Skip to comments.Taxing the Poor (Sowell on inflation)
Posted on 12/10/2012 11:58:55 AM PST by jazusamo
With all the talk about taxing the rich, we hear very little talk about taxing the poor. Yet the marginal tax rate on someone living in poverty can sometimes be higher than the marginal tax rate on millionaires.
While it is true that nearly half the households in the country pay no income tax at all, the apparently simple word "tax" has many complications that can be a challenge for even professional economists to untangle.
If you define a tax as only those things that the government chooses to call a tax, you get a radically different picture from what you get when you say, "If it looks like a tax, acts like a tax and takes away your resources like a tax, then it's a tax."
One of the biggest, and one of the oldest, taxes in this latter sense is inflation. Governments have stolen their people's resources this way, not just for centuries, but for thousands of years.
Hyperinflation can take virtually your entire life's savings, without the government having to bother raising the official tax rate at all. The Weimar Republic in Germany in the 1920s had thousands of printing presses turning out vast amounts of money, which the government could then spend to pay for whatever it wanted to pay for.
Of course, prices skyrocketed with vastly more money in circulation. Many people's life savings would not buy a loaf of bread. For all practical purposes, they had been robbed, big time.
A rising demagogue coined the phrase "starving billionaires," because even a billion Deutschmarks was not enough to feed your family. That demagogue was Adolf Hitler, and the public's loss of faith in their irresponsible government may well have contributed toward his Nazi movement's growth.
(Excerpt) Read more at creators.com ...
Sowell hits another one out of the park.
He’s absolutely right. Inflation is in essence a tax on savers, or whomever happens to be stupid enough to hold onto dollars for more than a split second. It can affect rich people, too, but is more likely to fall upon the poor. In gubmint jargon inflation is “regressive.”
Also tax on fixed income and min wage earners
As they can’t keep up with increasing costs of food
& other loving expenses
Truth, facts, and logic. No one in the government is interested in those, and no one who voted for 0bama understands them.
The Gods of the Copybook Headings will have to teach it to them.
Brilliant, concise, clear ... one of my favaorite commentators.
It doesn’t affect minimum wage earners anymore than any other group, except insofar as they’re more likely to keep their earnings in cash than those with bigger earnings.
There is no interest in learning for two reasons
Oh, the GotCH (gotchas?) won’t care if they want to learn or not...
Trying to pick out key stanzas... but you gotta read it all:
I don’t think whether it was earned on her part is the point. The point is that it hits the poor worse than the rich, who are more often farsighted enough to plan against it. If the mother is getting welfare she has already been set apart as in need of special consideration by the government, rightly or wrongly. To then turn around and steal her largesse back is ineffeicient, if nothing else.
Sadly most Republicans don’t even get this as they keep voting for more and more federal reserve easing.
Thanks for the PING to another great article from Dr. Sowell jaz.
Who is going to feed the starving millions when the EBT system crashes and burns with the dollar?
Never has a country bred or imported more illiterate, unemployable, semi-verbal, basically stupid and useless people.
While debasing and destroying its currency! At the same time! Hello? Trendline studier, what do you see ahead, but an epic crash, like two runaway locamotives on the same track heading for one another? In prior centuries, during the era of common sense, single motherhood was harshly discouraged, because unwed mothers were automatic beggers, a drain on their families, and likely to starve.
Now we pay the stupidest among us more per low-IQ baby.
The reset is going to be hell, when it once again takes brain, initiative, hard work and cooperation to survive. And that day is going to come.
The point remains that, a better example should have been chosen for illustration purposes. The welfare recipient will not suffer the consequences of a cheapened dollar, because, whatever she/he receives, will be enough to cover the inflation of “her” money. Inflation hits harder on those who don’t get payments that account for that inflation. My money in the bank is not going to be adjusted for inflation when I do decide to withdraw it, or use it for payments.
When I graduated from High School in 1965:
Average Cost of new house $13,600.00
Average Income per year $6,450.00
Gas per Gallon 31 cents
Average Cost of a new car $2,650.00
Loaf of bread 21 cents
Average Rent per month $118.00
USMC Pvt made $88/month.
USMC 2nd Lt made $295/month.
USMC Pvt made $1379/month.
USMC 2nd Lt made $2828/month.
Average Cost of New House $262,260.00
Cost of a gallon of Gas $3.52
US Postage Stamp 44 cents
Gallon of Milk $3.39
Move Ticket $8.20
Price Of Gold Per Ounce ( August 2011 ) $1,677.95
Average Yearly Wages $40,925.00
Just to show how generous the government is, consider this. When I was in second grade in 1953, we were encouraged to bring in a dime every week to put toward buying a $25 US Savings Bond for a cost of $18.75. Today, that Series E bond would be worth $166.43!
An inflation calculator shows that $18.75 in 1953 is worth $162.44 today.
So, by prudently investing in US Savings Bonds when I started grammar school, for each investment of $18.75 I would have earned $3.99, total, over the course of 59 years!
What a way to plan for your retirement!
I'd say the cost of a house you listed in 1965 is right on, we bought our first house in ‘65 for #13,900.