Friday, May 08, 2015

Tax Donkeys: Rich Enough to Pay Most of the Taxes, Not Rich Enough to Buy Politicians

Real political representation must be bought, just like everything else in a market economy.

Mike Swanson (Wall Street Window) and I were discussing the difference between the 1% who earn $360,000 annually and up and those in the Oligarchy class--the .01% (our podcast: America's Nine Socio-Eco-Political Classes).

The difference is the 1% remain Tax Donkeys: they pay most of the Federal and state income taxes, but are not wealthy enough to buy political influence.

In other words, the 1% (and indeed, the top 10%) have taxation but no representation. The political strings are pulled by a relative handful of super-wealthy individuals who use a thin slice of their wealth to fund political campaigns and lobbying.

Longtime correspondent B.C. describes this reality as no representation without taxation: those who pay the most taxes are represented via their political contributions and lobbying, and the 90% who pay relatively little income tax have no real representation at all because real political representation must be bought, just like everything else in a market economy.

B.C. explained his no representation without taxation in this way:

The wealthiest 0.01% - 0.001% pay a disproportionately large share of taxes as a kind of fee for service for "the best government money can buy," not unlike what they pay for legal, financial, and tax advice, household staff, private security, and so on.

The net result of "no representation without taxation" is the US has become a kind of militarist-imperialist, rentier-socialist corporate-state with a relatively friendly (mass media-generated, infotainment-constructed), egalitarian face.

While it's obvious the bottom 90% lose out in this system, the top 10% just below the Oligarch class are punished twice: they pay most of the income taxes, but aren't wealthy enough to buy political power. They are the Tax Donkeys that toil to pay for the corporate-state's social welfare programs that keep the bottom 40% passive and the imperial structure that secures the primacy of the Deep State and Oligarchy.

I have covered who pays most of the nation's taxes many times, most recently in Neofeudalism 101: Strip-Mining the Upper Middle Class.

Let's take a quick glance at payroll and income taxes for context. Individual income taxes and Social Security/payroll taxes total $2.4 trillion. Corporate and other taxes add $600 billion, for a total of $3 trillion in Federal tax receipts.

Put together, people making under $40,000 a year get $81.1 billion from the income tax; that is, they get more refundable credits like the Earned Income Tax Credit than they pay in taxes. But that same group pays $121.5 billion in payroll taxes.

So people making under $40,000 a year--63.9% of all taxpayers, according to the Social Security Administration, paid a net of $40 billion out of the $2.4 trillion in payroll and income taxes. This is truly a drop in the bucket.

Meanwhile, the wealth of the top .01% has pulled away from the top 10% and even the top 1%:

The corruption and concentration of wealth are self-reinforcing: financialization further enriches the top .01%, who can then buy political power to protect their wealth and restrict competitors, which further concentrates wealth in the top of the apex, and so on.

Pity the Tax Donkeys who pay for everyone below and further enrich the few above. "No representation without taxation" only works for the top .01%; Tax Donkeys pay huge taxes but have no representation in a system that auctions political power to the highest bidders. 

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go to Kindle edition
Are you like me? Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible.

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You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

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"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."
Laura Y.

Gordon Long and I discuss The New Nature of Work: Jobs, Occupations & Careers(25 minutes, YouTube)
The Old Models of Work Are Broken 

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