Thursday, June 18, 2009

Let's Tax the Poor

This phrase you hear from Congress all of the time “Tax the rich.” What does it mean? It certainly doesn’t refer to the person who has 10 million in the bank and who doesn’t work. They are talking about wage earners who get paid a lot.

The really weird thing is, 40 percent of the population pays no tax at all. They get to live here free (they don’t make enough money to pay taxes). The highest wage earners pay most of the taxes (god bless them).

Has anyone ever said, screw the taxation system and let's have everyone pay two month’s wages or work on a government chain gang to satisfy your government obligation? I do not get this “tax the rich” solution. If you are truly rich, you don’t need to work and what taxes are you going to pay?

People get rich in other countries and move here to retire. We are not taxing them or any of the truly rich.

If you are poor, you get a free health care, free food stamps, free college education, and free welfare. You don’t have to pay your fair share. Let the rich pay your bills.

Congress is so set on helping the poor. Everyone needs to pay into the system, tax wise. 40 percent of the population paying no taxes is absurd. Either pay with cash or labor.

Let’s tax the poor and not feel guilty. We have taxed the rich enough already; all they do is move to a country with a lower tax base. We need revenue from those who are a captive audience. The poor are the people who get the greatest return. It doesn’t cost them a dime to live here.

Of course, if your neighbor can't pay his mortgage, Congress will help them with that also. Do you get the feeling that deadbeats, have a lot of political pull? I can't quite figure that out! It has to be my money they are spending; they don't have any that they can call their own.

Why should some people get a free ride just because they claim that they can’t pay for it? Rome built its roads with labor from people that had no money to pay tax.

38 comments:

sobers said...

I like the concept - that everyone should contribute to society in some way - paying tax for most, providing physical labour for the rest.

The problem is in the implementation. What are the workers going to do for their 2 months? Will they need training first? Who will feed them and pay their bills while working? What do you do if they won't work, or just turn up and laze around all day? Could anyone choose to do the 2 months work, as I might prefer to work for 2 months and save a lot of tax, if I was wealthy.

It all gets a bit complicated when the govt tries to force people to actually DO things they don't really want to. You'd have to create a legal framework that effectively drafted people into a civilian army for 2 months per year, with discipline to match.

Anonymous said...

Decimation, thats how the Romans handled it.

dearieme said...

Eat the poor - they have a nice bit of fat on them.

frakrak said...

Have to agree Jim, no point putting oneself on life support for someone that expects his or her bottom to be “royally” wiped because of a privileged taxation system! The 40% figure is quite a revelation!

I have also thought that most folk finding themselves arbitrarily unemployed during a severe downturn should not be disadvantaged by accepting handouts! What’s wrong with the government legislating against fulltime employment, cutting it back to three days a week (where they can) so companies that require jobs have to employ more of the unemployed? Sharing the pain around to everyone, so to speak?

Let’s give everyone a chance of cleaning streets, working on government infrastructure projects one day a week with free labor, just for the privilege of being part of the community!

Finally, let’s give ALL those financial exec’s the chance to participate in this program and give them the task of cleaning the public toilets. I can see them having to use a shovel, if I have gauged public sentiment accurately!!

There with you Jim…..

Sackerson said...

We already do tax the poor - in the UK, at a rate of some 40%, it's estimated - on indirect taxes. And if they try to climb out of poverty by working they lose benefit entitlements and can end up worse off than before.

talia_ said...

Paying with labor?!? Isn't that what the people who are making the least and not paying taxes are already doing? A great majority of them are the ones out in the summer heat working construction building the cities we live in or picking the food we eat. They are already contributing at the most fundamental level to help this country survive on a day to day basis.

The world can survive without the majority of upper level jobs. But without shelter and food everything would crumble.

I definitely appreciate all that they do. And if I ever make millions a year I'd be more than happy to the taxes that help support a country that made that type of abundance possible.

Anonymous said...

Don't tax anyone!

Let the free market take care of everything.

I don't want to be a slave to the government for 6-7 months of the year!!!!!

It's slavery!!!!

Drewbert said...

Tax the rich because they're the ones who have helped the poor get poorer. They ship jobs over seas so they can save 50 cents per widget and then give themselves a bonus for saving on payroll by laying off 3,000 workers.

Get wage disparity below 1830's France levels and then MAYBE the rich will get some sympathy from me.

http://www.nakedcapitalism.com/2009/02/madame-defarge-watch-pay-disparity-in.html

Gone Soon said...

As long as the 2nd Amendment is the law of the land, we must help each other out.

When your neighbor starves, even if it's due to his own foolishness, you are not safe. It's probably cheaper to give him a little, than to have to guard your life and property around the clock.

Jim in San Marcos said...

Hi Sack

It is the same way here. Government dependency for support makes it a way of life from generation to generation. The system works so well, that you can game the system and get more out than you put in. Once you accept that trying to get out and better yourself isn't worth it, you'll never try. The government has built failure into your life.

Sadly, the government best intension's usually have very undesirable consequences.

Jim in San Marcos said...

Hi Drewbert

From reading some of the other remarks, I could be accused of poor communication skills.

I was hoping to point out that the rich do not get taxed. The poor do not get taxed either. We do tax the people that EARN a lot of money (there is sales tax which is kind of a consumption tax which clouds the issue).

The politicians cry "Tax the Rich." All we have is income tax. How do you tax somebody rich enough, not to have to work? The politicians are not taxing rich people, they are taxing wage earners with two jobs, or a husband and wife. The tax laws get passed and guess what, that second job makes you one of the rich people that they are referring to.

My gripe is why is being poor an excuse for not paying your fair share of taxes? If you can't help pull the load, let go of the rope.

Jim in San Marcos said...

Hi Sobers

Back in Rome many people worked full time on the roads as laborers who were being paid to work off someone else's tax obligation.

For a lot of people, paying someone else to work in your place for two months was cheaper than being away from their job. And if you had an attitude problem, I'm sure that they would beat it out of you.

I do agree that concepts have changed and things might have to be addressed differently today.

The thing that really gets to me, is that you get a free ride if you are poor in todays world. The poorer you are, the more you are entitled to. I makes no sense to reward failure.

Thank you for your comments.

Jim in San Marcos said...

Hi Talia

The poor pay no taxes, the rich pay no taxes. The rich spend their own money where the poor spend your money.

I am for taxing the wealthy as well as the poor. It just doesn't happen. Plus people are usually only poor when it is convenient.

We all enter this world at birth and leave this world about 70 years later. There should be some sort of charge for enjoying what everyone else has helped to provide.

The poorest person today enjoys a lifestyle greater than the richest people on earth just 100 years ago.

The major fact that most people never realize, is that being poor sucks. If it sucks bad enough, you'll do something about it.

Thank you for your comments.

Jim in San Marcos said...

Hi Gone too Soon

I agree. I have mentioned it before. Have enough food on hand to feed your neighbors. I do believe that we will need to help each other to survive this mess. It will be a group effort. Your neighbor will be your wingman.

I do think that a handgun might not be the security element you think it is. Shooting someone (if conditions deteriorate) might get you and your house burned to the ground.

Jim in San Marcos said...

Hi Dearieme

(I didn't miss-spell your handle this time)

I seriously suggest that you request a refund from what ever cooking school you are attending and consult with a lawyer;>)

Jim in San Marcos said...

Hi Frakrak

I disagree in one respect, I think that a lot of the rich people today started cleaning toilets in the beginning. You have to be prepared to do anything and everything.

I do agree that the government has a very big responsibility to help keep people supported while they look for a new job.

I think that your idea of community support for the infrastructure is a good one. Maybe it will catch on (there is no money to pay for it).

Take care.

Anonymous said...

Jim,

Death and taxes. Realized by everyone someday. Death is a sure thing, however taxes are relative. Not only do the "poor" not pay income taxes, but in many cases get up to $3,500 check from tax payers at the end of the year. Earned Income Credit anyone?

At my previous company, we hired a "career" temp employee towards the end of the year. She terminated the six week contract early. When asked why she was leaving, she replied "I'm at the max I can earn for the year," and further explained she was at the income limit to draw EIC funds from the IRS (actually, me and you). An isolated case... I'm not so sure.

If we could only get folks exited about real Tax Reform instead of more tax and spend government programs perhaps we could get some bi-partisan group hugging going on in the country.

I have no problem paying taxes, as long as its fair and that we ALL do. Get rid of corporate and personal tax returns, deductions, and exemptions. In a perfect world the IRS would be abolished, taxes would be flat, collected on consumption of everything except food, and not from our income.

Both the rich and poor consume and would pay a fair-share based on their capacity. The rich, regardless of where their money came from do spend more than the poor. As folks climb the social and economic ladder more taxes would be contributed.

What to do with all the collected taxes?

- 1) Strongest national defense in the world.

- 2) Free top notch, high quality, public education from Pre-K through 2nd year of college.

- 3) Free high speed mass transit system to ultimately replace the automobile.

ATP

frakrak said...

My guess is American society will not handle 25% unemployment the same way it did seventy years ago!

Obama would need more balls (in the air) than a Cirque du Soleil Juggler to appease the public on the topic of taxation reform!

If he is moving towards reform on tax, health, welfare, financial regulation, why can’t the guy get some alternatives together (via a summit) and present it to the public in the form of a referendum! Then he would have a true mandate to reform, the great unwashed would not feel disenfranchised, and after due process you should get change in about 30 years …

Truly wish I had a better suggestion for you all..

Jim in San Marcos said...

Hi Angry Tax Payer

I don't see government trying to much of anything. It won't get you re elected.

Frakrak in the post below yours, alludes to the fact that "American society will not handle 25% unemployment the same way it did seventy years ago!" That could be part of the solution. The government will be broke. No free health care or welfare, it will be sink or swim time.

The net result will be like poking a stick into a wasp's nest. I'm just glad there is an ocean separating us from the 4 billion people about to become unemployed.

Jim in San Marcos said...

Hi Frak

I don't have any solutions either. Everyone is projecting that we have hit bottom. That seems pretty absurd. I know people who have lost their jobs and are looking for work. Plus, if you have a job, your still scared that you could lose yours.

Our unemployment is turning into a potential powder keg. We have 20% to 40% black unemployment, (depending on where you troll for data). The silence on this highly visible aspect of who is unemployed is deafening. It doesn't look like an Obama bumper sticker will put food on the table to feed the wife and kids.

Are we in the eye of the hurricane? Time will tell. The trouble is, we might not have to wait very long for the answer.

Sackerson said...

Jim - I made a second point, but I don't know if it holds true in the US?: poor people pay a significant proportion of their income in indirect taxation.

But there is also the question of economic migration. We in the UK have been told for years how beneficial it is to have people come in from abroad to work here - yet if you look at per capita expenditure merely on health and education and compare it with the expected direct and indirect tax take on a wage earner, you'd have to earn a significant amount to be a net contributor to the system. This is where it's going to get nasty in the downturn. The laxness of our border controls in the last decade - I can't speak for the US - is leading to proto-racist stirrings in a normally very easy-going country.

Sackerson said...

P.S. Taxing the poor directly wouldn't help much anyway. Consider the implications of this study on the estimated costs of a family on minimum wage:

http://www.migrationwatchuk.com/briefingPaper/document/154

ca said...

Jim -

Regarding the gun issue....

After reading about the increase in crime, I suggested to my husband that we should get a gun. He thought this was a little extreme. So I suggested that he speak with the state police who have an office on the campus where he works.

When he told them we were thinking of buying a gun, they responded "we think that is a good idea." We were shocked.

Jim in San Marcos said...

Hi Sack

I don't think that the "poor" get taxed hard here.

When Hurricane Katrina hit New Orleans, it displaced a lot of people. The governments response was severely inadequate. If you read between the lines, it looks like a large percentage of the people were working for cash and paying no taxes. It was an invisible economy that enjoyed welfare, unemployment, free education and health care. Mix in prostitution and drugs.

The hurricane destroyed a life style.

I do think that these "want to be rich" people do spend more trying to get rich (race track and lottery) and a lot on alcohol tobacco and drugs.

The concept of being poor means something different to each person. A bottle of beer and your arm around a young tart at the race track with you welfare check in your back pocket might just be the good life. You can always claim you got robbed when you go home to face the wife and kids.

Here is a better Link to your web doc. After reading that, I wonder how many people on your side of the pond are working under the table for cash. When you add government benefits with the hidden income, you're no longer poor. You're gaming the system.

Jim in San Marcos said...

Hi Ca

Guns aren't the problem. If you have kids, drink alcohol or have a bad temper, you are asking for trouble.

I sleep walk and it sounds innocent enough. My cousin almost ran me through with a fencing foil while I was strolling around the house in the dark. A few years back, I was staying at a friends house the night and nearly got shot while wandering through his home.

I'd recommend getting a dog instead.

JMS said...

Jim, I completely agree with you about the gun thing. At first I was seriously pondering the idea of buying a gun. I even got the buy in from my wife. I am pro gun, but I think its near impossible to guarantee that it will only be used in the correct situation. I don't want to have an accident on my concience.

So I had a dilemma. How to protect my wife and my house while I am not there. So we bought a bullmastiff, and he is the cutest! Right now he is 6 months old and a little over 80lbs. We think he will max at about 140-150lbs. During the night he does walks around the house making sure everything is in its correct place. He doesn't bark often but when he does you know its for a reason and he probably makes better decisions than I do in the heat of the moment.

frakrak said...

Jim I to agree/appreciate your comments on guns! I also agree totally with your take on welfare and the working poor. The same happens in this country, EVERYONE should pay income tax at both ends of the economic food chain.

I was married in 1991, and being the sole earner for my family I was entitled to a small tax break; two weeks later this was abolished and turned into a “family payment,” effectively making me a working welfare recipient! This payment was deposited into my bank account every two weeks, opening the flood gates to an unbelievable amount of welfare B.S. in this country from this point on.

Governments have created a disempowering “cap in hand dependency” rather than an empowering culture of contributors to society! Governments should act with compassion towards poverty but not create dependency with the able bodied!
cheers

Jim in San Marcos said...

Hi JMS

Once you get use to a dog, they become great company.

I have a 20 pound Sheltie, a lot smaller than your dog. He doesn't eat much and easier on clean up.

With dog around, I don't have to get up and check out those things that go bump in the night. Plus if you ring the door bell or knock, you'd think we haven't fed him in quite a while. Great little burglar alarm.

Edward Forster said...

Who bears the burden of progressive taxation? For example, if we consider the employees at a supermarket, they and their payroll taxes are a cost to every consumer buying at the supermarket. That must be the case since the company's only source of revenue is its customers. Thus, the total company payroll tax bill is a percentage cost of every sales price.

Therefore, who is considered to pay income taxes? It surely cannot be the individual employees through their payroll deductions as we can see that they are essentially collecting tax from consumers and passing it on directly to government, without it even touching their own pockets. The great delusion is that by this taxation strategy employees think that they are paying tax, but those employment taxes are translated into equivalent sales taxes and so are all taxes involved in the chain of production down to the consumer.

No, the real taxpayers are ultimately and entirely the retail consumers.
And, the real equivalent sales tax is the same for everyone rich or poor. That is the extent of progressive taxation on incomes. Some might see it more as political.

It is almost self evident that any scheme of taxation on producers can be financed only by their paying retail customers at the end of the supply chain and it will always be in proportion to individual customer spending. Therefore, we are already subject to taxation of our consumption, but it is imposed by the back door in a hugely complex, expensive, intrusive and convoluted manner that misleads voters as to the true cost of government that is contained in every pound we spend. I would suggest that the obvious next step is to convert to an explicit consumption tax regime with a single flat percentage rate, abolishing all other taxes. Current net personal income would be declared true income in employment contracts henceforth. Then, the massive income tax industry could be put to more constructive use and entrepreneurs would be released to flourish.

Jim in San Marcos said...

Hi Frakrak

I guess it's a little like feeding the wildlife. Once you change the way they procure food, they become dependent upon you, which when winter comes, is a bad thing.

Our situation could cure itself. Can winter be far away?

Jim in San Marcos said...

Hi Edward

To your VAT (Value added Tax) I would also like to see a land tax and a luxury tax.

The only problem I see, is in the transition, from what we have now, to what you proposed. The UK went for the transition and decided to keep both plans if I'm not mistaken.

The taxpayer seeks fairer taxation. The government seeks more tax dollars. They won't meet in the middle on this one, you can bet your tax dollars on that!

Thank you for your comments.

Hausfrau said...

I think what Edward says is very true. I would also agree with capital gains taxes and luxury taxes.

I'm actually from New Zealand and it seems that we have a very similar situation. While our actual unemployment figures are quite reasonable we have a hidden unemploye population. Much harder to deal with and they are called the "disability beneficiaries". The problem is, most of these people aren't actually disabled but have managed to get a doctor's certificate saying that they have terribly back problems or some other bull****.

The biggest problem with these families is that they see the system as a lifestyle. They train their children to think the same and encourage them to have as many children as possible and hey why not start young (the more children an individual has, the higher are the benefits they are eligible for)?

So we have an exponentially expanding population of people whose only purpose in life is to create more deadshit children and use the system to their benefit.

The situation I am in is a good example of the inequailities.

I am a well brought up person from a middle class background and married to an Austrian. I've just started studying as we moved back here a few months ago. My husband has been looking for work since we arrived to no avail and we have used up our savings. If I wasn't studying I would be eligible for the benefit, but since I am a student with parents earning more than the given threshold (I think it's around (50,000 USD), even though I am married I am completely on my own as far as financing things is concerned. My husband is ineligible as he is on a temporary work-permit. HOWEVER if we had a child I would be considered independently of my parents and would receive support. Naturally I am doing my best to get a job as is my hubby but we would love a little support, considering I was a taxpayer for several years and I am actually educating myself in order to become a contributing member of society. The incentives offered by the government seem to constantly encourage two things: don't study, have kids.

Sometimes feel like an idiot for bothering to do things properly. I could just never work, live reasonably comfortbly, have kids that are also supported and let others do the work. Pity I was brought up to do my bit.

Poor Sap.

Edward Forster said...

Hi Jim,
Thanks for allowing me the forum. By the way, I am an electrical engineer not an economist, but I believe anyone can understand this.

I would just add that taxation be it on employee income or business income, property, or land is always a burden on production, which finally falls on consumers. When we personally pay mandatory municipal taxes, normally we do so from our earned income, i.e. from money provided by consumers of our work. It is therefore a personal cost on our production.

Then when we think we have paid our taxes and begin to spend our disposable income we encounter sales taxes such as VAT, etc. These are explicit in a way that deludes us into thinking that we are paying no more than this in a purchase. But if we add up what we think of as our total tax bill we will not reach the true figure at all.

The truth is this: if total taxation is 40% of GDP (UK), then on average 40% of what we spend with our net disposable income is actually tax. Say we buy something with a basic cost of £60, effectively another £40 is added as tax. This corresponds to a sales tax mark up of 66%. How many people appreciate that? Tax will soon be 50% of GDP or more in the UK corresponding to a sales tax mark up of 100%!

If voters realised this then they might say some tax might be better spent by ourselves. Unfortunately, as if this wasn't enough, tax is looking more and more like interest on debt that has been incurred by irresponsible government.

Anonymous said...

This is why a flat consumption tax instead of an income tax is the way to go; no one can escape the tax. If you consume more, you pay more. Its a disincentive to spend, so naturally there would be more savers in this country. There could even be a tax exemption on food for those whose income/wealth falls below a certain level. That way the poor can still eat, but still have to contribute to the tax base via their other purchases.

Anonymous said...

ca,

Please be responsible for your family's safety. No one else is going to protect you and yours. Police are rarely present at the scene of a crime while it is happening. Even if they are, it is a rare noble officer who will put his life on the line for your wife or daughter's dignity.

A dog is a great first step. Train your dog well. Then realize how little defense a dog is against a determined human. A dog is your best alarm system, not your best weapon.

Buy a gun and train how to use it. I recommend Front Sight in Nevada. Their program teaches you how to shoot, when to shoot, and what to expect if you ever do have to shoot someone. Sign up for the Front Sight e-mails today. Yes, their website and marketing is cheesy. Their training is bar none.

In response to those posters who think sleepwalking and guns are incompatible, don't let that be an excuse to leave your family to the mercy (or lack thereof) of criminals. Get professional help on whatever obstacles you need to overcome to arm yourself against the rough times ahead.

- Connecticut Renter

Jim in San Marcos said...

Hi Connecticut Renter

My nephew is in Iraq and his wife decided to visit some friends last month. When she returned home, a shotgun ,several high powered rifles, two hand guns and a laptop had been stolen. He's a little pissed.

When some home owner shoots a burglar, it makes the headlines nation wide. Drive by shootings don't even make the front page of the B section.

Using a hand gun is a little like killing a fly with a fly swatter; it's not as easy as it looks. It gets even more dangerous if the fly can shoot back.

How many houses do you have to rob before you get a hand gun and become a real threat?

I don't see a clear cut solution to gun ownership.

Anonymous said...

Rich people, for the most part, did not start off poor. They got a "free ride" from their parents. Their parents paid for their education, cars, clothes, food and all they had to do was study and through their connections, they made it. Poor folks have to struggle. The poor do not get a free ride and any welfare they get barely keeps them afloat. If you take that away from them, they will be even worse off.

Nels Werner IV said...

Um, it is called a lottery, and we tax the poor to the point that they jam up lines in gas stations while they carefully pick the numbers that will make them rich.

How many rich people you see buying powerball?