Taxes are confusing. No, not because of our insanely complex tax code, or because of the various forms we have to fill out every April. No, taxes are confusing because we've spent the past thirty-two years hearing from the modern Republican Party that taxes are too high on high earners and too low on low earners and that corporate tax rates are simultaneously too high and there are too many handouts for industries. You may think you're taxed one way, but the GOP is here to tell you that you can't trust your paycheck or your tax return or anyone else's tax return, because there's an economist at the Heritage Foundation who woke up in an opium den and figured out how you're being double taxed.
With this in mind, I'd like to share with you the Republican Guide to Taxation, a handy guide to figuring out how the GOP thinks about taxes. Don't blame me, I'm just the messenger.
Topic 1: How Much Do People Pay In Taxes?
Well, it depends how you look at it. From an income perspective, most people pay very little to nothing. All of those people who work pay Social Security and Medicare taxes, but those don't count because they're benefits that people in lower income brackets may one day receive. People who earn a lot of money, however, pay a criminal amount of taxes.
From a consumption perspective, you pay around, say, 30 to 35% in "embedded taxes". This calculation comes from a top secret formula that can best be summarized as follows:
What's a good, round number that people will buy? + What's higher than the consumption tax we want to put in place? = Embedded tax rate.
Simple enough.
Frequently Asked Questions
But...wait. If you're poor, virtually all of your income goes toward consumption. So doesn't that mean that poor people actually pay a 30 to 35% tax rate?
Technically, yes.
Then poor people would seem to have a really high tax rate according to this math.
That's until you realize that the poor pay for all of their food with food stamps. Food stamps come from tax dollars. Basically, hard working job creators pay taxes to produce food that poor people buy with the very tax dollars job creators paid in the first place.
Then...hold on, what?
Don't worry about it. All you need to know is that thanks to Obama's oppressive tax system, the minority of Americans pay for the majority.
Isn't our tax system basically Bush's tax system with a payroll tax cut added in?
Barack Obama has been president of taxes since 2001.
Topic 2: Double Taxation
As you may know, Mitt Romney has a tax burden under 15%. You know this because you're dumb and you believe the liberal media spin that comes from using arithmetic on numbers to arrive on figures. Taxes are not calculated using math. Taxes, at least for the richest Americans, are calculated using inferential accumulation.
Here's how it works. A corporation is a distinct legal entity designed to acheive certain business goals and absorb certain legal liabilities from its owners and operators. Corporations pay a corporate income tax in America that is the highest in the developed world, except for corporations who have accountants, in which case it's usually really low.
Corporations earn money, and pay taxes on their profits. Individuals are allowed to invest in companies by purchasing stock in them. Stock is a capital asset. If the individual holds on to that asset for more than a year and then sells it or receives a dividend from it, their profit is considered a long-term capital gain. Capital gains are taxed, and long-term capital gains are taxed at lower rates than regular income.
The original rationale for this was that long-term capital gains, if taxed as income, would almost always be taxed at the highest marginal income tax rate because people who get long-term capital gains tend to be really rich. Really rich people would be less likely to invest if they had to pay regular taxes on the money they earned for putting their money at risk to get more money back by letting other people do things with it. This is in stark contrast to rich people who put their money at risk by owning and operating businesses that do actual things and produce goods and services, who pay higher tax rates because they're chumps.
So, the corporation pays corporate taxes, and then when it pays out dividends to stockholders, the stockholders pay taxes on the money they receive. This happens because the government taxes realization events - when a person actually receives money they didn't have before. The corporation pays 35%, at least technically, and then the stockholder pays 15%. Most people, when confronted with this, would think that the stockholder pays 15%. This is because most people are subliterate, thanks to government schools.
In reality, the stockholder pays 50%, because corporations aren't people and only people pay taxes. The stockholder is thus double taxed, because the legally distinct entity that paid taxes on its profits and wasn't necessarily obligated to pay the stockholder anything when it earned those profits could have paid the tax money out to stockholders and didn't, because, again, the food stamps.
Frequently Asked Questions
Didn't Mitt Romney say that corporations are people?
Corporations are only people in terms of buying political ads. At all other times, they are simply legal fictions necessary because the government won't absolve participants in capitalism of legal responsibility for killing people.
If double taxation exists, then what's Mitt Romney's actual tax burden?
Romney pays 35% in corporate taxes, plus 15% in capital gains taxes. He donates about 13% to charity, which also counts as taxes because...well, I don't have an explanation for that one. He pays about 10% in state and local taxes, let's say. He pays the 30 to 35% embedded tax on everything he consumes. He will be leaving an estate worth hundreds of millions to his family, so let's put in the 35% estate tax rate that he'll pay even though he'll be dead and his children will be the people actually writing the check for the property they inherited.
All told, Mitt Romney's tax rate is 143%. No wonder he does his own laundry.
Okay, folks. That's it for our first installment!
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On a somewhat tangential note, Mitt Romney profits off illegal foreclosures in Florida. God forbid he gets taxed on those profits! http://thinkprogress.org/economy/2012/01/25/409804/romneys-profited-foreclosure-florida/