Term paper: Who benefits from keeping the poor in poverty and how do they do it? part 3, The Tax Man

This is part three of an essay on who has a vested interest in keeping the poor people in this country right where they are. In parts one and two, I explored the major players in electing the current regime, and the beneficiaries of the money that poor people spend every week. They were much the same. Surprise. Two players that I left out of the picture were the Church (because I pick on them often enough) and the Government itself. That’s right, the Government benefits from it’s own entitlement programs! Here’s how it works: First, you have numerous government employees paid to administer these programs. Then you have managers and district managers and bureaucrats paid to administer the administrators. The first layer, if you have ever met these individuals, is about 50% “workfare”, and 50% people actually getting things done. The next layers are often overpaid buffoons that couldn’t make it in the corporate world, and to whom somebody owed a favor. If I am wrong about your particular bureau in your particular state, I don’t need your e-mail. I have seen it first hand in Massachusetts, and not from the point of view of a recipient. This is not, by the way, the judgment of a single example either. I used to repair the computers and install networks and software for these bureaus.

State Government is financed in part by sales tax (except in New Hampshire). Sales tax is a regressive tax, meaning the poor pay more, and the wealthy pay less, taken as a percentage of their total spending. How this works is, if I can’t afford to buy the large economy size of a product, and buy the smallest size instead, I pay a higher price for that item, and I am taxed accordingly. Next week, I have to buy it again, whereas if I had bought the larger size it would last me two weeks. Now, I pay sales tax again on that higher priced item. If the regular size costs $1, and sales tax is 7%, I have now paid $0.14 to the government, whereas the person buying twice as much at a time for $1.75 has only paid $.01225. This adds up over time and population. (The manufacturer is happy too.) So the government is making more in sales tax per dollar spent on the lowest-paid bracket of society. When you think about it, the left hand is taking away a portion of what the right hand is paying out. In contrast, a flat income tax, without loopholes and without graduated percentages, would be a progressive tax wherein the more you make, the more you pay in taxes.

Another way the government taxes poor people is the State Lottery. Who buys more lottery tickets, a poor person looking for a break, or someone fairly well off who is likely better educated and has a better understanding of the laws of probability?

The third way the government gets its money back is in property tax. Subsidized rent is paid to landlords who own “distressed” properties (this is “section 8” housing, not publicly owned “projects”). It is likely that some of these units would be vacant otherwise. Who, after all, wants to live in some of these neighborhoods if they have a choice? The rental income is partially returned to the state as property tax. My point here is, the poor don’t keep it, the landlord gets paid, and the government gets some of it back in both property and corporate income tax. In the corporate world, this would be called a kickback scheme.

If you want to see what I think the church’s angle is on this, besides the selling of false hope to the needy for collection money, check out one from the vault, here. Scroll down to May 17, “One for You and Two for Me”.

Next post I’ll talk about some of they ways they do it.