There are two things that every American needs to understand. We will not be able to reverse the trend of greater government control until voters understand these two facts and use that knowledge when the enter the voting booth.
First, government can not spend a dollar without first taking it from someone. It’s an obvious point, perhaps, but apparently most voters don’t consider this when deciding who to vote for. Even less realize that most of the time it is themselves who are paying. When a candidate tells you that he is going to pay for your kids to go to college, what he is really saying is that he is going to force your neighbor to pay for your kids to go to college, and you to pay for your neighbor’s kid. Perhaps that dollar is not being taken directly from you, it may be coming from your boss, your customers, or the store where you buy food. In each case you are paying. Which leads to the next point:
Taxes are inherently regressive, but you have to look beyond that number you see on April 15th every year. You have to look at all the taxes government collects. There’s been much discussion about the new cigarette tax which disproportionately comes from the wallets of lower income groups. State sales taxes are also a clearly regressive tax, as are gas taxes. Those are easy to explain, but it takes a little more to show how corporate taxes hurt the poor. Wal-mart and McDonald’s do not pay taxes, their customers and\or their employees bear that burden in the form of higher prices, lower wages, and less jobs. When the corporate tax rate is high, the U.S. has the second highest in the world, you give corporations an incentive to move operations out of the country, which also hurts the poor and middle classes disproportionately.
The income tax, with its progressively structured tax brackets appears to be an exception, but think again. Small businesses are a huge percentage of our economy. Half of all non-government employees work for small businesses. Many of these small business owners claim their profits on their individual tax returns. So higher personal income taxes have the same effect that higher corporate taxes have, higher prices, lower wages, fewer jobs for those who can least afford it.
The worst tax of all, of course, is inflation. A rise in prices is felt most significantly by those whose discretionary income is small. Inflation is a hidden tax imposed by the government when their thirst to buy votes outgrows their stomach to tax you to pay for it. Instead of increasing revenue, they increase the money supply. So the next time you hear a politician promise you other people’s money, think for a moment where that money is really coming from. It isn’t coming from the much maligned, wealthiest 1%, Washington spent their money already. It is being created out of thin air by the government and the Federal Reserve. Every dollar they print means the dollars that you and I have are worth less.
When voters understand the basic principle that there’s no such thing as a free lunch, they will stop buying into the nanny state politicians who promise they’ll take care of your every need.
