Dear Friends,
It seems to me, few actually know what the word tax means, and so it means nothing. Some people think that to tax a thing is to benefit it, many believe that taxing is merely a means to fund government, while still others think tax is a burden. Look up synonyms of tax and you get pages and pages. Some with negative and some with positive connotations. Moreover, because tax means different things to different people, it is like an empty cup. It’s usefulness is in being empty. So when a politician says, “tax cut,” then either adds or doesn’t, “for the one percent,” they are saying nothing. They expect you to fill the empty cup with whatever you believe. Based on your perspective. This is why no one actually defines tax, what it is, the different species of them and what they really do.
A tax is firstly a burden and secondly a means to fund government. There are a multitude of kinds of taxes, payroll taxes, social security taxes, capital gains taxes, etc… which fall under income taxes. Other taxes are on property, added value, inventory, fees, and consumption. So you see, there is not a single area of human endeavor that is not taxed, burdened, exploited as a revenue source and an obligation. So when someone says a tax cut will benefit this or that faction, it is incumbent upon them to point out the tax being cut, as well as the mechanism by which that faction will benefit. Anything else is misleading at best and outright fraud at worst. Because the term tax is so nebulous, manipulators seek to use that empty cup, to get us to act against our own interests. Sadly, many of us always will.
Cutting income taxes logically then, should benefit the highest taxed the most, right? Except that if payroll taxes are cut, since the middle class and poor’s income is based on selling their labor, the benefit goes disproportionately to the low and middle class. Yet the manipulators would have you believe that the richest get the benefit. Most of the uber rich like Gates, Musk, Bezos, etc… wealth is based on the stock value of their companies, and is often “unrealized.” They provide value for wealth. (Despite their political ideologies). Others however, like George Soros and Rothschild, wealth is based on diversified holdings across asset classes, hedge funds and bankrupting others to short their stocks and bonds. They are parasites. So even a tax designed to punish billionaires cannot target them all.
The uber wealthy derive most of their income from capital gains and dividends, while corporate executives get their income from stock options as well as absurd bonuses, and for political optics sake, payroll is a smaller percent. Executives, lawyers and some salesmen are the top one percent as far as income goes. They are not the richest people though. They might not even be very wealthy at all, in terms of assets and real wealth, after debt is subtracted. The middle class however, has as their largest asset, their home. Which is a huge capital gain liability when we sell it. So, raise capital gains to harm the richest, and middle class home owners are harmed. Raise payroll taxes, and manipulators will say it harms the rich, while it actually harms workers. Which means no productive debate can be done today.
All of which shows that our tax system is an intentionally muddled mess. The more absurd it becomes, the more it benefits the richest and harms the poorest. Even as that disorder allows manipulators to convince people that cutting their taxes harms them and helps others! When the top tax rate was ninety percent, there were sufficient deductions, the accountants of the wealthy could navigate through, so they didn’t have to pay any tax at all. Reagan’s “tax cut” actually raised the taxes or the rich by eliminating their loopholes, while actually lowering the payroll tax burden of the middle class. Showing that simplification is better at making the tax system more fair. So you can count on manipulators claiming tax simplification is evil. Because it is… to them.
Sincerely,
John Pepin
