Throughout history, employers have wanted to make as much profit as they can and employees have wanted to earn as much income as they can. It’s just natural that each side would have its particular point of view, but successful employers and successful employees know that they have to work together and compromise.
If the employer doesn’t pay enough, good employees will not stay and the company won’t have the workforce it needs to conduct its business. If the employees demand too much, the employer may not be able to stay in business and both lose.
The United States started out as an agrarian economy as the following charts indicate:
As more and more people became employed in non-farming jobs, the disparity in bargaining power became evident. This led to the rise of labor unions and union membership.
According to USA Facts:
- In 2020, 14.3 million people or 10.8% of US employees were union members. That’s down from 20.1% in 1983;
- In 2000, 20.1% of the 19.2 million people employed in production, transportation, and material moving occupations were unionized;
- While private-sector union membership fell from 9% in 2000 to 6.2% in 2019, it edged up slightly to 6.3% in 2020;
- Similarly, public-sector union membership dropped from 36.9% in 2000 to 33.6% in 2019, then rose to 34.8% in 2020;
- Seven states account for over half of the country’s 14.3 million union members: California, New York, Illinois, Pennsylvania, Ohio, Michigan, and New Jersey.
One of the self-evident truths in life is that if you want more of something you reward it, and if you want less of something you punish it. That is why parents often reward good report cards with money or another type of benefit—like a new bicycle or the use of the family car.
Unfortunately, the politicians and their minions don’t seem to understand this basic truth. They don’t understand that taking money through taxes is a punishment. Instead of rewarding labor, the politicians and their minions in Congress tax it.
Abraham Lincoln, himself a laborer for many years, said, "Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration."
The “higher consideration” given to labor by the Ruling Class and their minions in Congress is to see that labor pays increasingly higher taxes and is now going to be in the group most likely to be audited thanks to the expanded IRS.
REGRESSIVE PAYROLL TAXES AND INCOME TAXES ON LABOR
The federal payroll taxes that fund Social Security and Medicare are the most regressive taxes imposed on American workers. These taxes start at the first dollar a worker earns and continue until the worker earns $147,000. It doesn't matter how many children you have or how much or how little money you make. If you can cloud a mirror with your breath and you’re working, you pay the tax.
In theory, the 15.3% payroll tax is borne equally between the employee and the employer at 7.65% each. However, many economists believe that if employers didn’t have to pay their 7.65% share, that money would go to the employees in the form of higher wages. Consequently, it’s really the employee who pays most if not all of the tax.
It’s an economic fact of life that when companies experience an increase in net income, wages go up. When income goes down, wages either stagnate or even actually decrease. And when companies have to pay more taxes, net income goes down accordingly.
Then you have the income tax. Obviously, an income tax is levied against the money people receive in exchange for their labor. Since very few people have inherited large amounts of money, most people get the money they need to live through their labor.
HIDING TAXES ON LABOR BY TAXING CORPORATIONS
A third way to tax labor is not as obvious. Many politicians grandly proclaim that they are going to tax the rich, evil corporations, and by doing so, they’re reducing the tax burden on individual workers. Unfortunately, it just doesn’t work that way.
A corporation is nothing more than a legal entity. It exists only on paper. It can be either privately or publicly owned, but in either case, the owners are people. In the case of a publicly owned corporation, people buy an ownership interest in the corporation by purchasing the company’s stock. In any case, the money that a corporation makes actually belongs to its owners.
Most of the politicians and their minions advocating for higher taxes on corporations have never had a job in the private sector, other than babysitting or mowing yards when they were young. They don’t understand how business works, so they assume that somehow the corporations are bottomless pits of cash that they can help themselves to at will. They look at corporations the same way they look at the federal government. If you need money, you can just create it.
The actual economic truth is that corporations cannot just “create” money to pay the higher taxes. When taxes go up, corporations must either:
- Increase the prices of their products.
- Absorb the costs of the tax by reducing their profits. This reduces the value of the corporation which is based on its profitability. When profits go down, the company’s stock is less valuable, and that is directly reflected in a decrease in the value of worker’s retirement accounts.
- Reduce the amount paid for labor by either laying off people, not hiring people or not providing wage increases.
- Further reduce other costs like rent, shipping and the like which are normally already as low as they can go.
- Do a combination of the above.
It’s like punishing a puppy for yelping after you’ve stepped on its paw. They simply can’t understand a basic economic truth—that one way or another, individuals pay every penny of a corporate tax.
How much do these “disguised taxes” cost American workers? It is very hard to calculate and that is why the politicians and their minions love it.
LABOR AND THE FAIRTAX
By taking money we have earned, all taxes reduce our ability to consume. However, if you want to encourage labor, then it is time to stop taxing it. Pay raises are nice and, in this inflationary climate, really needed. But if you really want more labor, reward it by stopping the taxation of labor and work.
The FAIRtax taxes your consumption, not your labor. The more money you make, the more you keep. With the FAIRtax, you pay taxes only when you make retail purchases of new goods and services. And the prebate ensures that no one pays taxes on their basic necessities.
The politicians and their minions seem to care little for the people they say they are trying to help—the laborer.
For example, the politicians and their minions ignore the effect of their policies on the family of four making $30,000. That family might not pay any income tax, but they lose 7.65% of their earnings to federal payroll taxes, reducing the amount they have available to spend on basic necessities from $30,000 to $27,705.
Under the FAIRtax, the family would have the entire $30,000 to spend, and the monthly FAIRtax prebate would let them spend all $30,000 tax free. The FAIRtax would result in them having $2,295 more to spend—nearly an 8% raise. Then factor in that prices will likely go down by at least 10% and the family now can purchase $33,000 worth of goods for $30,000.
This means that, under the FAIRtax, this family that relies on its labor to live is effectively $5,295 a year better off. And by not taxing used items, the FAIRtax gives this family a way to reduce their taxes even further, thereby making even some of their monthly FAIRtax prebate available for consumption.
If the politicians really want to reward us, they should immediately stop punishing those of us who work for a living and depend on our labor to survive. As columnist George Will said, "Money is time made tangible - the time invested in the earning of it. Taxation is the confiscation of the earner's time. Although some taxation is necessary, all taxation diminishes freedom."
Celebrate Labor Day, but also realize that no matter what the politicians and their minions in D.C. may say, you can see their true colors in what they do. The fact that they keep the income/payroll tax system in place and use it to punish those of us who rely on the fruits of our labor to live tells us all we need to know about what they truly think of us “little people” who are outside of their favored circle.
What can each of us do?
We can write letters and make calls to our elected representatives demanding that if the government really wants to eliminate the burden of filing income tax returns, they should enact the FAIRtax and do away with tax returns altogether.
The great 18th century Irish statesman Edmund Burke made a statement that applies in many ways,
“Nobody made a greater mistake than he who did nothing because he could do only a little.”
Take back control! Help us PASS THE FAIRTAX!
The IRS will be gone and we will pay our taxes when we make purchases.
WE and not the Ruling Class and their minions in D.C. will decide how much federal tax we pay!
WE will know how much tax we are really paying because taxes will no longer be hidden but shown on every retail receipt.
If you have friends who don’t know about the FAIRtax, send them to FAIRtax.org. Have them watch the white boards under “How It Works” and, if they agree, ask them to please join us.
Then contact your Members of Congress and the President and demand that Congress pass -the FAIRtax—the only fair tax.
Remember, if we don't continue to tell the truth and demand a change, then this quote from George Orwell's 1984 may foretell our children's future:
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
Is it hopeless? When confronted with a seemingly impossible problem, remember the statement attributed to the author George Bernard Shaw who wrote, You see things; and you say “Why?” But I dream things that never were; and I say “Why not?”
Isn’t it time for us to ask, “Why not?”
HELP BRING ABOUT REAL TAX REFORM AND STOP FUTURE IRS ABUSES
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