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.
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