Have you seen your latest paycheck yet? Most people see a check once every two weeks, some people once a week, and some people once a month. By this time, however, most Americans (working Americans, I should say) have noticed something different about their income. Even after the “fiscal cliff” was averted, the taxes of just about everybody went up. You don’t make $450,000, or even $250,000? What? You thought that raising “taxes on the rich” didn’t mean you?
The fact is, that while many of the tax rates were extended, everybody’s payroll taxes increased. This means that the “FICA” deduction has gone up – for most people about a 50% increase. Now, that increase may only be from roughly 4% to 6%, but that can be $50 that a family needs to buy groceries or fill up their minivan’s gas tank. These aren’t taxes “on the rich”; these are taxes on the middle class – the working class. While I myself am paying higher taxes, I do take pleasure in seeing how many people are shocked that their taxes went up too.
It is a common economic fallacy that government can tax individuals or groups. Government sets different rates for different income levels, different deductions for different organizations, and various loopholes for “crony-capitalists”, just to give the impression that they can tax different people at different rates. This allows smug politicians of both parties to use tax rates as a political weapon in the ever going battle we call “class warfare”.
By promising to raise taxes on the “rich”, politicians win votes from envious constituents. By promising to lower taxes on “businesses” they invite votes (and money) from the corporate elites around the country. A flat-tax would hurt both parties because they would need to focus less on tax-rates as a means to political gains, and more on actual policy. Policy is what both parties lack, and they are dead afraid of the American people realizing it. As long as the “progressive” tax rates are in place, however, the American people will remain distracted by class warfare.
Its too bad, really, because the tax rates Americans should be paying attention to are not just their own individual rates, but the rate that the economy as a whole is paying. For instance, up until the 1930s, the federal government spent roughly 3% of GDP. Today, the Feds consume 25% of GDP. Having this giant, bloated, inefficient government certainly isn’t going to help get our economy going! Whoever that 25% comes from, it ultimately comes from YOU.
Economics is a social science, studying the economic interactions between individuals. Taxing one person will always have an effect on someone else. If a rich person is taxed at a higher rate, that means not only the he writes a bigger check to the government, but also that he doesn’t write a check to a car dealer. This is turn means that the car dealer is taxed, the car salesman is taxed, the car manufacturer is taxed, and countless other people are taxed – the people in the steel mill who produce the materials to build the car, the people who make the tires for the new car, and on and on.
Therefore, even if only one person is taxed directly, everyone is taxed in the end. The point is not to look at who writes the check to the government, but who pays for it. Because wealth is very liquid, there are plenty of ways for the rich to avoid paying taxes – they can send their money to a Swiss bank account, for instance. In the meantime, however, plenty of people will be hurt because that money is in Switzerland, not America. These are the people that pay the taxes in the end.
Maybe it is all worth it, though. The government has bills to pay, and someone needs to pay up. Let it be YOU, the American people. Let’s be honest – you voted for it. You voted for Medicare, for Medicaid, for Social Security, and for Obamacare. These massive entitlement programs will wreck the American economy by saddling us with more debt than is imaginable. The unfunded liabilities of these programs (not even including Obamacare) run up to $86.8 trillion. That’s right – $86.8 trillion. Try to think of how much that is… try.
Continuous trillion dollar deficits will bankrupt America, continuous class warfare spewed from mouths of the political elite will distract enough of us in the meantime, and all the while our President is seizing power not given to him in the Constitution; threatening to use executive power to raise the debt ceiling, as well as sidestep the 2nd amendment. Does anyone realize that these are not the actions of a President, but rather of a dictator?
Nah, Democratic California Representitive Jackie Speier says, “I urged him to do as much by executive order as possible. Frankly, I don’t have a lot of confidence that this Congress is going to do anything significant.” Right, so since that whole “separation of powers” thing really gets in the way of “progress”, let’s just forget about it and hand over more power to a single authority. This reminds me of one of my favorite excerpts from F.A. Hayek’s Road to Serfdom:
Yet agreement that planning is necessary, together with the inability of democratic assemblies to produce a plan, will evoke stronger and stronger demands that the government or some single individual should be given powers to act on their own responsibility. The belief is becoming more and more widespread that, if things are to get done, the responsible authorities must be freed from the fetters of democratic procedure.
People are getting tired of the stalemate in Washington, and they are beginning to believe that “if things are to get done” (ie: gun control, raising the debt ceiling, immigration reform, etc) then the authorities (Obama) should be “freed from the fetters of democratic procedure” (ie: the legislative process). It is happening right before our eyes. We are on the road to serfdom.