Does how you pay taxes affect how you feel about taxes?

It’s fair to say there is a significant difference in the reaction to paying taxes between social classes in the U.S. While no one is thrilled about having to pay taxes, it is primarily the rich who lobby for lower taxes; poor people contact their representatives mostly for other issues. So given that rich people have a stronger aversion to payer taxes, I am curious if there is a difference in the way taxes are paid by each class and if there is a correlation between payment method and attitudes.

The majority of taxes paid by most people are garnished from their wages before they receive their paychecks. In other words, the taxes they shell out never directly pass through their hands so they don’t experience the feeling of directly paying the government for government provided services. But the majority of the income earned by rich people is through returns on investment. How are taxes paid on this income? Do these taxpayers personally make direct payments to the IRS? Do they feel as if they are paying the government (mostly federal) for services (mostly local) they don’t receive?

If the way rich people pay taxes fosters a sense of resentment towards the government, are there ways to change how taxes are garnished to minimize this effect?

On a related note… How are tax payments managed in Scandinavian countries where taxes are much higher than in the U.S.?

Smaller percentage of a growing pie

Many mainstream economists avoid the issue of income inequality by claiming it can be resolved by ‘growing the economy’ so that the entire ‘pie’ gets larger. This argument is essentially that a smaller percentage of a larger pie is more than a larger percentage of a small pie. This is true in absolute terms: 12% of 1000 (120) is greater than 15% of 750 (112.5). But if the piece of the pie held by lower wage workers continues to shrink, at some point the absolute value shrinks to some negligible amount… obviously not a cure to income inequality. So do those mainstream economists have a real fix or is it all smoke and mirrors?

How much extractive economic activity can the earth support?

Economic activity starts by extracting something from the environment…

To understand this conclusion, work backwards from any final consumer product, be it physical or intellectual: plastic toy <- molded from resin <- chemical transformation of petrochemicals <- drilled/extracted from environment; book <- printed on paper <- made from wood pulp <- from trees cut from environment; meal at a local restaurant <- made with ingredients from local supplier/distributor <- grown by farmers who extract their products directly (plants) or indirectly (animals) from their environment… this is true for all products in the economy.

So how much exists to be extracted and what happens when we reach the limits?

America trending...

The American economy is trending towards an extreme form of capitalism known as oligopoly if it’s not there already (see here). How is a ‘capitalistic’ oligopoly significantly different from a planned economy? In both, major sectors of their respective economies are controlled by a small select group of powerful individuals (board of directors or central committee). They have sufficient financial resources to influence public policy as they please. They are, for most part, free to ignore the wishes of ‘junior’ members (small shareholders or citizen workers) and direct their business strategy as they see fit. As I see it, the current American economic system is pushing this country away from its representative democratic roots as a republic to a something resembling an oligarchy like the Russian Federation.

Too many MBAs

This country has produced too many MBAs. They are so common that an MBA is considered de rigueur for public office which has resulted in governments whose policies and practices are infused with business ethics and priorities. One negative example: education was once considered a public investment but since funds spent on education are not classified as investments by business economists, government policy has changed. The single most important form of long term planning in any society, the one which promises the best return on investment, public education is now being managed as a short term purchases with immediate return on monies spent. This is the justification for student testing and teacher accountability - immediate return on money spent on teacher pay - and not long term investment on student learning, growth and achievement.

With the emphasis on business degrees, our academies have turned the brightest minds in the country away from intellectual innovation to financial innovation and the result is a loss of intellectual specialists and a glut of inequality maximization specialists at the cost of national and international economies and ecosystems.

The only positive is these institutions are still (mostly) intact so we only need the will to invest in a future that benefits all people. It can take decades or centuries to grow a forest that man can now cut down in a day.

To advocates of expanded Second Amendment rights…

Regardless of your motivations, as a supporter of gun control, one of mine is to avoid accidental gunshot deaths or injuries of your children. Unfortunately the expansion of gun rights for which you advocate (stand your ground laws and open carry provisions) put all our children at risk. I would ask that you respect the lives of my children as I do yours.

A Major Failure of Capitalism

If the opposition to a minimum wage (either its existence or increase) were drawn out to its logical extension, it would lead to the conclusion that capitalism is not the ideal economic system, contrary to what minimum wage opponents might say…

To make this argument, it is necessary to go into the meta-level questions about economics. An economy can be defined as all the exchanges of goods and services within some area. But why do those exchanges occur at all? In even the most dire of circumstances, such as refugee camps, people will organize and engage in some form of exchange of goods and services. Why is that? What purpose does it serve? Looking at it from the most basic level, people trade to get the things they need to survive. So under less dire circumstances, the developed world for example, economies exists to advance the survival, well-being and growth of all its participants. A good reason to be, at least to my mind.

So how does the minimum wage fit into this? It relates to the unwillingness of capitalists to pay their full time employees a living minimum wage. An economic system which is not willing to compensate full time workers sufficient wages to support themselves is not fulfilling its reason for existence and thus a full out failure. It is long past time to reconsider capitalism as an economic system.