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Taxing the Poor (Sowell on inflation)
Creators Syndicate ^ | December 11, 2012 | Thomas Sowell

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 ...


TOPICS: Business/Economy; Editorial
KEYWORDS: inflation; sowell; thomassowell

1 posted on 12/10/2012 11:58:59 AM PST by jazusamo
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To: abigail2; Amalie; American Quilter; arthurus; awelliott; Bahbah; bamahead; Battle Axe; ...
*PING*
Thomas Sowell

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Recent columns
Fiscal Cliff Notes
Fiscal Cliff Notes: Part II
Jensen and Flynn

Please FReepmail me if you would like to be added to or removed from the Thomas Sowell ping list…

2 posted on 12/10/2012 12:01:06 PM PST by jazusamo ("Intellect is not wisdom" -- Thomas Sowell)
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To: jazusamo

Sowell hits another one out of the park.


3 posted on 12/10/2012 12:01:53 PM PST by Hoodat ("As for God, His way is perfect" - Psalm 18:30)
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To: abigail2; Amalie; American Quilter; arthurus; awelliott; Bahbah; bamahead; Battle Axe; ...
*PING*
Thomas Sowell

Photobucket - Video and Image Hosting

Recent columns
Fiscal Cliff Notes
Fiscal Cliff Notes: Part II
Jensen and Flynn

Please FReepmail me if you would like to be added to or removed from the Thomas Sowell ping list…

4 posted on 12/10/2012 12:02:12 PM PST by jazusamo ("Intellect is not wisdom" -- Thomas Sowell)
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To: jazusamo

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.”


5 posted on 12/10/2012 12:07:13 PM PST by Tublecane
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To: jazusamo
But a welfare mother is unlikely to be able to buy real estate or gold.

Fine, but, what part of the welfare benefits did the mother earn, other than by having children and being poor?

Sowell could have chosen a much better example than someone whose income wasn't earned by her/him. If the mother were able to put away some of that money in a savings account, then, she would have been using "other people's money", and she would have been receiving more than she was in need of.
6 posted on 12/10/2012 12:15:03 PM PST by adorno (Y)
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To: Tublecane

Also tax on fixed income and min wage earners
As they can’t keep up with increasing costs of food
& other loving expenses


7 posted on 12/10/2012 12:15:42 PM PST by jonose
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To: Tublecane

Truth, facts, and logic. No one in the government is interested in those, and no one who voted for 0bama understands them.


8 posted on 12/10/2012 12:17:44 PM PST by from occupied ga (Your government is your most dangerous enemy)
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To: from occupied ga

The Gods of the Copybook Headings will have to teach it to them.


9 posted on 12/10/2012 12:19:09 PM PST by MrB (The difference between a Humanist and a Satanist - the latter admits whom he's working for)
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To: Hoodat

Brilliant, concise, clear ... one of my favaorite commentators.


10 posted on 12/10/2012 12:20:09 PM PST by ArmyTeach ( Videteco eos prius (See 'em first) Sculpin 191)
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To: jonose

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.


11 posted on 12/10/2012 12:35:43 PM PST by Tublecane
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To: MrB
The Gods of the Copybook Headings will have to teach it to them.

There is no interest in learning for two reasons

  1. One group already knows everything (the liberals)
  2. And the other is too lazy to and too satisfied with their handouts to care (the parasites)

12 posted on 12/10/2012 12:40:31 PM PST by from occupied ga (Your government is your most dangerous enemy)
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To: from occupied ga

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:
http://www.kipling.org.uk/poems_copybook.htm


13 posted on 12/10/2012 12:42:49 PM PST by MrB (The difference between a Humanist and a Satanist - the latter admits whom he's working for)
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To: adorno

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.


14 posted on 12/10/2012 12:43:01 PM PST by Tublecane
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To: jazusamo

Sadly most Republicans don’t even get this as they keep voting for more and more federal reserve easing.


15 posted on 12/10/2012 12:55:36 PM PST by Sam Gamgee (May God have mercy upon my enemies, because I won't. - Patton)
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To: jazusamo

Thanks for the PING to another great article from Dr. Sowell jaz.


16 posted on 12/10/2012 1:26:44 PM PST by rockinqsranch (Dems, Libs, Socialists, call 'em what you will, they ALL have fairies livin' in their trees.)
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To: from occupied ga
The reset is going to be very harsh, when "reality" rears it's inevitable head.

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.

17 posted on 12/10/2012 1:28:36 PM PST by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: Tublecane

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.


18 posted on 12/10/2012 1:30:07 PM PST by adorno (Y)
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To: jazusamo

When I graduated from High School in 1965:
http://www.thepeoplehistory.com/1965.html
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

1965
USMC Pvt made $88/month.
USMC 2nd Lt made $295/month.

2012
USMC Pvt made $1379/month.
USMC 2nd Lt made $2828/month.

In 2011:
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!

http://www.treasurydirect.gov/BC/SBCPrice

An inflation calculator shows that $18.75 in 1953 is worth $162.44 today.

http://www.usinflationcalculator.com/

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!


19 posted on 12/10/2012 1:41:42 PM PST by BwanaNdege (Man has often lost his way, but modern man has lost his address - Gilbert K. Chesterton)
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To: BwanaNdege
Good post. LOL!

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.

20 posted on 12/10/2012 1:50:35 PM PST by jazusamo ("Intellect is not wisdom" -- Thomas Sowell)
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To: jazusamo
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.

We should learn from history. This robbery is happening now. Whether Obama becomes Hitler, I don't know but we're headed toward an inflation calamity. If I were rich, I would invest in things that would be harder to get like basic necessities and also things that would make me more productive in gaining basic necessities that perhaps could save me money in the short term as well.

21 posted on 12/10/2012 3:09:53 PM PST by Crucial (Tolerance at the expense of equal treatment is the path to tyranny.)
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To: jazusamo

Thank you for the ping.

So, the government is successfully raising taxes on absolutely everyone.

All I know is that my grocery bill doubled in the last couple of years, and our diets are pretty stable. We eat about the same things in rotation every week or two. We haven’t bought any big ticket items or extras. Just for the usual, it has doubled.


22 posted on 12/10/2012 3:24:29 PM PST by TheOldLady
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To: jazusamo

My Mom bought a 1100 sq.ft. 3 BR 1 bath on a slab, with a carport, for about $7800, in 1964.

When I started at Ga Tech in ‘65, they said that upon graduation we would probably be earning $10,000-$12,000.

IIRC, a 289 Cobra was $4,995, an XK-E was about $6,300 and a 911 was $6,995. Those days are long past.


23 posted on 12/10/2012 3:53:06 PM PST by BwanaNdege (Man has often lost his way, but modern man has lost his address - Gilbert K. Chesterton)
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To: adorno
Sowell could have chosen a much better example than someone whose income wasn't earned by her/him.

He chose that example because that's the type of person the Democrats claim to help.

24 posted on 12/10/2012 4:11:14 PM PST by BfloGuy (Workers and consumers are, of course, identical.)
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To: jazusamo

thanks for posting!


25 posted on 12/10/2012 4:11:46 PM PST by 4Liberty (Some on our "Roads & Bridges" head to the beach. Others head to their offices, farms, libraries....)
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To: Travis McGee
Who is going to feed the starving millions when the EBT system crashes and burns with the dollar?

When the government inflates away all of the saved wealth, taxes retirement plans, makes sure that those who have money can't use it to buy health care, when the economy is ruined, and the saved private wealth is confiscated by the government to subsidize it's beloved parasites, then as you say the reset will be very harsh

...Now we pay the stupidest among us more per low-IQ baby.

But they're smart enough to steal, but mostly too lazy to do so.

Going by 20th century history, the government's standing army will uphold the tyrants to the very end. as you sayit will be harsh indeed

26 posted on 12/10/2012 8:13:29 PM PST by from occupied ga (Your government is your most dangerous enemy)
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To: jonose
"Also tax on fixed income and min wage earners As they can’t keep up with increasing costs of food & other living expenses"

After over 4 years, I finally got a "COLA" increase in my SS payment, which amounted to a shriveled pittance of less than a hundred dollars. At the same time, my "premium" for medicare went up over ten dollars, and the amount withheld for my taxes also increased. After doing all the figuring and juggling, my total deposit increased by about $9. This, in spite of the fact that prices on everything I must purchase have increased by 30% or so in the last couple of years. It's a good thing I don't drive or own a car. I shudder to think of what my situation would be like in that case.

27 posted on 12/11/2012 10:03:26 AM PST by redhead (America!! Remember who you are!!)
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To: adorno
This is the money quote:

That's not all. Income taxes only transfer money from your current income to the government, but it does not touch whatever money you may have saved over the years. With inflation, the government takes the same cut out of both.

The point is the government is robbing everybody, but most especially our accumulated savings which have already been taxed. They are forcing every last dime out of your pocket to the lift the economy. The same economy that they are simultaneously strangling with anti free market policies.

28 posted on 12/12/2012 6:16:27 PM PST by oldbrowser (Put Obama in check, now.)
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