Re: Big Government (2)

2008-4-15 14:16:00

Responding to a website that JJ referenced in another message, Larry wrote:

"I looked briefly at the ... site. Not sure that it is entirely credible. For example, it gives the tax on an average income of $48,201 as 19.14% or $9,227. A quick calculation on a standard 1040 shows that a single person making $48,201 taking minimal deductions would pay no more than $6,293. Married folks, people taking a mortage interest and property tax deduction, or folks filing jointly, or with children as deductions would pay less.

"So a quick calculation tells I am not sure I would trust this site."

JJ:

You are always very distrusting of anything that proves my case.

Actually you do not have to trust this or any other site 100% but you can arrive at over 50% through common sense.

You have already agreed with my figure of 30.8% for the average visible taxes. In addition to this the site claims there are the following hidden taxes:

Median household income -- $48,201.
Corporate income tax ($354 billion/109.9 households from the U.S. Chamber of Commerce ) -- 6.68%.
Employer's share of Payroll tax (Social Security and Medicare) -- 7.65%.
Excise and other taxes (from "Whitehouse dot gov") -- 3.24%.
Inflation (from Federal Reserve ) shrinking household net worth of $155,100 per year -- 3.2%.
The cost of compliance with regulations (from "House dot gov" using their $600 billion total/109.9M households, which also referenced economists estimates of $810 billion and $1.7 trillion) -- 11.33%.

Total hidden taxes -- 32.10%.

Then if we add 30.8% and 32.1%, we come to a total of 62.9%.

Now the guy's figures here look pretty credible to me but let us say he is off by a whopping 20%. That would place the hidden taxes at 25.7% or the total tax at 56.5%.

I think my statement was a fairly conservative estimate. Here is what I said: "If all taxes are taken into consideration the average person in the United States pays almost 50%."

Maybe I should have said "over 50%."

"All wealth is the product of labor."
-- John Locke

In a subsequent message Larry wrote:

"If ... you ... don't have something really, really credible to back you then you can create the effect of discrediting the book itself which is not primarily about taxes.

"If you pick a number that more people can agree on then your book will benefit more from that than picking the most sensational number you think you can argue for."

In yet another follow-on message Larry quoted JJ:

"All wealth is the product of labor.' -- John Locke"

Larry then responded with:

"All labor does not produce wealth, nor produce it equally."

JJ responded to Larry's comments above with:

That is correct, but it does not disagree with Locke's statement.

Actually, I appreciate your observations, especially with material I plan on publishing.

I will rewrite it in hopes of passing the smell test of skeptics.