Tax Egos: New Ruskin College
www.NewRuskinCollege.com
Lecture Notes: 09-25-04
Everything appears out of phase. I am loosing the thread of the discussion. There is a sensation of drowning, dropping below the surface as once familiar faces and ideas recede and disappear into a dark background.
How little we are actually able to communicate to one another. We think we share a common language, share our thought on common subjects, yet, . . . what was there? What’s more it seems that everyone is actually colluding to avoid having to face the fact that there is no common ground, that we have been atomized.
For example, consider the collusion of both political parties to avoid facing a simple truth about governance. Both sides seem to conspire in a lie, in preference to the truth, because the lie is more beneficial to each of them than is the truth. To avoid having to admit that there is no such thing as “progressive taxation,” both Democrats and Republicans participate in the false claim that government can distribute taxes to the “rich,” ($200,000 according to Kerry), despite all evidence to the contrary.
The Democrats like to claim to the gullible public that they will not have to pay, but rather the costs can be shifted on to the “rich” who have the “ability to pay.”
But the Republicans also enjoy the benefits of this falsity because they can then claim that it is true, the “rich” do pay the great majority of taxes, which implies that it is fair that the rich should therefore have a greater say in the governance of the country, because, after all, “we are paying” for it; the rest of us being reduced to beggars.
As we have previously explained the government is not able to determine who actually ends up paying taxes unless it imposes “wage and price controls” simultaneous with the “progressive taxes.” Without wage and price controls taxes will be redistributed by the market just as all other cost are redistributed.
In other words, as long as there is a free market, as long as people are at liberty to control their property and labor, i.e. set their own price, the government is unable to direct the incidence of taxation on to any individual or class.
As long as people can raise prices the market itself will determine the incidence of taxation. Bill Gates and Microsoft, do not, have never, paid taxes. As long as Mr. Gates can raise his prices any attempt to take his property by taxation will fail. However, if price controls are placed on Microsoft, then the government can force Microsoft to pay. In other words, the power to tax is not the power to destroy unless it is accompanied with the power to prevent the actor from passing the taxes on to his customers.
It is true that not everyone is placed in as privileged, valued, a position as is Microsoft. However, even with these other actors, the incidence of taxation is determined not by the government and its tax tables, but by the value placed on the actors and their goods or services. The greater the perceived value placed on the actor by the consumers the greater that actor’s ability to pass on his taxes.
Who ends up paying the taxes in the absence of wage and price controls?: Those individuals with less, or no, ability to raise prices, industry sectors under heavy competition from low cost foreign producers, for example, or any industry sector which, for what ever reason, is experiencing price deflation. When taxes are levied against these sectors, and the individuals in these sectors, the taxes can not be passed on throughout the market, i.e. to their consumers, and they actually end up paying the tax.
Not only do these unfortunates end up paying their tax, they also end up paying every other tax passed onto them by those industry sectors on which they are dependent. In other words to the extent others are able to raise their prices the added price includes a portion of the so called “progressive tax” that had been levied against that privileged, valued, sector.
Again, the free market redistributes the “progressive taxes” not based on the “ability to pay” but based on the ability or inability of the actor to raise his prices. This ability to raise prices is based on the perceived value of the consumers. The consumers place a high value on the Microsoft operating system and have shown a willingness to pay higher prices. Microsoft and such companies therefore can raise prices and shift their taxes on to their customers in the absence of wage and price controls.
However, consumers may well shift their purchases of domestic automobiles to foreign automobiles to the extent the taxes increase the domestic’s prices. This dynamic accounts for the rapid rise and decline of industry sectors. Ascendant sectors operate tax free as consumers are willing to absorb their taxes, while industries in decline, for what ever reason, end up taking on a larger and larger share of the taxes, and other costs, while at the same time having less and less ability to pass on these costs in their prices.
But notice that no where in this description is there “progressive taxation.” The “rich” merely collect the tax for the government, and this ability to “collect” is based not on their “ability to pay” but on their ability to raise their prices; i.e. based on the value consumers attach to their product or service.
Not withstanding this truth, the Democrats find it convenient to claim that government costs have been shifted onto the “rich” who are being made to pay the taxes for us, and the Republicans also find it convenient to claim that ‘yes, we rich folk are paying most of the taxes, you nobodies.’ Both prefer the lie to the truth.
Rich Republicans point to the large percent of Federal Income Taxes paid by the top one percent or five percent and snicker that those wastrels, the bottom 95% hardly pay anything. But where did the top five percent get their money with which to pay the tax? From the other 95%! Even the ones who earn so little that they do not even file a Federal return pay the taxes of everyone else; in the form of the prices for the goods and services they purchase. Raise the tax on the top five percent and the cost of canned beans goes up.
This is not an argument for wage and price controls. This is an argument for truth.
Notice too that this argument is the strongest argument in favor of the Flat Tax. The Flat Tax is a simpler tax, however the strongest argument is that the Flat Tax is no more regressive than the so called “Progressive Tax.” The objection that the Flat Tax is unfair because the rich can pay more is illusory. The dynamic market forces, by which all costs are redistributed by the action of the market, i.e. the consumer choices, that we have here been examining, will redistribute the Flat Tax just as the “Progressive Tax” is redistributed by the price mechanism. Note also that the Value Added Tax, upon which so much of the European Welfare State depends, turns out to be no more regressive than the “Progressive Tax” for the same reason that all of these taxes are redistributed throughout the economy, falling most heavily on those with the lowest ability to shift or avoid and least heavily on those whose goods or services are in the highest demand and who therefore have the highest ability to raise prices in response to increased costs including taxes.
But the important point I wish the reader to see is that it is the vanity of the rich Republicans which prevents them from articulating this argument in support of their cherished Flat Tax. They prefer not to make this, their strongest argument, because they would have to admit that they are not “paying” the greater share of the taxes but are rather merely collecting the taxes from their fellow citizens who have a lesser ability to raise their prices. Their egos are such, their pride in their superior “ability to pay” is such, that they would rather forgo this argument and even the implementation of their “Flat Tax” than admit to the truth of the matter.
But there is nothing that can be done. The parties, the mass media, the gigantic engine of society will continue to grind on, mostly oblivious to the truth, if not actually hostile to it.
Both parties seemed locked into a collusive agreement to prevent the truth from being told. A compact of lies, because lies are more convenient than the truth.
No one came forward to give evidence about what these powerful, rich, villains did to me. But then no one will come forward on any of these issues. Society: a conspiracy of lies.
If you had not death, you would eternally curse me for having deprived you of it; I have mixed a little bitterness with it, to the end, that seeing of what convenience it is, you might not too greedily and indiscreetly seek and embrace it: and that you might be so established in this moderation, as neither to nauseate life, nor have any antipathy for dying, which I have decreed you shall once do, I have tempered the one and the other betwixt pleasure and pain. ---Montaigne
www.NewRuskinCollege.com
Lecture Notes: 09-25-04
Everything appears out of phase. I am loosing the thread of the discussion. There is a sensation of drowning, dropping below the surface as once familiar faces and ideas recede and disappear into a dark background.
How little we are actually able to communicate to one another. We think we share a common language, share our thought on common subjects, yet, . . . what was there? What’s more it seems that everyone is actually colluding to avoid having to face the fact that there is no common ground, that we have been atomized.
For example, consider the collusion of both political parties to avoid facing a simple truth about governance. Both sides seem to conspire in a lie, in preference to the truth, because the lie is more beneficial to each of them than is the truth. To avoid having to admit that there is no such thing as “progressive taxation,” both Democrats and Republicans participate in the false claim that government can distribute taxes to the “rich,” ($200,000 according to Kerry), despite all evidence to the contrary.
The Democrats like to claim to the gullible public that they will not have to pay, but rather the costs can be shifted on to the “rich” who have the “ability to pay.”
But the Republicans also enjoy the benefits of this falsity because they can then claim that it is true, the “rich” do pay the great majority of taxes, which implies that it is fair that the rich should therefore have a greater say in the governance of the country, because, after all, “we are paying” for it; the rest of us being reduced to beggars.
As we have previously explained the government is not able to determine who actually ends up paying taxes unless it imposes “wage and price controls” simultaneous with the “progressive taxes.” Without wage and price controls taxes will be redistributed by the market just as all other cost are redistributed.
In other words, as long as there is a free market, as long as people are at liberty to control their property and labor, i.e. set their own price, the government is unable to direct the incidence of taxation on to any individual or class.
As long as people can raise prices the market itself will determine the incidence of taxation. Bill Gates and Microsoft, do not, have never, paid taxes. As long as Mr. Gates can raise his prices any attempt to take his property by taxation will fail. However, if price controls are placed on Microsoft, then the government can force Microsoft to pay. In other words, the power to tax is not the power to destroy unless it is accompanied with the power to prevent the actor from passing the taxes on to his customers.
It is true that not everyone is placed in as privileged, valued, a position as is Microsoft. However, even with these other actors, the incidence of taxation is determined not by the government and its tax tables, but by the value placed on the actors and their goods or services. The greater the perceived value placed on the actor by the consumers the greater that actor’s ability to pass on his taxes.
Who ends up paying the taxes in the absence of wage and price controls?: Those individuals with less, or no, ability to raise prices, industry sectors under heavy competition from low cost foreign producers, for example, or any industry sector which, for what ever reason, is experiencing price deflation. When taxes are levied against these sectors, and the individuals in these sectors, the taxes can not be passed on throughout the market, i.e. to their consumers, and they actually end up paying the tax.
Not only do these unfortunates end up paying their tax, they also end up paying every other tax passed onto them by those industry sectors on which they are dependent. In other words to the extent others are able to raise their prices the added price includes a portion of the so called “progressive tax” that had been levied against that privileged, valued, sector.
Again, the free market redistributes the “progressive taxes” not based on the “ability to pay” but based on the ability or inability of the actor to raise his prices. This ability to raise prices is based on the perceived value of the consumers. The consumers place a high value on the Microsoft operating system and have shown a willingness to pay higher prices. Microsoft and such companies therefore can raise prices and shift their taxes on to their customers in the absence of wage and price controls.
However, consumers may well shift their purchases of domestic automobiles to foreign automobiles to the extent the taxes increase the domestic’s prices. This dynamic accounts for the rapid rise and decline of industry sectors. Ascendant sectors operate tax free as consumers are willing to absorb their taxes, while industries in decline, for what ever reason, end up taking on a larger and larger share of the taxes, and other costs, while at the same time having less and less ability to pass on these costs in their prices.
But notice that no where in this description is there “progressive taxation.” The “rich” merely collect the tax for the government, and this ability to “collect” is based not on their “ability to pay” but on their ability to raise their prices; i.e. based on the value consumers attach to their product or service.
Not withstanding this truth, the Democrats find it convenient to claim that government costs have been shifted onto the “rich” who are being made to pay the taxes for us, and the Republicans also find it convenient to claim that ‘yes, we rich folk are paying most of the taxes, you nobodies.’ Both prefer the lie to the truth.
Rich Republicans point to the large percent of Federal Income Taxes paid by the top one percent or five percent and snicker that those wastrels, the bottom 95% hardly pay anything. But where did the top five percent get their money with which to pay the tax? From the other 95%! Even the ones who earn so little that they do not even file a Federal return pay the taxes of everyone else; in the form of the prices for the goods and services they purchase. Raise the tax on the top five percent and the cost of canned beans goes up.
This is not an argument for wage and price controls. This is an argument for truth.
Notice too that this argument is the strongest argument in favor of the Flat Tax. The Flat Tax is a simpler tax, however the strongest argument is that the Flat Tax is no more regressive than the so called “Progressive Tax.” The objection that the Flat Tax is unfair because the rich can pay more is illusory. The dynamic market forces, by which all costs are redistributed by the action of the market, i.e. the consumer choices, that we have here been examining, will redistribute the Flat Tax just as the “Progressive Tax” is redistributed by the price mechanism. Note also that the Value Added Tax, upon which so much of the European Welfare State depends, turns out to be no more regressive than the “Progressive Tax” for the same reason that all of these taxes are redistributed throughout the economy, falling most heavily on those with the lowest ability to shift or avoid and least heavily on those whose goods or services are in the highest demand and who therefore have the highest ability to raise prices in response to increased costs including taxes.
But the important point I wish the reader to see is that it is the vanity of the rich Republicans which prevents them from articulating this argument in support of their cherished Flat Tax. They prefer not to make this, their strongest argument, because they would have to admit that they are not “paying” the greater share of the taxes but are rather merely collecting the taxes from their fellow citizens who have a lesser ability to raise their prices. Their egos are such, their pride in their superior “ability to pay” is such, that they would rather forgo this argument and even the implementation of their “Flat Tax” than admit to the truth of the matter.
But there is nothing that can be done. The parties, the mass media, the gigantic engine of society will continue to grind on, mostly oblivious to the truth, if not actually hostile to it.
Both parties seemed locked into a collusive agreement to prevent the truth from being told. A compact of lies, because lies are more convenient than the truth.
No one came forward to give evidence about what these powerful, rich, villains did to me. But then no one will come forward on any of these issues. Society: a conspiracy of lies.
If you had not death, you would eternally curse me for having deprived you of it; I have mixed a little bitterness with it, to the end, that seeing of what convenience it is, you might not too greedily and indiscreetly seek and embrace it: and that you might be so established in this moderation, as neither to nauseate life, nor have any antipathy for dying, which I have decreed you shall once do, I have tempered the one and the other betwixt pleasure and pain. ---Montaigne
www.NewRuskinCollege.com
