FT131: “If liberals say sin taxes hit low-income and young adults disproportionally they must know they have photo IDs.” -Old Pithy

Posted by PITHOCRATES - August 17th, 2012

Fundamental Truth

Liberals want to Tax the Poor while Looking Like they’re not Taxing the Poor

A sin tax is an excise tax.  An excise tax is a flat tax.  Everyone pays the same amount.  Which liberals/progressives find unfair.  As these taxes hit low-income people disproportionately.  Whether it’s someone living on low wages.  Or on limited government support.  They live on a small amount of money each week.  And if they buy alcohol or cigarettes those sin taxes consume a large proportion of their weekly spending money.  By greatly increasing the price for alcohol and cigarettes.  When you hear things like ‘placing a bulls-eye on Joe Six-Pack’s back’ it refers to a low-income guy that enjoys drinking beer.  But drinking beer is difficult for him to do because the current tax structure favors the rich.  Who can more easily afford excise taxes.

And it’s the same for cigarette smokers.  There has been a war on tobacco.  And it’s been so successful that a lot of college-educated people don’t smoke these days.  For it is politically incorrect to smoke today.  They’ve banned it from restaurants.  From the office.  Even outside in some places.  Some are even trying to ban it in people’s homes if they have children.  Progressives hate smoking so much that they have placed enormous sin taxes on cigarettes.  Making it very difficult for Joe Six-Pack to buy his cigarettes.  And it is the low-income and those without college educations who tend to smoke these days.  So the people who can least afford to pay these high sin taxes pay most of them.

Progressives want to raise tax rates on the rich.  Because they have more money and therefore should pay more in taxes.  According to them.  So they can transfer the cost of government away from the low-income to the high-income.  And they’ve succeeded.  Today almost half of all taxpayers pay no federal income taxes.  While the top 10% of earners pay approximately 70% of all federal income taxes.  Yet despite this huge transfer of wealth from the rich to the poor sin taxes have continued to rise.  Meaning the liberals want to tax the rich.  And they want to tax the poor.  While looking like they’re not taxing the poor.  By ascending their self-righteous soapboxes.  For they know better than we.  Sin taxes, they say, are for our own good.  They discourage bad behavior.  And encourage good behavior.  Behavior that they approve of.  And it’s only coincidental that they these taxes fall disproportionately on Joe Six-Pack.  Then they try to take the little income remaining from poor Joe by selling him lottery tickets.  Something else more lower income people buy than rich people.  For rich people are already rich.

Obamacare combines the Joy of a Colonoscopy with the Fear and Loathing of an IRS Audit

Most people would rather have a colonoscopy than sit through an IRS audit.  Why?  Because a colonoscopy is more enjoyable.  It only takes a couple of hours as an outpatient in the hospital.  Your odds are better for getting good news after a colonoscopy than after an IRS audit.  And doctors are happy to give good news to their patients.  While IRS agents are happy when they can take your money.  The more of it they can take the happier they are.  And with today’s tax code they can always find money to take from you.  Especially if you’re a business owner.  Or a movie star.  Where you can lose your pension, your children’s college fund and your house if you made a mistake or trusted an untrustworthy accountant.  So given the choice people would choose a colonoscopy over an IRS audit almost any day.  Even without the anesthetic.

And speaking of health care and the IRS, how about that Obamacare?  The liberals’ solution to ‘fix’ health care.  Even though it wasn’t broken.  Americans have long opposed any form of national health care.  They opposed it when Hillary Clinton tried to put a plan together behind closed doors.  And they still oppose it.  Based on that majority of the population that wants to repeal Obamacare.  Which they passed into law thanks to some backroom deals.  And fun with numbers.  The big selling point was to keep the cost of it below what the wars in Iraq and Afghanistan cost.  If the liberals could keep the price tag below a trillion dollars over a ten year period they could say it wouldn’t cost Americans an extra dime to give ‘free’ health care to everyone.  Because they would just transfer all of that war spending to health care spending.  Despite those trillion dollar deficits.  A debt approaching $16 trillion.  And an economy wallowing in the Great Recession.

So how did they do it?  Keep the cost under a trillion dollars?  By being devious.  The data they submitted to the Congressional Budget Office (CBO) included ten years of expenditures but only 6 years of benefits.  Because 6 years of benefits cost about a trillion dollars.  Well, almost.  They also stole about $700 billion from Medicare.  So the real cost of Obamacare over a ten year period is closer to $3 trillion.  Or about three times the cost of the wars in Iraq and Afghanistan.  How’s that for free health care?  So Obamacare is really, really expensive.  Which is why Obamacare forces all Americans to buy health insurance.  Even the young and healthy who would rather put that money into a house payment while they are young and healthy.  And how are they going to enforce this?  By combining the joy of a colonoscopy with the fear and loathing of an IRS audit.

Getting a Photo ID is too Costly, too Complex or just too Time Consuming unless you’re a 16-Year-Old Anxious to Drive

Because of Obamacare everyone will have to prove to the IRS that they have bought health insurance.  Which means if you want health care you better file your federal income taxes.  Have a Social Security number.  And have proven to your employer that you are a legal citizen.  With two pieces of documentation.  Like a Social Security card.  And a photo ID.  Pretty intense requirements.  And much more stringent than it used to be when anyone could go to the emergency room and receive treatment.  Today if you’re sick you better hope dotted your ‘i’s and crossed your ‘t’s.  Because in Obamacare before you can get a colonoscopy you have to first answer to the IRS.

And Joe Six-Pack?  We love you.  Because you’re just an average Joe.  The backbone of America.  Working hard and raising your family.  So who are we to begrudge you a cold beer after a hard day’s work?  Or a smoke?  We won’t judge you for enjoying those things.  Because a lot of us enjoy those things, too.  Even if it’s not politically correct.  Or in our best interests.  Or behavior those ‘better than us’ would approve of.  Just make sure you have your photo ID before you buy your beer.  Or your pack of smokes.  Because unless you look old you aren’t buying either without one.  Even if you’re a grizzled war veteran.  And been to hell and back in Iraq or Afghanistan.  Because even a Purple Heart won’t get you beer or a pack of cigarettes without a photo ID.

The liberals have made it harder for you to get health care.  Or to smoke.  And they’re not making it any easier to drink adult beverages.  If you want to do any of these things you better suck it up and get a photo ID.  Because proving who you are, how old you are and whether you are a legal citizen are very important to liberals.  Unless, that is, you want to vote.  Then they don’t give a damn.  They even say asking for a photo ID to vote is only a way to disenfranchise the low-income and young adults.  So they can’t vote.  Because getting a photo ID is too costly, too complex or just too time consuming.  (Except for all those 16-year-olds anxious to drive.)  Yet these are the very same people who acknowledge that the low income and young adults pay a disproportionate share of sin taxes.  Which they pay on those things you can only buy with a photo ID.

So why this bizarre and inconsistent behavior on the part of liberals?  Well, it must have something to do with the vote.  And based on their devious behavior in passing legislation people don’t want, one can only assume that their lax attitude is for one reason.  Making it easier for them to win elections when they pursue policies that the people don’t want.  Like Obamacare.  Which is why when it comes to the vote they want anyone to be able to walk in off the street and say they’re whoever they say they are and vote.  Unlike the ‘hell’ people have to go through to buy a beer, a pack of cigarettes, getting a job or collecting their lottery winnings.  Yes, if you win the big one you’ll need a photo ID to claim your money.  But you don’t need it to vote.  Because voting just isn’t as important as these other things.

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FT130: “Tax dollars pay the bills. Not tax rates.” -Old Pithy

Posted by PITHOCRATES - August 10th, 2012

Fundamental Truth

Even though we have a Progressive Tax System we don’t have a Progressive Movie Ticket Price System

The average price for a movie ticket is about $8.  A flat price.  In dollars.  Whatever you earn.  If you earn $50 in gross daily earnings you pay $8.  If you earn $100 in gross daily earnings you pay $8.  If you earn $200 in gross daily earnings you pay $8.  Is that fair?  Based on the amount people could pay, no.  Because $8 is a different percentage of each earner’s daily gross pay.  It’s only 4% for those who earn $200 daily.  It’s 8% for those who earn $100 daily.  And a whopping 16% for those who only earn $50 daily.  Is that fair?  Well, if we measure fairness by the way we pay income taxes, no.  This is not fair.

Look, we live in a fair country.  We have a progressive tax system.  So we should have a progressive movie ticket price system.  And someone who only earns $50 a day shouldn’t be paying 16% of their earnings for a movie ticket.  Not when someone who can more easily afford to pay more only pays 4% for a ticket.  These numbers are upside down.  The lower income people should only pay 4%.  The middle income people should pay 8% because they can more easily afford it.  And the high income earner should pay 16% because if they don’t they’re not paying their fair share.  So let’s say the government makes it so.

Once we make going to the movies fair this is what we can expect at the box office.  Those with daily earnings of $50 pay only $2 for a ticket.  Those with daily gross earnings of $100 pay $8.  And those with gross daily earnings of $200 pay $32 for their movie ticket.  The low-income earners will be very happy with this new fairness.  Those middle-income earners will have mixed feelings but won’t complain because they don’t have to pay any more.  The high-income earners, though, will not be happy with the new ticket pricing policy.  Because sitting in a theater is not worth $32 a ticket.  Especially if they’re taking their spouse and 3 kids.  Making a night at the movies cost $160.  Or 80% of their daily gross earnings.  And that doesn’t include any concession snacks.

The Problem with Fairness is that you can have the Best Intentions and end up with the Worst Results

You know who would love this?  Theater owners.  (As well as movie studios and the actors who share in box office sales.)  They would all be for fairness.  Because they would see greater earnings.  The typical theater seats about 225.  At $8 a ticket that comes to $1,800 in revenue per show.  When they implement the fairness policy, though, they could do better.  Say 40% of theater goers are low-income, 40% are middle-income and 20% are high-income.  Based on the fair ticket price policy the theater owner will increase earnings to $2,340.  That’s a revenue increase of $540.  Or an increase of 30%.  So, sure, the theater owners would all be for fairness when it comes to ticket prices.  (As well as the movie studies and actors.)

Until, that is, when the high-income people stop going to the theater.  If their seats remain empty the theater will not collect their $1, 440 in revenue per show.  Their seats will remain empty.  And half the people watching the movie will be paying only $2 for their ticket.  This will reduce revenue by $900.  Or a decrease of 50%.  Which will change the way theater owners think about fairness.  As they struggle to stay in business.  And if they can’t change the government fair pricing system their costs will exceed their revenue.  They will have to make cuts everywhere they can to get their costs under their revenue.  Lowering the quality of the movie going experience.  To the point people just stay home and watch something they download online while eating microwave popcorn.  Eventually shuttering the theater.  And putting more people out of a job.  (Not to mention making it impossible for a movie studio to make a profit on all but the biggest blockbusters and the cheapest to films to make.  And the big movie stars would all see a hug pay cut.  Which would ripple through the movie industry putting an even greater number of people out of a job.)

This is the problem with fairness.  You can have the best intentions.  And end up with the worst results.  That’s because the ‘fairness people’ think everything in the economy is static.  That a change ‘here’ won’t effect change ‘there’.  But the economy isn’t static.  It’s dynamic.  And a change ‘here’ does effect change ‘there’.  Because people are thinking, rational beings.  While state planners think they know what’s fair the people living their policies often think otherwise.  And change their behavior.  To minimize their costs under their fairness policies.  Because that is human nature.  Just like it is for people every day who shop around to find the lowest price and best value before spending their hard-earned money.

The Rich are more Generous in their Tax Dollar Contributions than the Poor and the Middle Class

The Left wants to raise the tax rates on the high-income earners.  To make them pay their ‘fair’ share.  Foolishly thinking that doing this will bring in more tax revenue.  It won’t.  Because people are thinking, rational beings.  These ‘rich’ people can either invest their money into businesses and create jobs.  Or they can put their money into treasury bonds and create no jobs.  One is high risk (creating jobs).  One is low risk (not creating jobs).  And when you increase the taxes on the high-risk investment you reduce the return on that investment.  And reduce the incentive to create jobs.  So instead of investing in jobs they park their money safely in bonds.  Reducing the income (business owner and employees) the government can tax.  As well as reducing a host of other taxes (sales tax, property tax, Social Security tax, Medicare tax, etc.).  All in the name of fairness.

So why do they do it?  Why are they always imposing fairness on us?  Because when it comes to class warfare tax rates are much more useful in defining fairness.  For they misdirect the people into thinking rich people don’t pay enough in taxes.  Let’s look at a married couple filing jointly who earn a combined income of $125,000.  Based on the 2012 federal income tax rates they will pay approximately $19,470 in federal taxes with a top marginal tax rate of 25%.  Now compare that to a rich person not paying their ‘fair share’ in taxes.  Someone who earns a million dollars in capital gains on investments.  One of those the ‘fairness people’ really dislike.  At a capital gains tax rate of 15% he or she pays $150,000 in taxes.  Now 15% is less than 25%.  And those on the Left will scream, “Unfair!”  Even though that capital gains tax rate will generate $130,530 more in tax dollars.  Or 670% more than the married couple paying a top marginal tax rate of 25%.

So is the ‘rich’ investor paying his or her fair share in taxes?  Well, he or she is sure paying a whole lot more in taxes than that married couple filing jointly.  Even if it’s at a lower tax rate.  Is that fair?  Is that enough?  It depends on how you measure fair.  If you measure by tax rates the rich are tax cheapskates.  If you measure by tax dollars then the rich are very generous in their tax contributions.  More generous than the poor and the middle class.  And that’s what really counts.  Tax dollars.  Because tax dollars pay the bills.  Not tax rates.

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