Taxes, the Only Certainty

Taxes have many purposes, but only one effect. They are for wealth redistribution. They are an involuntary donation to a charity, the goals of which one may or may not support at any given time, given under threat of prosecution. Ultimately, they take money from one person and hand it over to some other, unrelated in time or purpose. So if we are defining taxes, let's try this:

The license that the government takes to forceably steal money systematically from its citizens by mutual agreement of its representatives.

The average citizen pays taxes because said citizen does not want to go to jail. Said citizen then rationalizes that the taxes pay for common services, help the poor, or some other delusion, in an attempt to soften the blow of just having paid a substantial percentage of earnings to an extortionist. And make no mistake. The average American wants to help the poor, wants to pay a fair share for the common good and so on. It is just that taxes do no such thing. And the government is a monumentally poor administrator of charity, even if charity were its purpose. More of that later.

So now that we know what a tax is, let's look at its composition. To simplify, let's look at three taxes. There is a tax on income at the federal level, there is a social security assessment, there is a medicare assessment. What happens to all of this money? It is put under control of congress, according to the constitution. They then haggle with each other, with the President (since he/she can stop any expenditure), and with the state governments, who get subsidies from the government based on their representation, the position of Jupiter in the house of Sagitarius, the expressions of the spirit guide of Marilyn Monroe and other equally logical and controllable factors, mostly having to do with who can vote for something good that someone else needs and can reciprocate ... blah blah blah. There is no such thing as a Medicare fund or a Social Security fund. All of the money goes into the same till and is spent by the same people. It is then handed to the states which have their own assessments.

Most states are smart and assess a tax based on consumption. There is no dividing the digits of your birthdate by the square root of pi to get the number on line 47. It is just a percentage of total sales, plus the percentage that it is likely that people in your business skive off in unrecorded cash revenue. Also, almost all states assess an income tax because, what the hay, the feds get away with it. They are smart enough though to tie up all the complications and make it depend on a percentage of your federal tax, so Washington takes the blame for tax hikes and bureaucracy. SWEET!!!!!! They spend their money through a state legislature and subsidies to their towns and cities. The cities then assess a tax, but most do not have the big brass ones (NYC excluded, of course) make you fill out another income tax form so they tie it to your living quarters. If you live somewhere other than a cardboard box, you pay this tax. (More on how businesses do not pay tax later.)

All of these taxes are interrelated, so the beauty of it is that you always pay about the same amount in the end! That's right! No matter what they call it, no matter who raises or lowers taxes, you always pay about the same amount in the end, over a few years period. The fed lowers its tax and it lowers its subsidies to the states. The states lower their income tax, but must raise their sales tax, gas tax, and other taxes on your life, and tell you to curse the fed. The states lower their subsidies to the cities which raise your property tax and tell you to curse the state government. Not only that, but their budgets are unaffected by their revenue. This means that regardless of how much we pay in, they always spend ... oh roughly ... whatever they think is politically expedient. This creates a large interest burden, which increases the tax burden, but they cannot raise taxes to raise income, because that does not work. This is because people will spend less, causing lower corporate profits, causing lower wages and salaries, causing lower tax revenues. So the cycle is complete. Raise taxes, lower taxes, it all has pressure and couterpressure. (I realize this is oversimplified, but the point is what follows, not a lesson in Economics.)

So why do certain politicians build "platforms" based on taxes? The truth is that the optimal tax rates, between 20-30% of average income that create the maximum revenue, do not really change. (Look up what happened in the Carter administration when taxes were retooled beyond the 30% limit, and what happened when the following administration readjusted them to normal. Again, sorry to give homework, but this is not history 101.) But our perception changes. Politician A (R, WY) would convince us that he wants lower taxes on everyone. Politician B (D, CA) expresses that she wants to help the "middle class" by raising taxes on the "rich". But think about it. Who pays tax? People with money, that's who. "Rich" people always pay the lion's share of the taxes, because they have the money. Any historical research on the tax revenue pie chart will show that clearly. And much of the middle class can be made rich with a single stroke of the pen, lowering the tax bracket. The truth is that the government has built a huge complicated monstrocity of tax law, requiring millions upon millions to administer and adhere to. And the the only reason is to delude us into thinking that the other guy is paying his fair share. As President Reagan once pointed out, the entire matter could be handled on a post card sized form, if we were to cut to the chase. The total revenue and the TOTAL tax burden of most individuals would not change.

Well, that is taking into account another fact. Businesses do not pay taxes, or any other expense. They pass expenses on to the consumer, who is, coincidentally, a taxpayer. So if their taxes go up, the customer, i.e. YOU, pays (i.e. PAY). The edifice built on TAX the CORPORATION is a house of cards. Corporations do not pay tax, ever. Shareholders pay, customers pay, the industrious fellow who cleans up the conference room, where they discuss the need to increase prices due to rising taxes, pays, everyone pays, but a business, incorporated or otherwise, does not pay. If you rent an apartment, you pay property tax. So let's add into individual taxes, higher prices paid for goods and services due to higher taxes on businesses.

So the next time a politician, either party, comes talking about lowering taxes, or the need to raise taxes, or taxing the rich, or taxing the corporations, or lowering the deficit through taxes, or raising the deficit through tax cuts or any of that fertilizer they spread to get to your soft chewy chocolate center, just smile and give them a swift kick in the nuts, even if they are female. Then tell them, that if they are going to steal from you and extort your consent for it, they should at least have the courtesy not to insult your intelligence.