Wednesday, September 21, 2005

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.


At 12:09 AM, Blogger DUB said...

Even if the poorer person buys the economy size, it's the proportion of the income paid in sales tax (as you stated) that guts the poor. Hypothetically, say we allot humans a set consumption - just ignore conspicuous, wastefull consumption, and go on what is actually needed. One man who is poor needs to consume the same amount as a rich man. They both buy the same amount, pay the same amount, but the poor man has less to spend from the get go, and is paying a larger percentage of his income toward the tax.

This really rears its ugly head on items like cigarettes and gasoline.

I recently read a depressing statistic (and wish I'd have made note of its orgin) - when it comes to financial planning for the future, more blacks "invest" in lottery tickets than stocks, bonds, CDs, etc. I'm sure this applies to most people in the lower financial class. It's a very disturbing psychological game.

I always looked at gov't employees pay vs taxes with a smirk. Their "boss" can pretty much figure which tax bracket benefits them the most, and pay at that.

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At 12:15 AM, Blogger Rev. Barky said...

Capitalism is great for those who have money and know what to do with it. To a poor person it is like letting them loose in a field of bear traps many of which have been set by those with the money. You can profit greatly in 3 ways: getting people to pay too much for your cheap product/service, have them work for next to nothing and lending money to them at extremely high interest rates. In any case, it is a really bad thing when there are few left in your world other than economic slaves because they end up stealing from you anyhow.

The most valuable things we can teach the poor are basic personal economics, sex education with emphasis on birth control and abortion, and how to brush and floss daily.

At 8:56 PM, Blogger Skull_Duggery said...


At 4:07 PM, Blogger Rolo said...

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At 5:14 PM, Blogger mike said...

The weatlhy man needs a electric drill(for who knows what?),with time,resourses,etc.he is able to research and find the best electric drill known,and buys it at 300.00 it is the best will last his life time!.....The Poor man needs a drill now!,to finish a job,buy what he can with money he has!,most likely cheap,it lasts the job!,..the weathly man buys it once,..the poor man never stops buying it,..who pays the most TAXES!,?


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