Of all the issues that have characterized modern
society, one seems to be most common; taxes. We all
know what taxes are, or do we? What’s really going
on here? Why is this overtly simple concept becoming
so complex? The argument starts with the most
obvious question.
What are taxes ?
Traditionally, taxation is the way rulers exact
wealth from their subjects. They usually promise
protection and profit, delivering only the ‘protection’.
The idea is accepted by communities because,
ultimately, members of that community will be paid
some of that money for services they perform for the
ruler. This is why the ruler needs their money. Everyone
aspires to be one of those earning, rather than
one of those just paying. Underneath all this is the
element of fear, binding the system together with the
threat of death, or (even today) imprisonment for
failure to pay. All the various forms of monarchy
rule share this heritage as at least an
embarrassment, if not a flag.
So, along comes American Democracy to save the
day. A critical aspect of the development of this
fledgling nation is its redefinition of taxation. The
idea that taxes are the nation’s investment in itself,
that citizens are paying for the operation of their own
government, and they have, rightfully, a voice in how
taxes are both collected and spent.
It’s a good theory.
Too bad it has remained just a theory. The truth is,
when money is involved, the motive to abuse can
easily be greater than the patriotism of support. In
other words, a big pile of money will always draw
thieves.
Taxation can be used as a weapon or a tool. So can
a hammer. The intent of the person weilding it is
what decides. Taxes are proposed for a reason, and
knowing that reason is the only way to judge the
fairness of a tax. We have all heard the raging of
elected officials, decrying each other’s ideas as
ridiculous or un-American. They have ‘explained’ the
‘real issues’ that their ‘opponent’ ignores, and how
their own solution is for ‘everyone’. Everything
seems so complicated and one of them must be right.
Hogwash. They can both be wrong. A tax that
applies to everybody, by our own definition, must be
fair to everbody. To let either side convince us
negates that idea. All this talk about capital gains,
investment credit, child credits, medicare, welfare,
cost of living, ADC, and a thousand other
‘demanding’ situations have left us woozy.
Melding issues together is the way politicians
achieve their personal agendas. Go ahead, congress,
get mad at me, it’s true. Not mentioning highly
profitable ventures goes hand in hand with this.
Divert our attention to an inflammatory issue, and
they can get away with anything. I’ll give you two
examples.
Once, in a neighboring district near my
hometown, a Democratic representative was recalled
from office. The reason; he had voted for a tax
increase for his district. His Republican counterpart
brought the charges, and was able to achieve a recall
vote. Naturally, the offending rep. was replaced with a
Republican, giving the GOP a one man majority in
that state’s legislature. This was the only real
effect of the incident. Later, it was revealed the
Republicans had proposed the tax bill in question, and
the accusing legislator had voted for it, as well. A
man’s career destroyed for a partisan advantage.
We just take it all in stride. SHAME ON US ! It never
should've happened.
The other example is one I consider to be the
most important and overlooked tax issue we have. We
all hear the argument about the “capital gains tax”.
Some of us feel lowering it amounts to a benefit
for the rich, while some of us feel that lower rates can
inspire more investments. Both points are moot. The
truth is so far above the issue, we can’t see it. Once
we look objectively, we can see this as the demon
monster it truly is. What’s more, we can see its evil
twin.The capital gains tax of 15% applies over $500,000.
That's a lot of traded or inherited pazoozas to sweat 15%.
But, the big guys want it gone.
And, the right seems to agree, obvious as it is.
Only the richest stand to gain from all this.
For them, it's 'let us off, we create jobs'.
For, us, it's 'what jobs!'
The monster here is double-standard taxing. Its
insidious evil twin is the Self Employment Tax.
You never hear too much about that one. Most
people don’t know that if you don’t work for a
company that takes taxes and social security
payments out of your check each week, you must pay
the government 15 % of your net earnings. THEN
YOU PAY YOUR INCOME TAX ON YOUR 1040, AS
WELL. The minimum for filing a return is $5,000.00.
So if you net $10,000.00 from your free-lance or
self-employed business, you may owe $1,500.00 in tax to
make up for the taxes not paid by the company you
don’t work for. You do not have social security or
unemployment compensation unless you pay for them
additionally, and you must pay the entire 15% of each
(of which companies usually pay half). No one can
afford to do this, as it means giving the government
45% of your pay. Instead, most self employed people
go without those basics taken for granted by much of
the work force. Earning 10 grand a year means living
on $8500.00 (before personal income tax), or about
$165.00 a week (gross). How many of you could live
on that? Minimum wage only guarantees
less than $250.00 per week before taxes.
Americans have only two ways to earn a living
and accumulate wealth- assets and income. We
already pay taxes on both. As it is, the whole
system reeks of complicated taxes and breaks. Paying
two seperate taxes for the same net income is,
however, outright double taxation, no matter how you
slice it.
A reduction of the capital gains tax is quite a
break for an equity land owner, (colloquially known
as ‘the ‘rich’) but really, hardly anyone else. Under
the self employment tax, though, one must be rich to
acquire anything.
Both taxes are misguided. Both the capital gains
tax and the self employment tax should be abolished.
They amount to double tax standards, and discourage
all but the very wealthiest from participating in basic
aspects of American economy. The minimum filing
levels need to be adjusted to accurately reflect the
cost of living. Millions of self-employed people must
work ‘under the table’, outside of the sytem, because
they earn less than $20,000 a year, and can’t afford to
make it $17,000 by paying that 15% tax.This distorts
the country’s knowledge and views of our population,
our economy, and our tax base.
Should a company pay tax on its revenue? YES.Should people earning minimum wage (or less) have to
pay income tax? NO.Should anyone have to pay twice because a company
does not employ them? NO.Why is this so difficult to see?
I don’t mind if rich folks get tax breaks. I mind
very much if poor folks don’t. I don’t know how to be
more agreeable than that. If we continue to let the
tax revenues of our nation be misrepresented to us
by our own representatives, we will have lost one of the
most basic founding concepts of our beloved
democracy;
NO TAXATION WITHOUT REPRESENTATION.
Otherwise we’re just another dark age monarchy,
feudal lords and all.
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