Wednesday, June 25, 2008

Understanding Taxes - The Two Dogs Way

Most people never bother to attempt to understand economics, they always say, "I'm no good at math! LOL!" Here's a little primer for youse folks that think taxes on the "wealthy" and corporations are a good thing. Understand that this is overly simplistic because I am explaining these things to idiots.

There is a huge portion of your income that is removed from your pay before you ever see that check of yours. Government and the services doled out by that government cost a bunch of damn money and the politicians thought that it would be a good idea to try to mask exactly what you are wasting on that crap. You know that you have heard many times from morons, "I didn't pay taxes this year, I got money back! LOL!" Chances are really good that person doesn't understand how much money that they have confiscated from their check every pay period. Trust me, there are literally millions of folks that don't know that. I like to call those people "idiots" or "morons."

Here's an idea of how much that you actually do pay. Let's imagine that you make thirty thousand dollars a year. I chose 30k because it is less than the median income, but more than the poverty level. That will mean something later on in this diatribe. If you received a check for a portion of that yearly salary every month, your check would be two thousand-five hundred dollars a month without the government theft. If you get a check every two weeks, your check would be $1163.85. You know that your check is not that much, but where does that other money go? Federal and state taxes and withholding for FICA and Medicare.

How much do you actually pay for those things? Well, it depends on your salary, but we are working with the 30k, so we'll show how much that is. Since you do not understand these very simple things, I am going to assume that you are single because no one wants to be married to a stupid person.

The Federal tax that you would pay for 30k is this: $782.50 plus 15% of the amount over 7,825. That amounts to $4,108.75. From the withholding tables that were published with the "Bush Tax Cuts," you would have had $4310.00 held from your check throughout the year. If that was all that we had to deal with, you would have been due a income tax refund check for $201.25 at the end of the year because the withholding forces you to overpay your taxes, but you would have STILL paid the $4,108.75 in Federal Income Taxes. Understand?

Still there is also State tax to contend with. In Mississippi, we pay at the rates of 3, 4, and 5% of our taxable income. At 30k, you would pay 3% on the first five thousand, 4% on the second five thousand, and 5% on all the remaining balance. That amounts to $150.00 + $200.00 + $1000.00 for a grand total of $1350.00.

I am leaving out the part about "tax deductions" allowed when filing your returns because it is beyond your realm of comprehension. Plus it is easier on me because I don't have to actually fill out your tax returns for you.

To add to those totals, you also pay 7.65% of your total salary in FICA and Medicare. This doesn't even include the employer's match of those funds, which is legitimately your money, too. That percentage on your salary is $2295.00.

Let's recap. If you make $30,000.00 a year in the state of Mississippi, your NET INCOME is only $22,045.00. You lose a TOTAL of $7955.00 in taxes and other stolen money. This is money that you never get back, ever.

Most of you would argue that the FICA is returned to you upon retirement, but I beg to differ. We all know that Social Security is broken. There is NO Al Gore "Lockbox." The money that folks are paying into FICA right now is going to pay the folks that are already retired. Also, the rate of return for people that are actually getting money back from the system is currently one point two three percent. That's 1.23% people! You could buy clothing to sell after you had worn it out and get a better return than that. (I would say that a conservative estimate of the money that you were losing by paying into FICA is minimally one hundred thousand dollars upon retirement because if you invested 1500 a year for fifty years, that money would double at least seven times.)

Now, exactly who are those "wealthy people" that are getting all the tax cuts? That would be anyone that makes more than half of the national median income, which is currently right around forty-eight thousand a year. The "wealthy" are people that make more than twenty-four thousand BEFORE TAXES! That means YOU!

Also, understand that currently in the United States of America, we have a progressive taxation system. The people that make more money pay a higher tax rate. Do you want to know how that breaks down right now?

The bottom 50% of wage earners currently pay less than 3% of the costs of government. The top 50% pay the remaining 97%. Who are the top and bottom earners? Remember, the top earners are people that make over forty-eight thousand dollars a year. As your income increases, you pay a greater share until you arive at the top one percent paying 37% of the costs of government. Is this "fair?" Not in the least. More HERE.

Now, why are taxes bad? The government makes or produces NOTHING. But, in order to operate, they have to take money from you and me. The money that they take is money that we would use to buy stuff for our family and friends. When we buy stuff, we contribute to the economy by making sure that more stuff has to be manufactured. That stuff is manufactured by people that make money and by companies that sell that stuff. The money that is used to buy and sell is money that is in the economy, but when the government taxes that money from us, it is money that we cannot spend.

Furthermore, the government is giving that money to people that make LESS than half of the median income and those people DO NOT PAY TAXES! At best, taxing money from the economy is a zero sum gain. That is generally NOT the case, because the people that are making less than 24k are stupid people that are NOT using that money to buy anything that can be taxed. They are using it to buy bullshit.

Now, why will the tax "rebate" help the economy? That is because we can assume that most people will think of that as windfall and spend that money, thereby increasing tax revenues and forcing businesses to increase the production of stuff, thereby adding even more jobs, and the cycle continues.

Finally, why are "windfall taxes" stupid? That would be because corporations DO NOT pay taxes. All corporation profit is either ground back into the business (by buying more stuff or building new buildings, causing more stuff to be manufactured, blah, blah, blah) or paid to shareholders (who buy more stuff, blah, blah, blah). That is the nature of corporations, dumbass.

Now, if the government decides to tax what they deem to be excessive profit made by corporations, does that reduce the price that we must pay for anything? SHIT NO! It increases the prices that we pay BECAUSE CORPORATIONS DO NOT PAY TAXES and MUST recoup those loses.

Damn, how in the mortal Hell do Democrats get elected when it is blatantly obvious that they are morons?

Please take the time to comment.