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COLUMN: The inevitability and weight of taxes

Thursday, August 5, 2010 | 12:01 a.m. CDT

That death and taxes are inevitable is a constant, and it is inevitable taxes will begin to climb for anyone who pays them during the next year. I regret bearing this news but, the administration's claims to the contrary, there is no way that 30 million people can be added to the government health care roles and result in an overall savings — or even maintain the status quo.

Additionally, the campaign claim that taxes would not be raised one dime for the 95 percent who earn less than $250,000 per year has already been pushed completely off the back burner. Facts are indeed stubborn and will not go away — the $787 billion stimulus, extended jobless benefits and all the sundry cash outlays are hardly freebies. They must be paid for by someone.

On the subject of taxes, federal, state and local governments strive to promote the notion of justice in an equitable, honest and fair apportioning of the levy. In reality — and too often due to special interests, sacred cows, the squeakiest wheels and pet projects — tax increases fall on the unpopular, the "sinful" and the weak among us.

We have already seen this in the elevation of federal tobacco taxes (61 cents per pack of cigarettes) and the 10 percent tanning-bed tax. The rationale for the increases is simple — smoking and tanning are deemed harmful and should be taxed to modify behavior and pay for health care costs. Also obvious is that it punishes sinners (smokers) and tanners.

We also see a movement to tax sugary soft drinks and, particularly among Missouri's do-gooders, to increase state taxes on tobacco and alcohol as, after all, they are unhealthy, "sinful" products. As sin is a popular tax venue, I am surprised the legislature did not impose high levies against the adult entertainment business rather than virtually destroying their taxable income along with that of the employees who lost jobs.

The 1993 Clinton/Gore budget, promising to cut middle-class taxes while raising them only on those making $200,000 per year, also targeted a lesser and weaker class of taxpayers by increasing the taxable proportion of many Social Security recipients' incomes from 50 to 85 percent. That this income had already been taxed and that it struck hardest at many least able to afford it was not a viable issue as these retirees lacked clout.

The notion of taxing the unpopular is even easier to sell as "tax the rich" brings out the shrillest "Robin Hoodism" in many. Whether defined by class envy, low self-esteem or a political goal, soaking the rich is always in vogue — the wealthy are viewed by many as not laboring by the sweat of their brow, using shelters to avoid taxes and robbing the poor and the middle class for having more than they need or deserve.

Additionally, high on the list of those determined to tax and spend out of the recession is repealing the Bush tax cuts. After all, since the Obama administration has saddled former President Bush with all of the real and imagined catastrophes and warts occurring from 2000 to the present and beyond, why not blame the recession on his tax cuts? Remember, all of the people can still be fooled some of the time.

This is in no way an indictment of taxation — establishing justice, providing for national defense, ensuring domestic tranquility and promoting the general welfare require personal and financial sacrifice. Nevertheless, indiscriminate taxing of the rich, the unpopular, the sinners and the weak tends to rob Peter to pay Paul — thereby befriending Paul at the expense of Peter.

For example, a tax report released by the IRS shows that in 2007, the top 1 percent of taxpayers paid over 40 percent of all federal income taxes while the bottom 95 percent a little more than 39 percent. For a historical perspective, before the Bush tax cuts, the 2000 data showed that the top 1 percent paid 38 percent while the bottom 95 percent paid 44 percent of all income taxes. Accordingly, the oft-voiced claim that the Bush tax cuts disproportionately favored the rich is a dog that just won't hunt.

Contrary to the refrain popularized by the left, the Bush tax cuts reduced taxes for virtually everyone who actually paid taxes — for example, a single taxpayer earning $30,000 in 2000 paid $8,400 in taxes while the same person paid but $4,500 in 2008. A married couple with $125,000 in income in 2000 paid $38,750, but paid out $31,250 in 2008. The growth in federal revenue increased from $1.84 trillion in 1998 to $2.65 trillion in 2008.

There will always be taxes and, unfortunately, it appears there are increases on the horizon as profligate spending must not only be curtailed but must also be brought to account. Raising the taxes on the rich, the sinful, the unpopular and the weak is no answer as tax hikes historically have stifled growth and the resultant job creation.

No nation has ever spent its way out of recession — that notion is as economically foolish as you or I accumulating a huge debt and maxing out our credit cards as the remedy.

J. Karl Miller retired as a colonel in the Marine Corps. He is a Columbia resident and can be reached via e-mail at JKarlUSMC@aol.com.


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Comments

John Bliss August 5, 2010 | 10:39 a.m.

Colonel, thanks, you make a great point about paying tax on social security checks, money of which has ALREADY BEEN TAXED! I saw my father go through that, plus his company pension, which also had been taxed for 25 years as he worked, they took more again. Double Taxtion, seems to me we fought a war some years back about just that! Now, it is our OWN Nation putting the screws to us? As you pointed out, those on fixed incomes, that really can't afford extra taxes. Their full Social Security would be nice, so they could, well, EAT!

(Report Comment)
Ellis Smith August 5, 2010 | 11:37 a.m.

Corporate dividends are subject to double taxation. They are taxable as income to those who receive them from a corporation. Profits of the corporation, from which dividends occur, are also subject to tax; however, due to the "creativity" of existing tax codes one corporation may pay little or no taxes while another may have to pay substantial tax.

(Report Comment)

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