Tuesday, November 13, 2012

To Pay Taxes, Or Not To Pay ...

There is no doubt in my mind that more Americans should be paying Federal Income Taxes.  The operative word in that sentence is "should."  There is a damn good reason why the word isn't "can" without severe economic consequences.  It has everything to do with how the economic pie is carved up and what the reality of Taxes, in general, is in this model of economic dysfunction.

The first thing to address is what those non-Fed paying are paying and one my move out of Oregon has emphasized to me.  Most Americans pay sales tax and depending on the model in operation in a State, just how much the low and middle income pay for their State's operation.  This mess of a tax seems to range from about 5% to 7+% and though what is subject varies, food groceries are mostly out, every day needs are hit along with the more major purchases like vehicles and this hits a much larger share of income for low and lower middle income groups than anybody else.  There is an unholy mix of sales tax along with State income taxes and most of them are pretty damn regressive.

If you take a wage or salary anything up to $110,000 is subject to a tax of about 14% and there is no deduction on that (that rate can easily revert to the 15.3% rate).  You can go ahead and consider Mitt's published rate of about 14% on his millions of income.  Unless you're a church or favored Corporation you pay property tax and whether you own, "own", or rent you're paying these.  There are, of course, all kinds of specific taxes and fees like gas taxes and maybe the most insidious and nasty where tip receiving employees have their minimum wage slashed.

If you look at wages and salary that have been flat or falling versus inflation over the past 30 years you begin to get a sense of the impact of Federal Income Tax.  But that is really only a small part of what is going and talking about a symptom wealth distribution and, yup, taxes.  In 2007 the top 1% had 43% of the financial wealth in the US compared to the lowest 80% at 7% of the wealth.  Take into consideration that conditions have severely worsened since then.  There are structural reasons for this and there are policy and tax reasons for this.  I believe you can make the case that the structural reasons have much more to do with policy and tax policy than world conditions and even if they do not they are huge contributors.

It is frequently asserted that economics is not a zero sum game, as though this somehow mitigates conditions and quite basically ignores that at any given moment economics is exactly a zero sum game.  At any given moment there is exactly so much wealth within the system and how that wealth is distributed has everything to do with whether or not people earn money and spend that money and get taxed on those earnings.  If 80% of the population is competing for 7% of the wealth the system produces  they are going to take small portions and have small portions of a system that supports us all.

I really don't care what economic model one hews to from communism to unfettered libertarian capitalism the simple fact is that wealth is produced and protected by the infrastructure and various agencies.  These systems must be paid for, somehow, money has got to be put into creating and maintaining them.  If not enough people can afford or are willing to pay the piper the thing falls apart.  If you cut the share in wealth of the general population they cannot afford to support those essentials and if you allow the small percentage of the population to refuse the thing is broken.  The reason you have inability and the ability to refuse is all about the share of wealth.  If you concentrate sufficient wealth at the top you give them the ability to keep it that way and refuse responsibility through application of minor amounts of that wealth to the political system.

It has taken decades to get to this point and trying to do something real about it in a sudden manner, even if possible, would have undesirable consequences to the economy.  Forcing wealth back down into the general population will take time even if it is seriously addressed.  The problem is the the will to do it will take an awful lot work and time - the thinking that has led to this mess has been inculcated over decades and become some perverted common sense.  Waiting for politicians is simply foolish, they will react to common sentiment not common sense and worse yet - that sentiment has to overcome the political advantages of wealth.  Yeah, I think most Americans should pay taxes and that involves being able to pay them and that means that the real Takers in the economy have to give up quite a lot.  A hell of a lot which is just chump change in their world.  So don't hold your breath or any stupid like that...

By the way, if you're not in the top 1% or even better 0.1% you're getting hammered by percentage of income paid in taxes compared to them.  Absolutely hammered.

1 comment:

Joyce Reynolds-Ward said...

Yep. No question about it.