A Fair Look at Fairness and Taxes

“Remember, ‘fair’ is a place where hogs win ribbons!” is a quote I’ve often told my sons and many people around me. What is fair? Is fair the same as equal? Is equal always fair? Is it always fair that one hog gets a ribbon and the others don’t?

Our society has become obsessed with fairness and equality. If 50 kids play little league baseball, all 50 line up at the end of the season, all 50 are given participation awards and all 50 are told they are all champions and so impressive just for participating. That’s “fair.” No child is recognized openly for being better than the rest. We have and celebrate a “Most Improved” award for one special player….usually its the one that couldn’t tie his shoes at the beginning of the season, but by the end of the season, he was able to distinguish the difference between a pitcher and a picture.

Currently, we are concerned with what is fair in paying taxes. The rich, we are told, don’t pay their “fair share.” We seldom hear the fact that the lower end of the earnings scale pay little or no taxes. We are told that a “rich man” pays a lower tax rate than his secretary, but it isn’t explained that the rich man, who lives off returns on his investments, only pays “capital gains” taxes. Capital gains are taxed at a lower rate than “income tax” which is what the secretary pays on her salary.

So what is “fair” when it comes to taxes?

I earn a dollar. What taxes will that bold dollar feed? First, income tax, then come all the “consumer taxes” such as: sales tax on items I buy, my power bill, phone bill, garbage, water, sewer all are taxed, my property is taxed, the house I bought is taxed, the furnishings, cable tv, all taxed. Some how, I was able to put some of that tattered dollar into savings–which is good for the country and the good for the economy–and if I earn enough in interest on those savings, I pay taxes on those earnings. If I can invest in stocks, those gains get taxed.

After a successful life, I amass a moderate amount of wealth. Maybe real estate, some stocks, savings, investments and the like. Then I die, having paid all those taxes, capital gains taxes, property taxes and so on, and the government tells my children “Sorry for your loss. We need 55% of all the estate in death TAXES.”

Which loss are they sorry for?

So, what is fair when it comes to taxes? The middle class is likely the best group for growth. We work, we earn, we spend, we donate. The rich–by the way, just because a person or business makes $250,000 or more does NOT qualify them as “rich”–usually operate and own the businesses that employ the middle class. The rich pay the salaries of the middle class.

Take Joe Millionaire. Joe went out and started a business. He was successful. He employs a dozen or so people, maybe expands to another community where even more people are employed. Now evil rich Joe employs two dozen people. He pays all the “consumer taxes” we already talked about, as does his two dozen employees, plus they all buy more goods and services which allows other businesses to be successful and all of those employees earn money and maybe even that college student gets a job. This is production! The economy grows! The poor have a route to become middle class, and the middle class can grow towards being rich. Dozens maybe hundreds of people pay all those taxes we listed and government receives more money to operate. All thanks to evil rich Joe Millionaire.

We could even give a “Most Improved” award to that college student!

Now let’s make Joe Millionaire “pay his fair share.” He has to cut costs to keep his business open. That means closing that new franchise; locally a reduction in production, loss of income for the business and, sorry folks, lay-offs. Joe has to reduce his investments which means fewer other businesses have operating capital which means they have to lay-off employees. Now consumer spending is reduced, and all those “consumer taxes” are not getting paid as often or at the rate they were when Joe Millionaire was richer and had a lower tax burden. Now unemployment rises, that student has a degree, but no job, and more people need public assistance and the government gets less money but pays out more in unemployment and public assistance.

Maybe we should leave “fair” as a place where hogs win ribbons?

I’m still here you bastards!