their income bracket. All people, and I do mean ALL have tax deductions. If they don’t use them, society shouldn't be held to blame (Although I’m sure the government can suggest that they need help from Uncle Sam because they've been deprived in some way!). And, with Uncle Sam’s help and all of the new taxes levied to pay for that helping hand, the deprivation will only increase.
The key to filtering out the nonsense regarding "Tax Fairness" is in understanding the different ways in which people earn their living. By lumping the various categories together you can create a false impression about who pays what, without explaining why.
What about corporate tax rates? “Don’t some corporations pay no tax at all? How about other businesses? Why should I have to pay income taxes, but not some Fortune 500 company?”
The top corporate tax rate is 35%. Many corporations pay less. In fact, many corporations pay almost no taxes. Why do they pay less or nothing at all? Because, they’re not people, although, for the sake of legality they have the status of immortal persons in order to protect the rights of future shareholders. Corporations are not living, breathing entities, but are comprised of shareholders who already pay taxes on their corporate profits. That would be a simple answer. Your car doesn't pay taxes, neither does your dog. Although, you’ll pay taxes on both—and your income. If all of the profits made by shareholders and employees are already taxed because shareholders ARE the corporation, taxing the corporation, yet again, is comparable to being taxed twice. Money that would be reinvested to create new jobs is funneled to a middle man named Uncle Sam—so you’re “Uncle” can pay for his staggering interest on all his debts, the result of entitlements, military expansion, etc...
In a competitive business climate the only way to insure your company’s survival is to expand. To grow big enough to fend off your competition, which requires capital. Make no mistake, your competitors will be doing the exact same thing. This heated competition may be Darwinian, but it’s also an efficient way of cutting waste, which creates more working capital. This is how an economy actually grows. Not as the result of some wizened Washington bureaucrat making business decisions a thousand miles away.
The less compelling story that corporations aren't evil overlords, but are owned by shareholders, both big and small and make food, clothing and shelter—the most basic of necessities—affordable in
a way that mom and pop businesses simply can’t is lost in endless rounds of propaganda. “Tax the bastards” is a clarion call of the dispossessed, which inevitably leads to people wanting to tax someone else in an effort to lower their own tax burden. But, does that really work?
The simple answer is that the rich pay everything but a small percentage of all income taxes. The top 1% of wage earners pays 37% of the nation’s income tax, while the top 15% of earners pays 85%. Approximately one half of the country (47% to be exact) pay no income tax at all. So much for the old canard that the rich don’t pay their fair share. But that won’t stop people from resurrecting the lie to gain an advantage. These numbers aren’t hard to find. So, why do they keep beating a dead horse? Because it’s about higher taxes for everybody, not just the rich—and with it, greater government control.
“How about people like Warren Buffett? He pays less income tax than his secretary does. How’s that fair?”
Warren Buffett’s income isn’t based on a salary like his secretary’s, but comes from capital gains. This means that he has no guaranteed income, unlike most people who earn a regular paycheck. His wealth comes from investing money with the hope that it will eventually be profitable. And, like all such investments, there’s no guarantee that it will. He may invest for months, even years, with no financial return until he sells his business or stock at a profit. Meaning; if Buffett buys a company or stock and sells it for a $50,000,000 gain, he’ll pay approximately $10,000,000 in capital gains taxes. That amount will certainly be less if he reinvests his profits. Like all professional investors whose livelihood depends on continued investing, he'll buy a new company or stock and create more jobs, producing an immediate benefit to the economy. But, no matter how you choose to look at it, in the end, the amount paid in taxes will be a hell of a lot more than his secretary pays in terms of actual dollars and cents—and by a radical margin.
Capital gains laws don’t just affect men like Warren Buffett. They also impact average people. If you sell your home in order to pay for retirement or sell a stock to pay the bills, capital gains taxes can be the difference between a comfortable retirement and a marginal one. In fact, they’re far more likely to negatively impact average people than billionaires like Buffett.
This is only one of the many popular fallacies regarding taxes. Mitt Romney, for instance, may pay a smaller percentage of his income in taxes than a single person with no deductions because it comes primarily from capital gains. Very few people, however, actually pay taxes based solely on their income bracket. All people, and I do mean ALL have tax deductions. If they don’t use them, society shouldn't be held to blame (Although I’m sure the government can suggest that they need help from Uncle Sam because they've been deprived in some way!). And, with Uncle Sam’s help and all of the new taxes levied to pay for that helping hand, the deprivation will only increase.
The key to filtering out the nonsense regarding "Tax Fairness" is in understanding the different ways in which people earn their living. By lumping the various categories together you can create a false impression about who pays what, without explaining why.
What about corporate tax rates? “Don’t some corporations pay no tax at all? How about other businesses? Why should I have to pay income taxes, but not some Fortune 500 company?”
The top corporate tax rate is 35%. Many corporations pay less. In fact, many corporations pay almost no taxes. Why do they pay less or nothing at all? Because, they’re not people, although, for the sake of legality they have the status of immortal persons in order to protect the rights of future shareholders. Corporations are not living, breathing entities, but are comprised of shareholders who already pay taxes on their corporate profits. That would be a simple answer. Your car doesn't pay taxes, neither does your dog. Although, you’ll pay taxes on both—and your income. If all of the profits made by shareholders and employees are already taxed because shareholders ARE the corporation, taxing the corporation, yet again, is comparable to being taxed twice. Money that would be reinvested to create new jobs is funneled to a middle man named Uncle Sam—so you’re “Uncle” can pay for his staggering interest on all his debts, the result of entitlements, military expansion, etc...
In a competitive business climate the only way to insure your company’s survival is to expand. To grow big enough to fend off your competition, which requires capital. Make no mistake, your competitors will be doing the exact same thing. This heated competition may be Darwinian, but it’s also an efficient way of cutting waste, which creates more working capital. This is how an economy actually grows. Not as the result of some wizened Washington bureaucrat making business decisions a thousand miles away.
The less compelling story that corporations aren't evil overlords, but are owned by shareholders, both big and small and make food, clothing and shelter—the most basic of necessities—affordable in
a way that mom and pop businesses simply can’t is lost in endless rounds of propaganda. “Tax the bastards” is a clarion call of the dispossessed, which inevitably leads to people wanting to tax someone else in an effort to lower their own tax burden. But, does that really work?
There’s a big problem with the “Hey, I pay taxes, I want everyone else to pay more taxes, so I don’t have to” approach to tax fairness. The more any business pays in taxes, the more those costs are passed on to the consumer in the form of higher prices. In reality, by demanding higher taxes for business, so you can lower your own tax burden (which is the theory), you've simply increased prices on everyone, including yourself. You may not see it as a tax hike, but that’s exactly what it is. Who's most negatively impacted by these increases? The poor, who now are forced to use what little money they have to pay higher prices for everything.
For those who believe that government is the driving engine of the economy, less than 8% of Americans are employed by government. Leaving more than 90% of the jobs created to be the product of private investment. To the degree that government increases as a primary employer, it only does so after taking taxes from individuals, not as the result of creativity and innovation, which are the fuel for any economy. In fact, high taxes and excessive regulation are the two most common things that stifle business investment, leading to slow growth and fewer jobs.
The idea of a kind of Darwinian Capitalism insuring the survival of a particular business, is no less true of government. The only way to protect "Big Government’s" supremacy is for it to get big enough to fend off its enemies—meaning anyone that opposes it. Like an occupying army or a hostile police force, it begins to view the citizenry as the “Other”—the competition for limited resources. The same people who produce all of the wealth through their labor and pay all of the governments bills become potential enemies of the state. Unfortunately, the only thing governments actually create is more government—more prisons, more military, more laws to protect the people from themselves and more bureaucracy. All of this requires more taxes. It is a case of the dog viciously chasing its own tail.
The prevailing notion of government as the primary solution to any and all problems is always the last bastion of leftist thinking. If people can’t be trusted to act fairly (fairly as defined by politicians), then they should be forced to act fairly. If prices are too high, they should be forced to lower them. If wages are too low, they should be forced to raise them. It should require no effort to see that the essential ingredient is “Force,” meaning legal coercion backed by the threat of imprisonment as a means of compelling righteous behavior.
In America, it’s increasingly seen as unreasonable to expect people to act on their own behalf. They, apparently, need a thriving nanny state to do that. If ducks and wildebeests can act according to self interest, humans, the apex species on the planet, should be able to do likewise—and they've
done just that for thousands of years. Just not according to advocates of government as the primary solution for every social problem
Even more problematic is the increasing numbers of Americans who have no idea of how their country was founded. Or, the radical, egalitarian nature of its democratic ideas, except to say that it was racist White Men that were at the malevolent root of it all. Similarly, many Americans have no idea how an economy works, what money is, how wages and prices are established—except to say “It’s all about greed.”
Government, then, becomes the hero on the white horse. Business is the evil landlord tying the fair maiden to the tracks, just waiting to extort from the poor, widow and orphan the last vestiges of their labor. In reality, it’s government that has occupied that role since time immemorial.
This tends to be true of conservatives as well. Even if the cause is seen as different from the typical “racist white men” argument. Prayer in schools, illegal immigration and a longing for a return to a predominately White-Christian nation, with an overwhelmingly powerful military are sufficient substitutes. In other words, it’s okay to spend excessively for the military, but not for the poor, who tend to be lazy. The ignorance from both sides enables a divide and conquer strategy, which politicians exploit to their full advantage. Inevitably, higher taxes are required to pay for it all, regardless of the Left/Right dynamic.
The historical reality is that, when the wealth of a nation increases, freedom and charity become possible in a way that previously wasn't feasible. Poverty decreases and is redefined based on the aggregate wealth of its people. Poverty in the U.S., for instance, isn't the same as poverty in Mexico or Haiti. And, by comparison to much of the world, it barely qualifies as poverty at all.
Poverty, however, tends to increase as government digs its claws deeper into its citizens pockets. All good pick-pockets understand the need for a diversion, a sleight of hand, in order to carry out the theft undetected. For politicians, war, racism and class warfare will do just fine and are used in equal measure by both Democrats and Republicans.
For those who believe that government is the driving engine of the economy, less than 8% of Americans are employed by government. Leaving more than 90% of the jobs created to be the product of private investment. To the degree that government increases as a primary employer, it only does so after taking taxes from individuals, not as the result of creativity and innovation, which are the fuel for any economy. In fact, high taxes and excessive regulation are the two most common things that stifle business investment, leading to slow growth and fewer jobs.
The idea of a kind of Darwinian Capitalism insuring the survival of a particular business, is no less true of government. The only way to protect "Big Government’s" supremacy is for it to get big enough to fend off its enemies—meaning anyone that opposes it. Like an occupying army or a hostile police force, it begins to view the citizenry as the “Other”—the competition for limited resources. The same people who produce all of the wealth through their labor and pay all of the governments bills become potential enemies of the state. Unfortunately, the only thing governments actually create is more government—more prisons, more military, more laws to protect the people from themselves and more bureaucracy. All of this requires more taxes. It is a case of the dog viciously chasing its own tail.
The prevailing notion of government as the primary solution to any and all problems is always the last bastion of leftist thinking. If people can’t be trusted to act fairly (fairly as defined by politicians), then they should be forced to act fairly. If prices are too high, they should be forced to lower them. If wages are too low, they should be forced to raise them. It should require no effort to see that the essential ingredient is “Force,” meaning legal coercion backed by the threat of imprisonment as a means of compelling righteous behavior.
In America, it’s increasingly seen as unreasonable to expect people to act on their own behalf. They, apparently, need a thriving nanny state to do that. If ducks and wildebeests can act according to self interest, humans, the apex species on the planet, should be able to do likewise—and they've
done just that for thousands of years. Just not according to advocates of government as the primary solution for every social problem
Even more problematic is the increasing numbers of Americans who have no idea of how their country was founded. Or, the radical, egalitarian nature of its democratic ideas, except to say that it was racist White Men that were at the malevolent root of it all. Similarly, many Americans have no idea how an economy works, what money is, how wages and prices are established—except to say “It’s all about greed.”
Government, then, becomes the hero on the white horse. Business is the evil landlord tying the fair maiden to the tracks, just waiting to extort from the poor, widow and orphan the last vestiges of their labor. In reality, it’s government that has occupied that role since time immemorial.
This tends to be true of conservatives as well. Even if the cause is seen as different from the typical “racist white men” argument. Prayer in schools, illegal immigration and a longing for a return to a predominately White-Christian nation, with an overwhelmingly powerful military are sufficient substitutes. In other words, it’s okay to spend excessively for the military, but not for the poor, who tend to be lazy. The ignorance from both sides enables a divide and conquer strategy, which politicians exploit to their full advantage. Inevitably, higher taxes are required to pay for it all, regardless of the Left/Right dynamic.
The historical reality is that, when the wealth of a nation increases, freedom and charity become possible in a way that previously wasn't feasible. Poverty decreases and is redefined based on the aggregate wealth of its people. Poverty in the U.S., for instance, isn't the same as poverty in Mexico or Haiti. And, by comparison to much of the world, it barely qualifies as poverty at all.
Poverty, however, tends to increase as government digs its claws deeper into its citizens pockets. All good pick-pockets understand the need for a diversion, a sleight of hand, in order to carry out the theft undetected. For politicians, war, racism and class warfare will do just fine and are used in equal measure by both Democrats and Republicans.
The debate over how taxes should be spent, whether entitlements for the poor or military spending, is important. Financial accountability is equally applicable to both, not either/or, which is how the debate is often defined. The differences between Republicans and Democrats is more a variation on a theme than any substantial departure from radical tax and spend practices held dear by both parties. And, while the rest of the nation is struggling to fund local and state government, The Federal government in Washington is awash in lobbyists and truck-loads of taxpayer’s hard-earned money. Teaching us once again that even the lowliest of predators knows to follow the heard to the life-giving watering hole—until it dries up.
Mark Magula
Mark Magula
