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Everyone & not just 53% if us pay federal taxes

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POSTED September 20, 2012 12:31 a.m.

Teachable moments: Don’t expect them from politicians - or their hacks - whether they are Republicans or Democrats.

The flap over the comments that 47 percent of Americans don’t pay income tax and that nearly half the population receives government benefits is a perfect example.

First off, we all pay federal taxes and a lot of them.

The most visible of all taxes are income taxes of which 53.6 percent of Americans still pay. Reasons why many don’t pay income taxes range from the ability to deduct major expenses, the fact they don’t earn enough money, or they simple aren’t working.

However everyone pays federal taxes. Buy food at the grocery store and you’re paying taxes. Taxes are collapsed into the price of apples, cereal, and other food stuff. You’re essentially paying taxes the farmer, the trucker, the processor, and anyone else involved in getting that product to a grocery store shelf pay.

The same is true when you buy clothing, toilet paper, or an iPhone; pay for a service, or consume a wide array of items including gasoline which besides the stealth taxes collapsed into what you pay at the pump also has a federal excise tax.

If you’re a typical Californian, you worked the first 111 days of this year - through April 20 - to simply pay only the local, state, and federal taxes levied upon you upfront. That figure comes from the Tax Foundation and includes personal, property, corporate, payroll, excise, and sales taxes.

No one escapes taxes.

As for depending on the government for entitlements and such all of us do in one form or another. That includes about half the population that receives everything from food stamps, welfare and medical assistance to Social Security. Sorry, you can slice and dice it all you want but the bottom line is there are few receiving Social Security who ultimately will receive more than just what they paid into plus the equivalent of compounded interest. That’s not making a value judgment nor does it get into whether the Social Security system is paying out more benefits than it should or if it was mishandled. It is simply the way it is.

Tax credits whether they are for child care, clunkers, or some other purchase or investment is essentially a gift of public funds. The reason is simple. It is a direct reduction in what has been determined to be one’s fair share of federal income taxes. The government is making those who take tax credits winners and those that don’t losers. (And for the record, both Republicans and Democrats conspired in Congress to put in place tax credits that made it possible for a multi-billion dollar company like General Electric to pay no federal corporate income taxes.)

The same is true - but to a lesser degree - when it comes to tax deductions.

If you’re taking a mortgage deduction and your next door neighbor who is renting can’t, then the government is having his income indirectly subsidy your accumulation of wealth via a home. It’s pretty straight forward.

Politicians are a crafty lot.

They know if they can create stealth taxes that ultimately take money out of the pocket of every working stiff in America then most folks won’t be the wiser.

Back in the mid-1960s when Ronald Reagan was governor he agreed with the California Legislature to raise income taxes. What he refused to go along with, however, was an increase in the payroll withholding to collect those additional income taxes.

When asked at a press conference why he was against increasing withholding, Reagan replied, “Taxes are meant to hurt.”

Some took the off-the-cuff remark as a sign Reagan was callous.

In reality, he was saying that if we don’t see the taxes we are paying by having to send in money every April 15 we are lulled into thinking government - and the things we demand and expect of it - isn’t all that costly.

The more visible a tax the less likely you’ll think nothing of it.

 

This column is the opinion of managing editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA.  He can be contacted at dwyatt@mantecabulletin.com or 209-249-3519.

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