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Britt Combs: Taxes are higher than you think

much, much higher.

By Britt Combs | The McDowell News

Published: April 14, 2009

Readers who are still employed know April 15 as a special day for Americans, a day on which we contemplate the awesome value-for-money we receive from our beloved, benevolent and long-suffering federal government.
We all see the taxes withheld from our checks, but easily forget the layers upon layers of taxes we never see, but pay just the same -- payroll taxes (yes, your boss pays those, but it takes away from the money he could use to compensate employees) and energy taxes, already factored in at the pump, for example.
But there's plenty more, the countless layers of taxes paid up the supply chain, the cost of which are all, of necessity, added in to the consumer cost. The farmer pays a tax, then the picker, then the trucker and his boss, then the wholesaler, the packager, then the next line of shippers, then the grocer all get taxed to a frazzle. Each of them has to pass that cost along to the consumer.
The tax withholding that looks for all the world like 15 or 20 or 25 percent on your check is just the barest hint of the taxes you and I pay.
That's why Republicans, when they say the poor pay no taxes, are full of beans. The poor, in fact, pay more hidden federal taxes because they buy junky consumer goods. And lots of them. A rich man might buy a TV that'll last 20 years; he'll pay those hidden taxes once. He doesn't waste a lot of money on trinkets. But the poor man will buy a junky TV every year or two. It's the same with clothing, computers, washing machines, potato chips, what-have-you.
Here's a breakdown of federal revenue sources for fiscal year 2007, according to the Brookings Institution's Tax Policy Center:
The federals collected $2.5 trillion that year, or 18.8 percent of the gross domestic product. Of that, 45 percent came from individual income tax, 35 percent from payroll taxes, 15 percent comes from corporate income taxes (That, of course, is before corporate officers and shareholders pay their individual income taxes. They get taxed twice, so don't fall for the Democratics' hype on that one.), 3 percent from excise taxes and 2 percent from "other sources."
Of course, you also have to bear in mind that virtually any time you move what little money you still have from one pocket to another, you'll pay another tax. If you die, you'll pay a tax. If you give it to your grandbaby, you'll pay a tax. You'll be taxed when you buy most forms of savings instruments, and nearly all of them when you cash out.
The hell of all that is that, for all the money they confiscate from us, they spend much, much more. Accurate figures are difficult to come by; figures available are highly suspect due to political bias. But it's clear they are operating a failing Ponzi racket. The federals also hide overspending in the form of "unfunded mandates," that is to say, expenses they force states, municipalities, companies or individuals to bear under threat of prosecution or shooting.
An example at the state level would be No Child Left Behind expenses and other nonsense in the education sphere. As individuals, they require you to have airbags in your car or they'll put you in jail and take your car for themselves. And don't overlook the cost of compliance with their tax regulations – the countless hours you must spend preparing a tax return or the extravagant cost of paying a tax preparer. Another hidden tax, my friends, don't be fooled.
They pay for none of that; you do. But they never collect on it, so it doesn't show up on their books. But it's all taxes. They tax your money, then your energy, the precious, limited hours of your life get taxed.
Even for all their crooked bookkeeping and hiding expenses, they spend vastly more than they bring in. Whether they finance all that through borrowing or through printing money, the results are inflationary. Inflation robs the dollars in your savings of their value without ever having to crack the safe or getting you to file any sort of documents.
This is the inflation tax, the most insidious tax of them all. The government robs your dollars of their value and uses that worth to go shopping. Historically, the pattern is unbroken. If a deficit-running government survives long enough, the inflation tax is the ultimate flat tax. Everyone at every income level pays the same rate: 100 percent. That's hyperinflation; the point at which the government can no longer pay its debts, cranks up the presses, renders your savings and assets worthless and pays off creditors in worthless notes.
You know what's the most depressing thing about that? Come next election, most Americans will still vote for Democrats and Republicans. It's pathetic.

McDowell News reporter Britt Combs writes a weekly column and welcomes your comments.