A friendly tutorial on taxes | Jackson Free Press | Jackson, MS

A friendly tutorial on taxes

There has been quite a debate over issues of tax cuts, class warfare, and shared prosperity ('spreading the wealth around'). I want to present a little tutorial on income and taxes for my friends who bemoan the idea of taxation - or, rather, higher taxation.

First, higher income always comes on the backs of the poor. After all, we buy food for cheap because we pay farm workers so low. We buy clothes cheaper because folks are willing to work for close to minimum wage without health care.

So, we could lower taxes, but would you be willing to pay much more for goods and services so the folks who "need" government service (e.g. health care, food stamps) can afford those previously provided for services?

Second, if I make higher income, someone else generally has to make a lower income - there is only enough money to go around. The economy has a fixed amount of "good" high paying jobs. The economy needs people to be willing to take low income and physically demanding jobs. Would you be willing to pay more to people who do those jobs so your taxes can be low?

Third, income tax rates are at a historical low. Take a look at the marginal historical tax rates. Go ahead, google it. Tax rates have been unbelievably high (even close to the 90 percentile in income!!).

Fourth, we are only as prosperous as our neighbor. When we lower taxes, we lower social programs. Take a look at the 1980s which led to the social upheavals of the 1990s (remember the high crime rates, teenage pregnancies, and so forth?) When we lower social programs, we cause social problems. When we have social problems, we have major expenses for YOU the taxpayer. You have to hire more police, more teachers, pay for more health care and so forth.

The gist of my point is this - you are going to have to pay for "it" some how. We can lower taxes in the short term, but you'll pay for it in the long term.

The problem, then, is not taxes. The problem is government working well and working for us. So, quit bemoaning taxes and bemoan bad government programs!

Previous Comments

ID
139323
Comment

Wow, this is a tutorial? To your first point. "Higher income always comes on the backs of the poor." This seems to be your second point also "if I make higher income, someone else generally has to make a lower income there is only enough money to go around." Which is a fallacy. The American economy is not static. Wealth is created from the ingenuity of our people. Think of fax machines for a moment just as an example. Before their debut there was no market for them and no supply, but someone with an idea created the demand and the supply for them and created a whole new niche industry in the process. Now there is no business that doesn't have one or more. Where did that money come from? If what you are trying to say is that there will always be unskilled people who will be poor, that is probably true. But imagine for a moment if somehow all of those people suddenly saw the value in education and sought a better life. And decided that that type of labor was beneath them. What would happen then? If you couldn't hire someone to work for a low wage to produce food or clothing? The market would respond to that labor shortage by raising the price for that labor and in turn raising the price of the goods produced by those laborers or capital improvements in the industry would produce more for the higher wage paid through automation or improved processes. Think of it this way. Who makes more? The man digging a hole with a shovel or the man who operates earth moving equipment? Of course the worker who operates the heavy equipment makes a better wage and is far more productive. I have direct experience with this concept being a former small business owner. Try to hire someone to mow grass for minimum wage...lol. You will find yourself out priced by the market for that labor unless you hire illegals. Your third point about taxes being at a historic low. Ok. I don't feel like googling it so I will concede that they aren't so high to be destructive to most business. So it's time for them to go up? Most economists would say that during a time of recession or impending recession raising taxes wouldn't be a good idea. Why would that be? Well number one anytime you raise taxes on something you get less of it. People cite that reaction every time they talk about a cigarette tax. "If we raise taxes it will give people a greater incentive to quit." That's very true and depending on the amount of the tax it could price cigs out of some people's reach. Well do we really want to raise income tax in a time when people need all the income they can get? It will only lead to less income. Yes, yes I know Obama's plan only calls for raising the top rates. I support Senator Obama and will be voting for him. But as a concept, raising taxes on business is not generally a good idea when you need those businesses to invest in capital improvements like earth movers and the equipment they need to be more productive, which in turn offer a higher wage, in a very competitive global economy. I'm not really sure how to go at your last point. First you say we need more tax for more government programs because the lack of them costs us more. Well more taxes costs us more. I know a lot of people don't want to hear this, but the facts do bear it out. When taxes are at such a level as to allow greater economic growth even if they are relatively low, more funds are collected by the treasury because of the increased tax base. Our problem as Americans isn't that we don't raise enough money in Washington it's that the people we send there to over see it are completely inept. We waste more money than some countries make. So I'll agree with your last sentence. I won't bemoan taxes, whether they be too high now or too low, I'll bemoan the government programs that waste our money and do little or nothing to help anyone.

Author
WMartin
Date
2008-10-17T10:21:19-06:00
ID
139332
Comment

John I'm no economist by any means but I like the idea of what you're trying to say here. Taxes don't scare me and they never have. I will afford what I can and that I can't I won't. I don't worry about funding social programs or helping people on welfare, medicaid or other programs no more than I worry about funding schools and wars I disagree with. And I hope should I befall to bad health that someone will help me. The raising tax argument that seems to scare so many republicans seems to me to be a redherring meant to scare off people without any or much control anyway. It seems to me that none of us will let taxes get too outrageous before protesting. I still don't understand the protest to higher taxes but not to unnecessary wars or government waste or corruption. Programs have to be paid for some way. Taxes are often if not always the way we make improvements (I'm not for waste though). I'm not satisfied at where we are now as a country, so i'm opened to change, improvement or even the flirting with disaster as long as the odds are low and the intentions are good. I reluctantly even support the socialistic bailout of Wallstreet, AIG, et al, provided it keeps the economy percolating, keeps people working and families surviving. I'm all for helping erase poverty even if I have to pay more taxes to do it.

Author
Walt
Date
2008-10-17T15:29:21-06:00
ID
139340
Comment

Well I read today the deficit was something on the order of a trillion dollars for this year, so yeah, that will have to be paid off. Clinton managed to balance the budget so maybe it is a good idea that the democrats have a shot at governing for a while.

Author
GLewis
Date
2008-10-18T08:46:35-06:00
ID
139477
Comment

Is this satire?

Author
kudzuking
Date
2008-10-21T12:14:14-06:00

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