Wednesday, October 29, 2008

Soaking the Poor

by Pa Rock
Citizen Journalist

John McBush continues to rant and roar over the Obama plan to "re-distribute" the wealth, referring to his opponent as the "re-distributor" in chief. McBush is worried, and rightly so, that Obama will increase taxes on the rich - people like himself and Mrs. McBush. Their income is conservatively estimated at over a third of a billion dollars a year. So what did Sweet Cindy do to earn that monster income? Why, absolutely nothing! She inherited it.

So, step one, let's set aside the conservative whine about the unfairness of taxing those who worked so very hard to accumulate their fortune. That happens, of course, but more often that not wealth is acquired from the previous generation. Republicans in particular want to protect wealth that is passed down. We used to have taxes in this country on estates, and most people really didn't have a problem with the concept of an estate or inheritance tax - because the people receiving the inheritance had done nothing to earn it. But then a group of legislators came up with the idea of re-branding inheritance taxes as "death taxes" and suddenly started belching about how the government was even going to follow you into the grave to get their greedy paws on your hard-earned money. Never mind that the dearly departed would have no use for the money other than to maintain a state of privilege for his or her heirs.

And conservatives traditionally hate the concept of progressive income tax. In the early 1900's people with a very little money paid a very low rate of income tax. That has since risen dramatically. Why? Well, it's because in the early 1900's people who made more money paid a higher rate of taxes on their income. The percentage paid on taxes was graduated and rose with the amount of income. The ultra rich were hit with a 90% tax rate. And the conservatives whined that this, too, was unfair. If a person made more, they should be able to keep it. They presented it as a matter of fairness. Their goal was a flat tax, where everyone pays the same percentage.

There has always been a strong push, again from conservative quarters, to eliminate income tax altogether and impose instead a national use tax - a sales tax. Governor Huckabee rode that horse this year, and we will continue to see it trotted out in future elections as long as society dares to keep itself in good repair by taxing either property or income.

Sales tax is a very bad joke on a very vulnerable segment of the population. I have heard educated people blather on about how it is the fairest tax because everyone pays - and those poor people don't skate by just because they own no property or have a miserably low income. But sales tax is regressive, the opposite of progressive. The poor pay a much bigger percentage of their income on sales taxes than the rich. Whereas the poor often have to put all of their income into ordinary living expenses such as food, medicine, and gas, the very wealthy spend a much smaller portion of their income on things that are taxable. They never have to put it all on the line just to get by.

Remember Cindy McBush. Her monthly credit card bill recently was $150,000, and a good portion of that probably was subject to sales tax. But Sweet Cindy makes a third of a billion a year. So much of her income will not be exposed to sales tax, no matter how crazy she gets with her shopping.

The banks also conspire to fleece the poor. Most people have a checking account to conduct their business, but often the poor have no money left for savings. They spend it all just to survive. When the overdraft fee charged by banks is at a national average of over $29.00 per check, as it is today, the poor get clobbered coming and going. (My father was once a director in a small rural bank. He said the most lucrative income that particular bank had going for it was overdraft fees. And now that bank has ATM cards - another cash cow. When a person has to use some other bank's ATM, both banks get to collect a fee of up to three dollars or more.) The rich have plenty of cash and don't have to subsidize the banks with overdraft fees or ATM fees. My bank provides overdraft insurance, but you have to qualify in order to get it. In other words, if the wealthy do write a hot check, it is automatically covered at no fee. Nice, huh?

We all know that society needs funds to operate, but the wealthy feel that they should be immune from financial squeeze that plagues the poor. One class pays the bills and another class enjoys the benefits. Maybe it isn't the wealth that needs to be re-distributed, but it would certainly be nice if the responsbility for funding society could be shared by those sitting on its wealth!

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