©2017 C. Henry Martens
Why are we so horizontally opposed to how we are taxed? About what is “fair”? About what works? I would suggest that most of us lack an understanding of context. I mean, why shouldn’t poor people pay taxes or the rich get a tax break? Or on the other hand, why shouldn’t wealthy people bear the burden of taxes since they are the ones benefiting the most from capitalism?
Can we at least agree that taxes are necessary to maintain a healthy nation? I mean… we do want our government to function, right? That means having and paying employees at the very least. Do we want a military, schools, an environmental protection agency? Or are we okay with anarchy?
I happen to appreciate a strong military, public education, and clean water. We could quibble all day long about the way the money is spent and what programs are necessary or pure waste, but in general… I like the services my government provides.
The way I see it, I pay for what I want, and don’t pay for what I don’t want. My tax money pays for good highways, not for any interminable wars. I might have had some of my money going toward war efforts in the past, but that time is long gone. I just don’t see the point any more. Now it is your money supporting wars, or not. The point is, I can complain about any government program, subsidies, pork, or congressional salaries, but it won’t do me any good. So I choose to think of my money going toward veteran care, scientific research, and things that make my nation stronger and more benevolent.
If I didn’t see things this way, I would go insane at the amount of government waste.
At the same time, I know that money spent by government keeps the economy flowing. That is something that many people seem to be unaware of… that in a strong economy there has to be money moving from one hand to another, from one pocket to another, from one business to another. A stagnant economy sinks all boats. So the government’s best function, even before military strength, is to stay economically strong. You can’t pay for a powerful military if you don’t have a financially viable economic structure, unless you want to go back to slavery.
So I am rather proud of paying taxes. I hope you are, too.
But none of this stops me from complaining.
I have to choose one example to illustrate first, so let’s start with people who make less than the average wage. First off, let’s assume these people are willing to work. We could go off on any number of tangents that constantly distract us from getting to a point if we want to, but in this case let’s stick with people who work.
The less than average paid worker sweats as much as the rich guy. They just do it at their job, not the gym. Actually, that’s unfair. Rich people sweat more in worrying about how to manage their money than they do at the gym. Mental sweat counts, too, right?
Whether the low wage person is paid appropriately is only another distraction. That’s another story better told in another article.
What really makes a difference in the context of fair taxation… is what it takes to live on the wages that are being taxed.
Now a poor person uses the same services as a rich person does, right? Public schools teach their kids, they drive on the same roads, and their homes and way of life are protected by the military and police just as we all benefit. So really, our personal expenses, the debits for services rendered by the government, are the same, poor or wealthy. Well, at least pretty much. This is where it is handy to think of your own money being spent on the programs that benefit you.
But opportunity has a cost, too. And this is where it gets sticky. Let’s say a person makes a thousand dollars a month. That’s poverty level wages in the most inexpensive areas to live anywhere in the country. How much of that income is disposable? I can itemize it if you wish, but is there any question that someone making a grand a month will be hard pressed to put any money away for the future or for investment purposes? Especially if they have children? So my point is there is little opportunity for a low wage earner to do more than subsist. They spend everything they make on trying to survive.
Now we can quibble about this, too. Sure there are examples of people rising from poverty. I say the odds are about the same as a ten year old who wants to play in the NBA going on to realize that dream. But amazingly, the real figures are much higher. This is a testament to the tenacity of people in dire straits. While many in upper income brackets denigrate the poor as lazy or inept, the facts suggest they are just as capable as anyone… and tougher than most. The numbers would be even higher if the poor weren’t in an environment that generates bad luck. You have to wonder how many would rise if they didn’t have to care for an aging parent or if they weren’t preyed on by circumstances out of their control and with no support system worthy of being called one.
What about our example of wealth?
Well, what do we consider wealthy? I define it as a level of comfort based in financial security. Let’s say that a person is wealthy if they can pay the average basic living expenses in their present city for the rest of their life without working. But people in this position don’t stop making money, do they?
A lot of people resent wealthy people because they have more than the rest and are unwilling to share. On the other hand, a lot of people see the effort or luck involved in making money as a just reward. This is all distraction, once again, from the point of fair taxation. It does not matter unless you want to get caught up in the minutia of over-complication.
I’m going to say this clearly. Most wealthy people deserve to be wealthy. No matter how they come by their money, inheritance, hard work, smart investing, talent, scrimping and saving, or playing the system, they all give the rest incentive to make an effort, to improve their circumstance. The exception to deserved riches is illegal activity.
The most common excuse for limiting taxes on the rich is that with their wealth is used to generate jobs for the rest of the population. I say excuse, rather than reason, because I don’t believe the “reason” any longer applies. We live in a diminishing job market where intelligent people are increasingly encouraged to seek higher education to compete, yet there are fewer jobs in all categories.
The times, they are a’changin’.
What worked before will not work in the future.
I’m going to suggest to those people of means who feel financially secure, unless you are in the upper point one percent and maybe much more wealthy, you are the new middle class. You better realize that those wealthier than you are going to be looking to where the money is for their future wealth building efforts.
This means that those paying the most in taxes will be increasingly be the lowest echelon of the wealthy.
Either that or the nation becomes bankrupt and a third world economy.
So what is fair taxation for someone of wealth?
I said before that a poor person and a rich person reap the benefits of government fairly equally. And as an individual, that is substantially true. But a wealthy person has investment in commerce, and that commerce uses roads. Commerce is manned by people educated in public schools. Commerce is protected by a military made up of citizens that come from low wage conditions.
How about we make it simple. Think of the savings in governmental expense if the IRS was only chasing after the fair and just taxes levied on profit… and not income. In other words, taxation only on money made above and beyond the average living expenses in any person’s community.
A graduated tax, favoring small business that employs a greater percentage of workers compared to larger more efficient businesses, would encourage employment as well as growth. After all, any percentage of profit that stays with a business is better than no profit.
I have a lot of sympathy for people who have generated their own circumstance, rich or poor. They both bear burdens. But a nation must make an attempt to survive, and if in that endeavor we wish to be seen as Constitutional and cognizant of human rights, we must be fair. Those of us with religious convictions can surely see anything else is irreligious.
There will always be industrious people. There will always be lucky and talented people. Some will succeed beyond all reason, and some will fail through no fault of their own. It could be any one of us. The government can act as a great equalizer. We do not have to pillage those who have nothing, nor do we have to ruin those who inspire our efforts.
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