Saturday, July 30, 2011

Oh Yes, We Pay

I was watching the news last night and several of the sound bites concerned the allegations of several conservatives that something like 46% of the population doesn't pay taxes. Those in that group are in favor of raising taxes on the wealthy, these folks said, because a) it doesn't impact us and b) we want to stick it to people that are better off than we are.

My wife and I fall into that 46% who don't pay income taxes directly and directly is a key word here. The SSI I receive is non-taxable and the amount my wife earns is, after the standard deductions and exemptions, less than zero.

But to suggest that we don't pay taxes is a bald face lie! On the federal side of the ledger, my wife has payroll taxes (social security & Medicare) deducted from her monthly paycheck. On the more local side of the ledger, we pay sales and property taxes. We also pay taxes with our telephone, cable, electric and water/refuse/sewer bills.

And, though we don't pay income taxes directly, we certainly pay them indirectly. Corporations that provide products and services factor into their prices their potential tax liabilities. Why do you think oil and pharmaceutical companies (to name just two) are enjoying record profits?

They jack up their prices to cover some or all of the taxes they would owe IF they paid at the marginal rate. But here's the truly interesting part. While consumers are charged higher prices to cover their corporate income tax bills, a good number of them actually don't pay those taxes at all!! Consequently, though corporate taxes are figured into the egregious prices they charge, they often end up simply pocketing the money and then they utilize these "gifts" to lobby Congress to lower the taxes they actually don't pay even lower.

So yeah, we pay and pay and pay and pay.

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