Thursday, July 19, 2012

Dissecting the Liberal Talking Points: The Wealthy Pay for the Infrastructure Already!

It's been a favorite liberal point for a while now: "It's justified to raise taxes on the wealthy because they benefit most from government paid for infrastructure, etc. with their businesses." President Obama made a similar claim recently when he said that businesses who succeeded didn't really deserve the credit, because they used public roads, bridges, etc.

I touched on the gaping hole in this logic yesterday, but let's dive into it more. Here's the problem:


Let's look at some of the primary types of taxes, shall we? First of all, there are income taxes. People who make more income, whether under a flat tax system or a graduated income tax system pay more money in taxes. Under a flat tax (for the sake of argument let's say 15%) a person who makes $20,000 in income pays $3000 in taxes before deductions and credits. A person who earns $200,000 per year in income pays $30,000 in taxes before deductions and credits. (For those of you from Palm Beach County, FL, $30,000 is more than $3,000.)

Then we could consider our national graduated income taxes. The person making $20,000 per year is in the 10% tax bracket. That means they are paying, before deductions and credits, $2000 in taxes. The Person making $20,000 per year is in the 35% federal tax bracket. They are paying $75,000 in taxes before before deductions and credits. (For those of you from Palm Beach County, FL, $75,000 is more than $20,000.)

So, even if we except your erroneous logic, that evil, wealthy business owner is already paying a significantly larger amount of money into the community infrastructure pot.

Then there are the other two main sorts of taxes that come into play when it comes to infrastructure: Sales Tax and Property Tax. Now if a person making $200,000 spends say 80% of their income and saves 20%, that means $160,000 is spent. The lion's share of purchases with that money will be subject to sales tax. Let's even pretend another 20% of that money is spent on products like food and clothing that are sales tax exempt. We're now at $120,000 of income being taxes on sales. So let's take the sales tax I pay here in New York State of 8%. That means this person is pay $9,600 per year in sales tax. (That's in addition to what they pay in state and federal income taxes).

Now let's pretend our $20,000 per year person similarly saves 20% of their income and spends an additional 20% on tax-exempt products like food and clothing. So that means $12,000 of their spending annually is subject to sales tax. Again, at the 8% rate I pay in New York, that person is paying $960 per year in sales tax.

(For those of you from Palm Beach County, FL, $9,600 a year is more than $960 a year.)

So again, this person is paying significantly more than his counterpart (ten times as much, to be specific) of his working class counterpart. Now property taxes. I hope I don't need to give an object lesson to explain that the property taxes are significantly higher on a ten bedroom mansion sitting on seven acres of lake-front property has higher property taxes than a 3 bedroom ranch on half an acre of land in a suburban neighborhood.

Here's the bottom line: These evil, horrible wealthy people who President Obama wants to see punished for their success are already paying their "fair share." Even if they are consuming more public works and services, they are also paying significantly more in taxes than their working class counterpart. No matter how you slice it, the stock liberal logic does not hold water. Ultimately, it comes back to this: the Left wants to confiscate more of other people's money so they can keep spending and spending, and they're trying to give you a road to rationalize it. End of story.

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