The Quiet Conservative October 17, 2010
Taxes and the Government
Taxes. You pay them, but have you thought about them? What is a tax? A tax is a compulsory fee by
the government that is used to fund the government. Well, sure, you reply. Everyone knows that. Just
try not paying a tax and see what happens. But do you agree with the taxes you are paying and what
the tax money is used for? Paying taxes is the responsibility of every citizen, as a functioning society
must have a functioning government. However, unlike every other form of government throughout
history, we set our own taxes because we, not the government, are in charge.
At least, that was the theory. This was the comment made by President Obama in Boston,
Massachusetts where he was campaigning for Deval Patrick, the liberal governor of that state, "...They
want to cut education by 20% to help pay for a 700 billion dollar tax break that only the wealthiest
2% of Americans will ever see."
Before getting into the tax issue in depth, the President's statement has been repeated by his
administration in many formats but essentially the same message. Tax cuts are payments by the
government that we cannot afford, and that it is immoral to do so as only the wealthy get the money.
Here is a quick illustration that is currently viral on the web. It has been attributed to several people
and has appeared in several forms since 1991, including as a restaurant bill and the present bar bill.
This is the current form:
Bar Stool Economics
"Suppose that every day, ten men go out for beer and the bill for all ten comes to $100 and If they
paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.)
So, that's what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day,
the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce
the cost of your daily beer by $20." so drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first four men were
unaffected...They would still drink for free...But what about the other six men - the paying customers?
How could they divide the $20 windfall so that everyone would get his 'fair share?'...They realized that
$20 divided by six is $3.33...But if they subtracted that from everybody's share, then the fifth man and
the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it
would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the
amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before...And the first four continued to drink for free...But once
outside the restaurant, the men began to compare their savings.
"I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got
$10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times
more than I!"
"That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The
wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits
the poor!"
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without
him. But when it came time to pay the bill, they discovered something important. They didn't have
enough money between all of them for even half of the bill!
And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The
people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack
them for being wealthy, and they just may not show up anymore.
In fact, they might start drinking overseas where the atmosphere is somewhat friendlier."
Of course, in real life if someone becomes an expatriate and has a net worth over $2 million, they are
automatically assumed to have done so for tax avoidance reasons. They are subject to a higher tax
rate under the American Jobs Creation Act- according to the Wikipedia entry on taxes. (It's OK to cite
Wikipedia despite what they say. Think of it as electronic Cliff Notes and don't be embarrassed.)
But the point and rebuttal to the President as Marxist in Chief isn't to point out that the rich pay the
most in income taxes, it is that the people we elected to the government believe that they, not you,
have the right to your money. When President Obama says the government would have to cut
education to pay for tax breaks, he reveals the mindset of the entire Democratic Party, the Socialist
Party, the Communist Party, and the Left as a whole. It is the GOVERNMENT'S MONEY, not
YOUR MONEY. That is it in a nutshell. That is the whole difference between a representative form
of government that has guided this country since its founding, and the post American socialist state that
Hope and Change was meant to bring. The $700 billion the President was talking about belonged to
the 2% of the people he talked about, not the government.
Here is the reality of income tax payments: The top 5% of wage earners pay 53.25% of income taxes.
The top 10% of wage earners pay 64.89% of income taxes, and the top 50% pay 96.03% of all
income taxes. The President holds these people in utter contempt.
Now that you understand that when a politician talks about stimulus money, grants, foreign aid, deficit
spending, "investments in education, infrastructure, business, research," etc., he/she is talking about
taking your money to do that. You might not think so when he/she is talking about a measly ten
million here, two billion there, but he doesn't have any money. He/she has your money. Every dime
that politician talks about will be coming from you. And it isn't just income taxes either. What other
taxes are you paying government so they can operate bigger and broader each year?
You pay: Income tax if you work, consumption taxes, excise taxes, environmental taxes, property
taxes, financial transaction taxes, sales taxes, property taxes, public school taxes, estate taxes, social
security taxes, and there is even a proposal now for a value added tax to pile on top of everything else.
You would think that with all the money you are paying, the people taking that money would at least
be a bit careful with it. After all, that would be good manners. President Obama stated much of the
health care overhaul would be paid for by cutting the waste and fraud from Medicare and Medicaid.
Have you heard of anyone lifting a finger to trim any waste or fraud at all? No? Well, what a surprise.
How about 89,000 stimulus payments made to dead people or people in prison? Was that good
stewardship of your money?
The Independent Institute has a great new web site that allows you to bring down the massive amount
of waste to a level that is personally relevant to you. Called MyGovCost.org (www.mygovcost.org), it
figures out, based on your salary, what the debt the Federal Government has accrued in your amount
personally and what you would have been able to do with the money had you kept it. For example, for
a person earning $50,000 a year, that person will pay $166,399 in lifetime Federal taxes. If the person
had privately invested the money, that person would have earned $600,010 he could have kept. It
puts into perspective what your money could be doing when you control it, not a Marxist in
Washington.
The purpose of government at any level is to accomplish a few basic tasks that are in the common
good, and that cannot be done by private industry. That concept has been discarded as bigger and
bigger government has grown. For example, the Department of Energy was formed to free us from
foreign oil. The fiscal budget is a proposed $28 billion dollars next year and as far as anyone can tell
the only thing our government is doing is putting domestic energy sources out of reach. No new oil
drilling. No new coal mining. No new nuclear plants. No new energy. If you think windmills and solar
count, then you are wrong. They only exist in a green imagination where cost isn't a factor and energy
production isn't a factor.
The Department of Labor is a $13 billion dollar bite. The Department of Education? $46.7 billion.
The Department of Health and Human Services? $99 billion. All of this is waste. All of it. The reason
such a radical statement can be made is that it isn't radical. The Federal Government has no place
running or funding such efforts. By usurping state control of issues they have strangled competition,
efficiency, accountability, and fiscal responsibility to the taxpayer.
There is an argument to be made that government services have a place in some of these areas, but
there is no argument to be made that the national government has a place. By closing down large
swaths of the Federal Government, eliminating waste and fraud, and placing the role of government at
the state and local level, the proper balance can be regained and private industry, creaking under the
yoke of government over regulation and taxation, can grow and people can prosper.
Taxes are the responsibility of the citizen towards a working government. But the money belongs to
the taxpayers, not the governments. When the government is no longer the steward of that money, the
taxpayer has the duty to restore the accountability and control over what funds he contributes.
When President Obama and the other Marxists think the government owns the money that you
provide, and the government decides how much you may keep, it is time to remove him and those of
like mind at the ballot box. Americans need to replace those of corrupt values with honest, traditional
Americans with values of a representative and limited government. A free people can, and will, be
stewards of their own finances.