Awesome Parable on Taxes

From the Rhode Island Blog Anchor Rising:

Sep 19, 2008
Public Tax Meeting

We Voted On It
John JJ Richman was making breakfast when he heard the crowd outside. They seemed just shy of hostile. He opened his door to see about 65 townspeople, out of a town of 100. Two spokesmen were standing on the porch.


John: Good morning. Why are you all here?

Rob: There are things that need changing, and you are the one to help us.

John: (Distracted by the milling crowd)


Rob: The town could use improvement. Renovating the school, hiring more police, fixing up the football field, and a summer splash fountain for the children. For the little children! (Rob was shaking a bit.)

John: Well, if you put it like that, I can contribute $1000. (He scans the crowd) Make that $2000.


Rob: Not enough. We want you to pay for it all, along with the other 4 rich guys in town. You are earning $250,000 and paying $80,000 in tax. We think $105,000 in tax is only fair, (his eyes flash) or maybe a bit more. That leaves you with $145,000, which is more than fair. You live in the town and will benefit from the improvements.

John: That's a big bite. Why should just 5 out of the 100 fund the whole town? As a single man, that $80,000 in 2008 payroll and income taxes is 32% of my earnings, isn't that enough? Maybe the whole town should contribute.


Rob: We contribute what we can. We have less money than you. Some of us work for you, and you don't pay enough. We should all be more equal. You have the money and we need it.

John: I already personally pay 20% of the town's expenses. The 5 rich guys in town together pay 60%. The 25 well off families pay 86%. Isn't that enough?


Rob: We are not into philosophy. We want money. You have money.

John: Well, I don't agree with you. Where do you get the authority to just take what you want from me?


Rob: I'm the mayor, and at my election two years ago a referendum passed by 65 to 35 about fixing potholes. I think you argued at the time that there was already enough money to fix them. It seems you were always stingy.

In that referendum, Section 3, Paragraph 2.a says: "The town shall have the authority to levy taxes to an aggregate amount strictly limited to a total of $20,000 to fix the potholes in the town's streets and thoroughfares (note 1)."

Note 1 says: "And in emergencies, for things other than potholes, and possibly a bit more".

(The crowd laughs and slaps each other on the back)


John: This is unfair. You want me to pay more without paying anything more yourself.


Rob: Actually, we are lowering our own taxes. We deserve it, and you don't. We don't understand how you get your money. Some sort of luck or black magic. It probably should be ours. Somehow you took it when we weren't looking. We are leaving you more than enough. You should be happy.

John: I don't have the extra money on me.


Rob: We'll bill you. We are not barbarians.

(The crowd looks disappointed)

John: It seems I can't do anything about this. You understand that I won't be expanding my business within the town. I'm feeling a bit upset. I may go fishing.


Rob: Fishing is good. We'll see you there.

We may be back in a month about money for another Stimulus Package. We want to improve the town economy by giving each of us 65 a stimulus check of $1000. Those new TV's look sweet.

John: Is that all?


Rob: (Turns toward the crowd without answering) OK boys, next stop is 13 Orchard Lane, there is more work to do

And better yet, the comment after was just perfect:

Anonymous said...
And now - The Rest Of The Story:

Within the year Richman, the 4 other rich guys and most of the other 25 well off families in town had put their homes up for sale and moved to other towns. They outsourced much of their manufacturing to Mexico and the far east and moved the remainder or their plants and other business interests to other towns with more reasonable tax structures.
The taxes no longer paid by these people were shifted to the remaining well off families who are now in the process of leaving town.
The extra police have been laid off along with half of the original force. The money for the football field was spent on new sod but the field is now overgrown because there is no money to repair the broken lawn mower.
The splash fountain for the children was started but there isn't any money to complete it so it remains a muddy eyesore.
The streets and public buildings are in poor repair but there is no money to fix them.
The mayor is running for re-election on promises to increase tax revenues by raising the tax rate on the campgrounds and antique stores that bring tourists to the town, as well as the hotels, restaurants and other businesses that cater to them.

BONESHAKER

9/20/08 7:28 PM

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Soak the Rich, Take the Risk

This article shows another reason that we shouldn't soak the rich:

The first person to testify, Rutgers economist James Hughes, confirmed the grim possibilities facing the Garden State. "A sharp economic rebound is not in the cards," Hughes said. "We still have a lot of pain to go through."

Forty percent of New Jersey's income tax is paid by the wealthiest 1 percent of residents, Hughes said, and under the "worst-case scenario" the state could see its income-tax collection drop by 13 percent or so in the wake of Wall Street cutbacks.

So the rich people who live in New Jersey and work on Wall Street are paying for the nanny state. The people become dependent on the nanny state. But when there's an economic shock concentrated on Wall Street (not an unheard of event, right, guys?) the rich people lose their money, stop paying taxes, and make it impossible for the nanny state to support the people who became dependent on it during good times.

"Progressive" overtaxation of the rich sucks for everyone.

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Bar Stool Economics

After reading Dennis's post (based on this Powerline post), I saw this great post on Living Jersey about bar-stool economics.

The rich guy must have gone to Pennsylvania.

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Group aims to recall the Governor - Wow!

From Newsday:

The group has started a Web site at www.recallcorzinenow.com where people can download and print recall petitions.

They petitions state, "It is our intention to recall Jon Corzine, Governor of the State of New Jersey."

"The focus here is simple _ this guy is not doing the job and he needs to go," Carl Bergmanson said.

All I can say is....Wow! We will follow these folks as they may be facing an uphill battle but maybe, just maybe this movement will produce a dialogue that will address real problems in this state. Noone thought it was possible in California when Gray Davis was shown the door.

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Economic Stimulus Welfare!

I just received a notice from the IRS regarding the economic stimulus plan. The good news is according to the IRS, I have to do nothing to receive my money aside from filing my tax return. The bad news is that very few people I know in New Jersey qualify. You see, they explain that if you are a "higher income" person (that is someone making 75k single or 150k married), you get phased out. Of course, that would include a State Trooper(You're out!)especially if you are married to a teacher (double out!).

However, if you made more than $3,000 dollars last year you get $300.00. Why did I get this from the IRS? It should have come from the Social Security Admin or State Welfare agency.

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Attention NJ Residents - Here's who to blame for your higher tax bill!

Democrats in the House and Senate this week voted to end most of the Bush tax cuts and let them expire in 2010. This will result in the largest tax increase in years which will be on the back on the next President. Even the USA Today which is far from a conservative newspaper stated the decision by Democrats as the following:

House Democrats would allow all of Bush's tax cuts to expire, effectively raising taxes by $683 billion from 2011 through 2013

Democrats continue to fail to recognize that taxation is taking money from productive people believing that government knows better how to spend your money. No elected politician is ENTITLED to your money in the United States. And we should all remember our local elected officials that voted for this massive tax increase. They are as follows:

Senate
Lautenberg
Menendez

House
Andrews, Robert E.; New Jersey, 1st
Pallone, Frank; New Jersey, 6th
Pascrell, Bill; New Jersey, 8th
Rothman, Steven R.; New Jersey, 9th
Payne, Donald M.; New Jersey, 10th
Holt, Rush D.; New Jersey, 12th
Sires, Albio; New Jersey, 13th

These members of the House and Senate have let down the people of New Jersey. When you consider the poor rate of return that New Jersey already gets on its tax dollars sent to Washington, you would wonder why our representatives are so anxious to increase our taxes. Interestingly enough, our loss of representation was not as severe in the House with the New Jersey delegation voting 7-6 for higher taxes.

President Bush's tax policies helped New Jersey. And as the federal tax bill went down, New Jersey's last two Governor's stepped in and took the money to feed their corrupt political machines. Now New Jersey residents face even higher federal taxes to match their worst in the US state taxes. And no-one seems to care...

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Megan McArdle's Article, "Tax Me More"

In a relatively tight space, just 1,150 words, Megan McArdle at The Atlantic pretty much shreds the argument that people want to have higher taxes. An excerpt:

But most people do not appear to think that the government (or anyone else) has a morally salient better use for their money than they do; otherwise, they would give that money to the government (which will take it even if there is no "tax me more" fund) or charity. Perhaps you'll argue that people's norms about fairness are so strong that they will not give away their money unless other people do. My response would be to ask: is the unfairness of your paying more than other similarly affluent people greater or smaller than the distributional unfairness that you want the government to rectify? Nor is it plausible to believe that you can, by withholding your extra contribution, force other people to kick into the kitty; your contribution is a drop in the budget of any political entity to which you belong.

[Gotcha! You cry. My money alone won't make a difference! Sorry, but if that were true then you'd be morally justified in cheating on your taxes. The small sum you send them is spent on something you presumably think we need more of.]

Or you might argue that since money is a positional good, it's not reasonable to ask you to reduce your income unless everyone else at the same level does, too. So now positional goods races are an acceptable way to spend your life? So important that they should override your moral concerns about distributional justice?

Perhaps you claim that you don't want to send the government extra money because God knows what they'll spend it on. Well, welcome to the libertarian movement. Your subscription to Reason should arrive in four to six weeks.

Read the whole thing.

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