Tax the ‘rich’ - it’s not my money
Submitted by Businessman’s Blog
Written by Michael Vass
I was speaking with a friend over the weekend about the interview Sean Hannity and Michael Moore had. My friend was mostly aligned with Michael Moore, I was not. In the discussion we came to the big question, do businesses and the “rich” pay a fair amount of taxes.
The opinion of my friend was much along the lines of Moore and many Liberals. That businesses and the “rich” don’t pay enough, and thus more should be taken. When I asked what was the definition of “rich” my friend stated “anything over $100,000″. To say that I was shocked was the least of things. Then again my friend makes about the average in the area I live - roughly $27,000. So $100k is almost 5x the annual, and thus I understand the thought that it is rich.
Then I decided to ask, how much should such a person pay in taxes. My friend responded 70%. Again I was shocked. But in my friends mind, the $30,000 that would be left of the money is more than they make and thus easy to live on.
And this is where the problem lies I believe. Many Liberals base their logic on false assumptions and lack of knowledge.
Right now a person making $100,000 pays roughly 60% of their income in taxes - depending on the State and City they live in. If you add in the cost of a home mortgage, gasoline, electricity, and food (for 3 people) they net roughly $18,000. That doesn’t include car insurance, kids clothes, car repairs, a phone and/or cellphone (for them or their kids), medical bills, computer repairs/internet connectivity, cable, vacations, Christmas/Birthday gifts, religious tithings, credit card bills, or if anything is left over retirement savings. Notice that I left out a savings accounts and any rainy day money. Because it is likely that there isn’t money for any of that. $100,000 isn’t rich at all, though I will conceed that $250,000 is closer to the mark.
But what if the person in question also owns their own business? It gets really bad then.
First, let’s say that you own a small business. You generate something like $250,000 a year. That’s rich by some standards, but it really isn’t. Take out the cost of employees, say 2 of them. At minimum wage you get $14,000 each, not including unemployment insurance and SS. Take out the cost of raw goods, on average no more than 40% of revenue (in a good economy) - $100,000. Take out electricity, shipping, equipment, sales, phone, water, workspace rent, are you getting the point? Without taking a salary it can cost some $200,000 to run a business. And the owner of a small business never works 9-5, that would be a nice slow day. But after it’s all said and done, $50,000 isn’t too bad.
That $50,000 though turns into a mere $30,000 after taxes (at best). Then come the other costrs and suddenly there is nothing left. But imagine if President Obama and other liberals got their wishes. And taxes went to 70%. The businessman above would not only go broke, driving the unemployment rates higher due to the employees losing their jobs, but the mortgage failure rate could go up if they didn’t own the house outright. Plus as a real fun fact, many business owners cannot get unemployment as they don’t qualify. Even though they pay tons of taxes via the business and personally, they cannot gain any safety if things go bad or taxes increase. And right now both are happening.
I realize that this is not the most accurate example that could be made. I’m not trying to make it perfect to the math. The point is that right now, and even in good markets, most of the people liberals shout about not paying enough are barely clearing the cost of living. And they do so without any of the safety nets that employees get, while doing far more work. How much more does it take to break a camel’s back?
Could millionaires and billionaires pay more in taxes? Probably, though nothing is stoping Moore or Warren Buffett, or George Soros, from donating as much money as they want to the IRS. Though I am definitely aware that none of them has done so. Yet they want more of other peoples money to go to taxes they are unwilling to pay.
Still, the cry for higher taxes inevitiably will include more than just the millionaire+ brackets. The middle class and the small business owners always get caught in the higher tax traps. Which squeezes their ability to live even in good markets.
Maybe I’d feel different if people like Soros and Moore put their money where their sizable mouths are, but I doubt it.
