Saturday, March 14, 2009

We ARE All Socialists Now....Whether We Like it or Not

The government lets us keep no more than 25 cents of every dollar we earn.

Lest you think I exaggerate, consider this list of what you're forced to give to the government:

Federal income tax

State income tax

Local income tax

Social security tax

Capital gains tax

Medicare tax

Disability tax

Corporate tax (passed on to you in the form of higher prices)

Tariffs on foreign goods (passed on to you in higher prices)

Sales tax

Property tax

Local business tax (Where I live, in Oakland, California, I must pay $3.60 for every thousand dollars of GROSS income.)

Utility taxes (phone, gas/electric, garbage, water)

User fees, for example, public college tuition, mass transit fares, park entrance fee

Excise taxes (for example, on tires, alcohol, cigarettes, soft drinks, blank recording media, even vending machines)

Car rental taxes

Hotel occupancy tax

Parking lot usage tax

Gasoline taxes

Bridge, tunnel, and road-use tolls

Passport fee

Airplane ticket taxes

Car registration fee

License fees (from profession to your pet, from a hunting/fishing license to a license to run a radio station)

Gas guzzler tax

Parking meters

Real estate conveyance taxes (when you buy or sell, in addition to the aforementioned capital gains tax.)

Driving citations: The fees for parking and moving violations have become usurious: Where I live, $45 for a parking ticket, $250 for not coming to a full stop at a stop sign, and dare you get caught driving under the influence: $6,000 is the average cost.

Other citations: I got a $250 ticket for having my dog off-leash in an empty park!

Beverage container "deposit" (5 or 10 cents per bottle and can in most states--and who bothers to return them to reclaim the deposit?)

Additional taxes. For example, where I live, there are additional taxes for libraries, mosquito abatement, schools, ambulances, etc. Should not these basics already have been covered by the myriad other taxes we pay?

And, when you die, managing to still have some bucks, there's estate tax.

I’m sure we pay other taxes I’m unaware of or can't think of.

And President Obama wants even more of our money. He’s already pledged to increase taxes on the wealthy and he wants yet more from everyone. For example, he wants to increase the number of toll roads and his carbon tax (pleasantly called "Cap and Trade") will increase the cost of anything that contains carbon, which is practically everything: for example, plastics, gasoline, even skin cream.

Most neutral observers insist that Obama’s mammoth deficit budget and projections for yet more bailouts and “stimulus” spending will force further tax increases, including to the middle class.

By one estimate, President Obama's current budget will cost the average taxpayer $25,573.48 in federal income tax alone.

In addition, as the New York Times reported today, the Obama administration is printing money "at the fastest rate in its (the Feds') history" to, today alone, "pull vast sums of money ($1 trillion) out of thin air." This deflates the value of every dollar we manage to have saved.

Do you feel you receive fair value for giving the government 3/4 of what you earn? Do you believe the nation as a whole derives fair value or do you suspect that large gobs of your money go to bureaucratic waste and pork-barrel spending that few taxpayers would support if given a choice?

To help you answer that question, let me tell you about the one little corner of government spending I'm familiar with because my wife is a superintendent of schools: the education bureaucracy. Enormous sums of our tax dollars are spent every year devising, implementing, monitoring, and often litigating regulations: “No, Regulation 43.77659 B in Section 654.37D in the California Ed. Code states that the county should get the money." "No, Federal ruling 25.7736b says the district, not the county should get the money.” Only pennies on your dollar go to actually helping kids learn. You'll be amazed to see how absurdly labyrinthine even one set of rules governing one little pot of money is. Here, for example, are the rules governing just one portion of the additional tax dollars Obama is giving to state education departments.

So here’s a thought experiment: All government is hereby dismantled and all tax and fee dollars are returned to the taxpayers. Tens of thousands of dollars would be returned to the average family each year, which adds up to over a million dollars(!) over their lifetime. Thus, individuals could spend and save that fortune as they saw fit.

Companies would thus sprout up to provide services the public would be willing to pay for: roads, mass transit between highly-traveled places. The public would likely be willing to give the government some carefully monitored money to provide national defense and law enforcement and probably a safety net for people truly unable to support themselves on their own or through private charities. Schools, like most services currently provided by the government, would likely be private--no massive bureaucracy, which means most dollars would go directly to the classroom. Social Security probably wouldn't exist--a recent survey found that, if given a choice, half of people would opt out and simply rely on themselves to save money in a better investment vehicle than Social Security. (which is not hard to find.)

So imagine an America in which we got to keep 90% of what we earned rather than 25% and in which we had more choice in what services would be publicly or privately provided. Do you believe America would be better or worse than the America Obama is creating?


Anonymous said...


I can offer only one additional perspective to your magnificent analysis of taxes: taxation involves robbing and (temporarily) enslaving the taxpayer.

Robbery is defined as taking someone's justly owned property against their will. Slavery involves forcing someone to work preparing tax returns and all this entails)against their will.

Dr. Michael R. Edelstein

Anonymous said...

I think that if taxes were abolished, it wouldn't be long before they returned, because we learn so little from history and from the mistakes of others.

How long would it be before government began growing again? A growing population would demand ever more services, perhaps services that the private sector can't provide. The government would find more and more excuses to grow, and soon we would be in the same situation.

Besides, as much as people are angry with what's happening, I think there are more who have become too dependent. If the control was in their hands, what would they do? I'd guess they'd panic. Would the private sector be able to calm that population down?

That's my cynical response. My optimistic side would be very interested to see what I'd be capable of if I decided where my money went, and what kind of society would result if capitalism were allowed to bloom like never before, and government was nipped in the bud.

Anonymous said...

Do you have a citation for the 25 cent calculation you put on the table?

Interesting that you place so much emphasis on the various costs of driving, all of which go away very quickly if you decide not to drive. Not an option nationally, but absolutely an option in the 'golden triangle' of Bay Area real estate you and I live in.

Do you think those costs would go down if, as a not-too-long-ago posting suggested, we privatize roadways?

(Water costs in privatized systems worldwide have tended to go up after privatization.)

The data that I've seen indicates that the US is close to last on a list of industrialized nations ranked by total taxes as a fraction of GDP.

Marty Nemko said...

Driving represents only a tiny fraction of the dollars in taxes and fees listed.

% of GDP is a misleading statistic. The straightforward statistic is the % of earnings lost to taxes and other government mandates such as fees.

There is, to my knowledge, no statistics that include all the taxes I have identified. I arrived at the 25% figure through an estimation process. Do you have reason or data to suggest it is incorrect?