What Tax Burden?

George Rebane

Dan Walters of the SacBee has a puzzle – ‘Are California taxes too high or too low?’ – that seems to vex him, and apparently a bunch of his readers.  He concludes that since during the recession we are earning less, we are paying less taxes, and therefore our “tax burden” is actually lower since the state is taking fewer of our dollars.  Before we all start dancing in the streets, maybe we should mull it over a bit.

I guess a good place to start is with how do taxes burden us.  Well, the simple and correct answer is that if we don’t get to buy what we want or need with our earnings, after the government takes part of it away in taxes, then it’s a burden to us.  However, if our after tax earnings are still enough to accomplish our plans – why we worked to get the money in the first place – then the taxes are not burdensome.  To be sure, we’d still like to keep our loot, but the amount we pay is not really burdensome.  Burden, after all, still means a load ranging from uncomfortable to unbearable.

What Walters has a problem with is tying simple arithmetic with the human condition.  Here’s an example.  If a person earns $100,000 and is taxed 30% of it, he then gets to spend $70,000 for his own needs.  And a person earning $60,000 taxed at ‘only’ 20% gets to spend $48,000 for her needs.  Finally, if a person earns $40,000 and has to pay 10% of it in taxes, then he winds up having only $36,000 to spend.

Now say it costs about $40,000 a year to put some food on the table, fuel in the car, pay for a roof over the head – not anything fancy, but just the basics.   Since all three buy their food and fuel from the same stores, it’s easy to see that lower tax rates will still impact the lower wage earners more.  It removes a bigger percentage from the basic nut with which they need to get by.

The problem with Walters and his thought followers is that they think of ‘burden’ from the government’s viewpoint as being the total amount of taxes it collects from the people.  And from that perspective, if less is coming into state coffers, then the people must be paying less taxes, and therefore the state is not so much of a burden to them.  But that thinking is turned on its head, as we’ve seen from the example, when lower state revenues are the result of a recession (as Walters argues), and now the $100,000 wage earner is earning $60,000, and the $60,000 wage earner is down to $40,000, and … .

People who accept Walter’s elitist argument are unclear on the concept of how and for whom taxes become a burden, and its overall human dimension.  I suppose that kind of viewpoint comes from collecting individuals into a bundle called ‘people’ who pay an aggregate amount of taxes into the government’s coffers.  So when, for whatever reason, that aggregate amount is reduced, then to such thinkers, the tax burden on the ‘people’ is also reduced.

Looking at California’s reduced tax revenues, you can all go now and celebrate your reduced tax burden.  But a few of us might just stay home and cry in our beer.   

 

Comments

[Account Deleted]

Walters is usually pretty good, but he blows it with this one. Start with the quote about those on the right not happy with any level of taxation. Completely false. I have never found anyone with a conservative bent thinking we don't need to pay taxes. In fact, most conservatives will have a level of taxation that they feel everyone should pay. It is the left that will never put a ceiling on taxation. Try asking a Dem or a leftie what should be the highest level for total taxation. They will tie themselves into knots trying to avoid a maximum. There are all kinds of fees in this state that are taxes just the same as the sales and income tax that are usually not counted because they are called by another name. Try getting a building permit for a home in this state and calculating the extra cost to construct that house to our special California codes. Those are called "developers fees" and somehow most fools in this state can't see how they end up paying it as part of their mortgage, with interest to boot. Oh, and they are now trying to quietly shove through smog checks for your car on a yearly basis. But, it's not a tax, so it won't count either. If the legislature's super-majority rule for tax increases goes by the boards, there will be a stampede for the exits. Real estate in Idaho looks good to me.

[Aaron]

Nailed it, George.

[Russ]

Independent of the taxes we pay on earnings and purchases, we must pay the carbon taxes specifically the AB 32 -- California Global Warming Solutions Act of 2006 carbon taxes, which will increase the cost of energy cross the board. Although the Governor and the Legislature refuse to call the AB32 Cap and Trade program a tax, it will increase the cost of all products manufactured and sold in California. It is a hidden tax that will drive more business out of the state. As the competition declines, prices will rise along with the taxes. When will we rise up and demand ENOUGH!

[DaveC]

Still though, the cost of government services has outpaced inflation. Add to that the number of redundant government agencies and special interests funded by government.

I am always reminded of the Department of Energy started during the reign of James VI in the late 70's. It started with 6000 employees and has since increased tenfold.

To coin a phrase from some one I no longer recall, government agencies are like the Everready Bunny, they keep going and going and..........................

[George Rebane]

Also, I think it was Reagan who said that a government program is the closest thing to immortality that we will witness on earth.