Posted on 11/19/2012 6:16:10 AM PST by econjack
A Shocking Story About Greed and Taxes
By Jeff Clark
Monday, November 19, 2012
Raising taxes on the rich raises taxes on everyone.
My home state of California just passed Proposition 30, which increases income taxes on residents who make $250,000 a year or more. The top marginal tax rate is now 13.3%, the highest of any state.
Proposition 30 was sold to the voters as "this won't cost you a dime, but it'll make the rich pay their fair share to put our schools back in shape."
Since so many voters thought they were excluded from the tax, and so many voters have no understanding of economics, the lower wage earners were able to vote to take money away from the higher wage earners.
But… they'll get hit just the same.
I was having this discussion a few weeks ago with the gentleman who pays me $4,300 per month to rent my old house. His kids attend public school – the cost of which is paid for through property taxes. Since I own the property he lives in, I pay the taxes. So he believed he could vote to raise taxes to improve the schools and it wouldn't cost him a dime – since he doesn't pay the taxes.
I had to explain to him that the amount I charge for rent is based on my ability to earn a profit on my investment (the home). That means I have to charge him enough to pay all the taxes and insurance on the property and generate a higher income than I could receive on an alternative investment.
If my property tax payment goes up, I would have to increase his rent by a similar amount. So while he doesn't pay the property taxes directly, his vote to increase my taxes would be a vote to increase his rent.
He was shocked… SHOCKED… that I would be so greedy as to force him to shoulder the burden of the increased cost of my investment. I explained to him the alternative if I was unable to earn a fair return on investment was to sell the house and move my money elsewhere – which would leave him and his family without a home.
Again, he expressed shock at my greed.
Funny, though… he didn't seem to mind it so much when he thought he was voting to take my money to spend on his daughters' education.
This is an educated man who is an executive at a large corporation… Yet he has no understanding of the basic laws of economics.
Is there any wonder we are in the mess we're in?
Prop 30 imposes an extra income tax, so it gets around the property tax issue. But the economic argument is the same. By imposing extra taxes on the "rich," the rich then need to raise prices in their businesses to make up for it… or else take measures to avoid the tax completely. That means everyone pays.
Best regards and good trading,
Jeff Clark
One party and a compliant media are promising the free lunch. It is not surprised there are many who accept the offer.
How dare you greedy rich people pass the costs along to those who Democrats promised to not be affected by them? This is an outrage!
LOL, landlords should tell tenents exactly how much is being passed on to them, but many are stupid and wont get it,.
The Rich are Rich because they are not stupid. The stupid believe everything they are told, therefor THEY pay for their stupidity.....and every four years we all pay dearly.
I have discussed this with the students in my macroeconomics class. If we tax the wealthy more, many far less than wealthy people will likely loose their jobs. I ask my students to think about who eats at the high end restaurants, buys the luxury cars, golfs at the high end country clubs etc. and how taxing the wealthy will likely end the jobs of the people who work at those places providing the services to the “rich”.
Wow. Who would live in a place that charges $4300 for rent and be raising taxes on people to make it more expensive? Producers need to depopulate these areas. Think Detroit.
It’s the difference between the rich paying taxes in California and not paying taxes. If they leave, Californicate gets nothing.
One of the main, if not the main, campaign theme of extreme left Dem. Tammy Baldwin of Wisconsin, my state, who was just elected senator defeating popular ex-gov Tommy Thompson was that the rich don't pay their fair share. Millions of idiots believed that twaddle, and she coasted to an easy victory. Never underestimate the public's capacity for gullibility and stupidity.
People never realize government is not on your side.
Yep, I can hardly wait to hear from all the voters who voted for obama to realize their earned income levels are about to go up over the limit they thought they would be excluded from because their “free” benefits like health care will be included in their incomes.
All taxes on the active income “rich” means they will raise the cost of the products or services they extract their income from.
Translation: A tax on the rich is paid for by the consumers of EVERY income level.
According to the president of the Howard Jarvis Taxpayers' Association, the exodus of businesses from that state will accelerate soon. The politicians out there are raping and plundering the tax base out there like never before. I don't know how honest, hardworking people can make a go of it in CA.
This is what so many stupid Democrat voters (redundant, I know) fail to understand: Any time you increase the taxes or the cost of doing business on “the rich,” the cost will be passed along to the rest of us, in the form of higher prices and/or lost jobs.
Likewise for corporate taxes.
If those folks voting have no health insurance at their present jobs, they can expect a 25% reduction in take-home pay as their employers move to make more of them part time workers. If you can avoid becoming a covered business by employing nobody for more than 30 hours per week, a prudent company would take the smart path of reducing everybody’s hours.
Let the chips fall where they may...elections have consequences. And the voters should not be sheltered from their choices.
Same as our leaders at all levels of government.
Prop 30 is even more insidious than that. It allows “regionalization” of the tax burden, which means that irresponsible urban center who can’t balance their budgets will simply redraw the tax boundaries to include wealthy suburbs. The DemonRAT looters have a new tool. Cities will now scavange the countryside for new revenue. If you have a surplus in your local budgets, it’s going to be used to bail out Stockton, Sacramento, LA, SF, Fresno,
It’s such a great idea, other states will follow: New York can’t be far behind. And don’t forgee CHICAGO. A flash mob will visiting your bank account soon.
Sheeperals have a religious level of faith that government and the democrats in it are 100% benevolent in their intentions.
The GOP has dropped the ball so many times I can't even count them. Never once have I seen the GOP say: "The top 10% of the income earners in this country foot 71% of the federal tax bill, while the lower 51% of the people pay no taxes. If it's a 'fair share' you want, cut the taxes on the rich by 80% and start taxing the poor at 20%." To me, if you don't pay federal income taxes, you don't have anything in the game and shouldn't even be allowed to vote in federal elections.
Make sure, when you’re charging down the hill to the sea with the other lemmings, that you’re the one wearing the floaty.
Tax them. Tax them right out of the country. Then the peasants will starve on the failed crops they have sown as their money and the jobs they generate emigrate elsewhere.
Its the only solution really at this point. Gotterdamerung to take the nation back.
I didn't know that. You guys in CA...hold onto your hat. The big screw is coming...
It always falls on the CONSUMER to pay any taxes no matter what they are or who their levied against. Since the middle class is the largest consumer market, without question the brunt of paying these taxes always falls on the middle class.
Sadly there are more and more people who just don’t get it.
JB
Same old democrapic talking points.
Liberal policies and prosperity are mutual exclusives.
You cannot support a progressive agenda, and also make a statement you are in favor of supporting the “middle class” at the same time. The very wealthy have all kinds of means of protecting their life of continued privilege, and any program that is supposed to support the the very poor, comes only at the expense of those closest to their existing economic status. The very poor take from those who are merely poor, and the merely poor take from those who are considered to be “middle class”, not by any means raising the very poorest, but only leveling the average downward. Thus, the gradual disappearance of what was once known as the “middle class”.
By defining the very lowest economic class as “middle class”, well, then, the liberal agenda certainly does defend the “middle class”. (Or is that “muddle class”?)
Depending on WHERE in CA, $4300 probably isn’t that high. Haven’t you seen (few, rare) apartments in Manhattan as high as $50K/month? It’s all about location, location, location. And what the market will bear.
I left SoCal for good in 1993...never goin’ back.
TOP DOWN—BOTTOM UP. Slam in the middle.
How much is enough for the schools?
Lets say a fat cat was going to buy a yacht for 100,000 but due to tax increases he decides not too. Ok now uncle Sam gets the 100,000. What does uncle do with it? He “redistributes” it , so now one yacht is converted into 30,000 bottles of Night Train. The stimulative effect of one yacht on the economy is lost in return for the stimulative effect of 30,000 puking winos.
You’re correct that the GOP should start saying those things, but I have a Dem friend who when I told him who pays what as far as income taxes, simply refused to believe me. That’s the problem: millions of Dems would rather believe lies than the truth. It, Dem pols lies, speaks to the average Dem that says yes, they are put upon by the rich, AND IT’S JUST NOT FAIR!!! I mean that’s why they’re Dems. They have a fantastic capacity for self-delusion and feeling sorry for themselves. Add ignorance to that, and you have a voter who’s extremely difficult to convince.
Property taxes are a horrible tax. It meets neither criteria for taxes: Benefits Received or Ability to Pay. Like any other “free good”, people buy too much of it when the price is free or unknown. I’d like to see each property tax person get a credit equal to the property taxes they pay. If it costs $20,000 per student for schools and you pay $5000 in property taxes, you still owe $15000 for your first kid in school. If I don’t have any kids in school, I can give my voucher away or sell it to the highest bidder. That way, you don’t force retired people out of their homes and having 10 kids all of a sudden becomes a little more expensive.
Of course this will never happen, but anything we can do to show the true cost of “free goods” is a good thing.
Consider the similarty between Obama’s insistence on increased taxes, the California government’s increased taxes, and the mentality of the union that killed off the Hostess bakery company.
All three are parasitic - they are determied to take what they want regardless of the damage they cause to the host.
econjack: The top 10% of the income earners in this country foot 71% of the federal tax bill, while the lower 51% of the people pay no taxes.
thatjoeguy: without question the brunt of paying these taxes always falls on the middle class.
I know what both posters are saying and I agree with them. But the 'give me free stuff' crowd needs this explained a bit better.
Where is it defined that those are the criteria? Or are those simply your personal, pet criteria?
Regards,
The article missed one point, the guy renting the $4,300 house gets in line with his son every school day for the Free Lunch program.
Wow, that 70% effective top income tax rate during the 1950s must have killed the economy back then.
I have a friend that is fairly wealthy and has been sitting on some major cash for a few years. He was hoping a Romney presidency could unleash that cash by changing many of the anti-business laws, rules, and regulations. With Obama getting the seat and the Republicans already caving, the writing is no longer on the wall for him, it is written in stone: We are doomed. So, he is taking that cash and putting it someplace safer. He has control over $1.9 billion in cash. None of the owners of that equity fund desire to spend it through business investment. As one investor put it this past weekend, “Are you kidding? Not less than 8% of it is taken in taxes EACH YEAR! No way am I going to invest in a three year business venture just to see 24% of it gone right off the top. And God only knows what capital gains taxes are coming. They are due to reset but no doubt those taxes will be increased past my personal income tax rate. Let’s not forget the hostility towards innovation and achievement with regulations that will probably outlaw what we are trying to do here. Forget it. I would rather hold onto my money than risk putting it out there. There are safer holdings that guarantee a better return even if they are near zero.” It was a recorded conversation for legal purposes and that is the exact quote.
Obviously this landlord doesn’t live in San Francisco where rent control prevents him from passing on some or all of that tax increase. Selling the property could help, but the rent control laws protect some tenants in that situation anyway. It’s so bad that IF landlords get low-rent paying tenants out, either by bribe or by moving in a “family member”, the units stay empty because landlords are giving up on being landlords. They estimate that 20,000 units are vacant in SF because of this situation.
Also, about that $250,000 limit. It won’t be long before the CA government employee union rank and file are hit by this. It is possible that right now, a married couple consisting of a teacher and firefighter with ten years’ experience will be affected by this rate, but unions have always tried to structure pay so that benefits hide the reality of what the pay really is, since benefits are not considered taxable income. Time to include them, I say and put everyone on the same footing.
A guy who pays $4,300 a month in rent, thinks he’s not rich??
I may go back after I quit working, I sure wouldn’t want to try it as a productive citizen or when I still have kids in the house.
Heh, heh... $100,000 will buy you a boat... not a yacht.
Rush just said on his radio show that approx. 37% of Californians are actually working (employed or self-employed), and of those only approx. half pay income taxes. So about 18% of the population of California is paying taxes to support the system.
” Wow, that 70% effective top income tax rate during the 1950s must have killed the economy back then.”
Back then, you could deduct almost everything down to the suit on your back(uniform expense)
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