No Truce With Kings

Here’s Nolan Finley writing in The Detroit News about a note from a reader named Jon Taub. (As a side note, I’d like to know where they can get milk for $2.50/gallon. It’s a dollar more where I live.)

Tax code milking cash cow dry

[…] Taub applies that same formula to a purchase of a gallon of milk, which currently sells for $2.49 at Kroger, to see what would happen.

“If every U.S. taxpayer purchased a gallon of milk, each person would pay $2.49, and the total cost would be 140.5 million times $2.49 — or $349 million.

“Now let’s assume the government treated milk like government services and determined its price the same way it determines tax rates. The pricing would change as follows:

“When the bottom 40 percent of earners buy their milk, they won’t pay a dime for it. In fact, the government would give them $1 in reverse payments for every gallon of milk they purchase. The total cost of providing one gallon of milk to each person in this group would be $196.1 million.

“The cost of providing milk to the remaining 60 percent of the taxpayers would be $209.9 million, bringing the total cost burden of all taxpayers’ milk to $406 million.

“Under our existing tax rates, instead of paying $2.49 a gallon, the top 1 percent of earners would pay 38 percent of the total milk burden or $109.81 for a gallon of milk.” […]

Taub urges everyone to think about that example whenever they hear President Barack Obama talk about tax fairness, as they will incessantly over the next few weeks.

The current tax system is unfair, but not because the wealthy don’t pay enough.

It’s out of whack because it doesn’t acknowledge that the rich are paying more for their government milk than it’s worth so most others can pay less. And instead of saying thank you, we’re milking those cash cows dry.

As we’ve noted here more than once, the US tax code doesn’t tax the rich too lightly — it taxes the everyone else too lightly. I believe most European countries are more equitable in taxing lower income earners, though their tax rates are no more "progressive" than the US tax rates.

That’s not to say that wealthy US citizens can not or do not hire accountants and lawyers (and some times lobbyists) to work the loopholes or to make new loopholes. But what loopholes in tax code indicate is a corrupt government. To be equitable, the income tax code should be across-the-board, simple and without loopholes.

Ask your congressman why it’s not.