Taxes and history

I was doing some research last night on the history of taxes in the United States compared to a few other countries with 0% personal income tax.  It is fascinating to read how this country went from having a government that got by with being funded through import tariffs, and being there solely as just the government.  There were no social programs, no department of whatever, it was just the government.  The first taxes were levied as a means to pay off the debt incurred to fight the Revolutionary War, and later again to pay for The Civil War, not the one with Captain America and Iron Man. Although what they grossed in the box office would have paid off that debt.  🙂  Some where along the way, elected officials got it in their heads that having the government handle things was in the best interest of the country.  We mere citizens could not comprehend dealing with running a country as large as this.  And if we took issue with how things were being done, we could always vote them out.  But you see there is the catch.  They know we can vote them out whenever we choose to.  So how do they protect themselves and their position of power?  Why they create government assistance programs that are needed.  Certainly they are needed, there are time where things go wrong, and people need help, and while in the distant past communities would rally together to help out the family that lost their home to a fire, or to help the farmer harvest his crops so that the town could survive the winter, we now let the government handle it for us.  And to do so, they would like to have our money.  We are paying them to do the extra that generations a hundred+ years ago stepped up and did themselves.  And that is fine in of itself, except they use these assistance programs as a threat to keep themselves in power.  You cannot vote for that guy, he is in the other party, he wants to do away with your subsidy, you will be on the street with him in office, don’t vote for her, she is with those other guys, they want to raise your taxes and give your money to those people barely surviving on the amount of money we feel they need to live.  It is  a viscous circle.  When you look at comments from Bernie Sanders talking about how the rich paid 90% income tax way back when, the rich should be taxed to pay for making the country better!!  He failed to mention that while the 90% was actually 91%, but there was a catch, they only paid that on earnings over $3,250,766 adjusted for inflation.  What rich person couldn’t find ways to offset earnings to fall a couple hundred dollars below that number and still live their comfortable lifestyle.  But it sounds good as a speech.  We are raising the tax on the rich to 90%!!!!  Yeah!!!! We are sticking it to the rich guy.  And the rich 1% just shrug their shoulders and say, yeah, whatever, let me know who to make a check out to.  Do you know that in 1955 we had 24 different tax brackets? Did you know that regardless of what ever the tax structure looks like, however they use smoke and mirrors to distract people that the percentage of GDP (Gross Domestic Product) is pretty constant? I once had to talk my father in law out of storming city hall because they raised his property value up considerably, and he thought his property taxes were going to double. Once I showed him that yes they increased the value of the land, but also halved the tax rate per $100, and that his taxes were actually going to be lower he was fine. All governments, regardless of what country you are in, has found a way that is palatable to the population to fund how they want to run the government and country. We may all grumble and complain that we should do things their way, see, they do it different, it works. No, it just works for them.

I have looked at how other countries do things, and they all have variations of ways to get what they need.  Either you pay 0 personal tax, but your employer pays 55% so your paycheck is much lower since your boss is paying your taxes, or you pay a value added consumption tax, the more you buy the more you pay, some countries offer free medical, electric and water, but you have to pay 10% taxes of the rent you pay for your apartment, and pay 5% of your wages to the social programs, and your company pays 12.5%.  Money does not just appear out of thin air to make all of the worlds problems go away.  It comes from somewhere.  Blame gets laid at the feet of the Baby Boomers, but have you thought about why they worked and used the systems in place to make all the money they did?  Why they wanted all of the toys?  Because their parents were children during the Depression, one of the worst periods of time in our history.  They were raised by parents who had nothing when they were children, who probably instilled in them that they should want to have things, should take advantage of any loophole there was, because that was how you got ahead, and made sure that their children would have advantages.  They came together as a generation and succeeded.  Certainly the cost for things went up, if there is more demand than supply, costs go up.  Simple economics.  They wanted things, were two income families, and had the cash to buy them.

It seems that about every 30 odd years we go through a tax overhaul. We have had several, we will probably have another in my lifetime. I’m sure many will see one in their lifetime. Just as I’m sure you will see people in 30 years blaming this generation for some problem in the world. The only reason we should look back at history is as a reminder that back then things were different, and they did what they did at the time because they felt it was the right thing to do. It has become too simple to point at other countries, classes of people, and say you are to blame. When someone says you should all step up and do better to make the world better, what they mean is they want the world to be shaped in a manner that feels right to them. Not everyone shares the same world view. If I told you that tomorrow we could start solving all the worlds problems, you could have free medical, free electric and water, a living wage when you retired, but you had to take a 60% cut in your paycheck, would you? I’m sure many would not. What if you only had to lose 20%, but you had to change your religion, had to adhere to a strict set of cultural values, could not have any form of Social Media, or watch movies not approved by the government, would you?

All of the “things” we have in life come with a catch. If you want X you have to pay Y. If you want health care for everyone costing Trillions of dollars a year, it has to be paid by someone, and when you talk of single payer government regulated health care? Think of who you are putting in charge of deciding what procedures are covered. When you wish the rich paid for everything? Chances are if you force them to pay for one thing, they will stop paying for something else, like that free museum, or that new park, or that cultural center you wish we had. Unless we scrapped the entire system and went back to a barter system, there will always be people in power that want your money, because you have asked them to do something for you that you really don’t want to do, and would rather complain about how much it costs, vs doing it yourself.

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