Who Pays Taxes?

Who Pays Taxes?
by Bud Malmsten

The politicos of the State of Washington are arguing again about taxes. So what else is new? This seems to be the prerogative of legislators at every level of government. So, for you who are not from Husky / Cougar Country, don't gloat. This is your problem, too.

Just for the record, let's get to the basic truth. The Government is going to get its bite. There are three opportunities to grab some:

· when you receive money [income tax],
· when you spend money [sales or excise tax], and
· when you own something [property tax].

Government officials at all levels [elected, appointed, and even dictators] want you to believe they are operating on the "Robin Hood Principle:" take from the rich; give to the poor. And it works! Let's face it. There are many more poor than rich, and the poor are so busy treading the financial waters that there is little time or energy left to really think it through.

That is why we are here. Notice that the argument about taxes always comes down to one fundamental premise. Everyone involved has some variation of the theme, playing their own supporting group against their perceived opponents: Let other people pay more while we pay less. This premise comes in many disguises.

If it is income that is to be taxed, the low incomes want a graduated system with higher percentages for the wealthy, while the rich ones tout the virtues of a flat tax; can you say, "Steve Forbes?"

When sales are taxed, every group wants some necessity to be exempt. It is ironic that this is the least progressive form of taxation. The poorest person receiving public assistance must pay the same rate as Bill Gates and Paul Allen. However there is no sales tax on shares of Microsoft stock.

The bottom line question is, "Who pays taxes?"

A superficial glance at the numbers answers, "Everyone, and the richest 5% pay about one half of all taxes collected in the USA." I even used that statistic to make a point in a previous column. The point being that it is OK if that group would get one half of the benefit of a tax relief package.

A closer look at the facts makes the same point.

For example, it is really popular to promote more tax on big business in order to give relief to the lower incomes. Think carefully now - big business DOES NOT PAY TAX! Big business COLLECTS TAX and passes it on to the government.

I am not talking about sales tax here. This is ALL of it. Whatever tax any business owes is passed directly on to the next level.

How about we try this thought on something real. You buy a box of Kleenex.
· Whom do you think pays the real estate tax AND the income tax for the
store where you made the purchase?
· Whom do you think pays the road use taxes on the truck that delivered it?
· Whom do you think pays the employer taxes for the factory that
manufactured it?
· Whom do you think pays the sales and excise taxes on the machines that cut
the trees to make the paper?
Right! YOU DO! The sales tax is just the only one you actually see. The rest is all wrapped nicely in the price of the product. Which of course means that the sales tax is really a tax on several other taxes.

Washington's "servant/leaders" are terrified by the success of the infamous Initiative 695, which won a dramatic roll-back on motor vehicle excise taxes last fall. You see, the writers of that initiative understood this basic principle: The only way to really reduce government spending is to reduce government receipts. That is why they included the "Public Vote on any New Tax or Fee" clause.

The people of Washington shouted to the government at all levels, "Enough, already! Put yourself on a financial diet. Set some priorities. See is you can live with two percent less income. That's right - 2%!"

The immediate specific is property tax relief. The sides seem to be divided over who gives more to whom.

Get real! No government has any money that it can give to anyone. To reduce someone's taxes is not, I repeat, is NOT giving anything to that person. It is simply taking less from that one.

Spend some time cogitating on this thought from President Lincoln:

"You cannot help the wage earner by pulling down the wage payer; and you cannot strengthen the weak by weakening the strong."