Taxing Riches

What tipped the scales for me when I voted for John McCain in the 2008 election? Certainly his appointment of Sarah Palin, a mother of five who bought diapers at Walmart and wasn’t afraid to hunt for food, helped his case. I am a conservative mother, and I identify with her. However, the real decision was made during the debate hosted by Rick Warren in which McCain refused to set an arbitrary dollar amount as the dividing line between rich and poor.

“Some of the richest people I've ever known in my life are the most unhappy,” he said, following Obama’s description of ‘rich’ as making $250K/year. “I think that rich should be defined by a home, a good job, an education and the ability to hand to our children a more prosperous and safer world than the one that we inherited.” The important part, however, the part that I wish all conservatives would memorize, is his next sentence:

“I don't want to take any money from the rich — I want everybody to get rich.”

I have realized that this was one of the greatest reasons why I staunchly oppose the liberal mindset. The liberals have set up “the rich” in order to bear the burden of their great society, built by directing cash flow from the producers to the non-producers in defiance of all the laws of nature. In setting up “the rich” for this burden, they must first define “the rich”, and every attempt to do so has led to disaster.

In this Great Recession, I have been lucky. My husband has not been laid off. However, we were notified last week that all employees in the company were going to undergo a temporary salary reduction. For whatever reason, they cannot bear the costs during this quarter. Their clients, however, cannot bear the drop in productivity. What was first going to be recompense as paid vacation is now going to be delivered to us as a bonus at the beginning of the next quarter.

As soon as I heard this, I groaned. I also used to work full-time, and the very first thing I learned regarding my salary was to never take accumulated vacation time as a monetary bonus. As soon as I heard the word ‘bonus’, I immediately knew that nearly half of the temporarily-docked pay would be lost to us for the rest of the year. Why?

Somewhere along the line, someone decided that the rich get bonuses. Therefore, bonus tax withholding should be calculated differently. Bonuses are taxed at a flat percentage, regardless of your financial situation. Once Social Security and other taxes are added on, you invariably find yourself with only about half of the original amount. Of course, the rich can weather a blow like this. A lower-middle-class family has very little stretch in the monthly budget, and paying back only half of a salary reduction puts a very real strain on the finances.

State luxury taxes provide a similar problem. By defining certain activities and property as ‘rich’, luxury taxes become a self-fulfilling prophecy, lifting these activities and property out of the reach of the middle class who may be willing to sacrifice in other areas of their lives in order to enjoy just one of these ‘luxuries’. The idea is the same; the liberals have decided that use of a certain good or service defines you as ‘rich’, and they who claim to bring opportunity to the poor end up forbidding it.

Property tax is yet another method by which those who define ‘rich’ end up snaring the poor and middle class. I live in a rural area, in which you will hear the phrase “Land-rich, money-poor”. This is not by any means a new problem. Property tax was a very early method of funding the government. It too, however, defines someone as ‘rich’, this time by looking at the size of their house or land. The New England Saltbox is an architectural design created in order to reduce taxes in a time when your house value was calculated by how many floors were in your home. By extending the roofline to the top of the first floor on one side of the house (usually the back), builders created the look and usefulness of a two-story house that was taxed as one. Measures like this were necessary for some families. Wealth is not the only reason to own a large house. The families with many children, typically poorer than the average, are hit hardest by large house taxes. Farmers are hit hardest by property tax determined by acreage.

As time goes on, I realize more and more the folly of a tax system that targets the "rich", due to the problems that arise from defining the line between "rich" and "poor". I am beginning to believe that perhaps the only method of taxation that can encourage growth and wealth is a flat income or sales tax percentage across the board.