Saturday, July 7, 2007

It's Time to Choose America - The Price of Government

The time is rapidly approaching where Americans are going to have to make a choice. A choice between whether or not we want to be an independant people who are allowed to live our lives as we see fit so long as we do no harm to others, or whether we wish to continue down the path of having the government approve, dictate or control our lives.

Do we desire to be self-sufficient, empowered and free or do we desire to continue strapping on the chains of government and the high price tag that comes with them? In pure financial terms the price of government is slowly, inexorably crippling our country and our population. Have you ever done the math?

Federal income tax rates are currently 10, 15, 28, 33 and 35% depending on one's income level.
(note - progressive taxes on income were a core tenant of Karl Marx's Communist Manifesto)

The FICA / Medicaid tax contribution runs 7.65% for BOTH you and your employer making the total 15.30%. Your employer's matching funds are a direct expense to them and from their perspective, are a cost of your employment with them. This means that since it is treated in the budget as part of your salary, it arguably is money you could or would otherwise receive as salary depending on your employer and competetive nature of your industry or profession. Self-employed people pay the 15.3% right out of their pocket.

So, we have thus far generated a low number of 25.3% on up to 40.3% in Federal taxes depending on one's income level.

I live in Indiana. My state income tax rate is 3.4% plus a local county tax of 1.0% (the mayor recently asked for an increase to 1.65% [65% tax increase!!!!]). Property taxes are all over the board and recently got jacked an average of 34% in Indianapolis. Right now I'm paying more than 2% just in property taxes on a primary residence so let's use a range of 1 to 3% for property taxes.

Now we're at 32% to 49% of a person's income (admittedly not adjusted for deductions but that's not germane to this argument). SO, before you actually get money in your pocket to go spend the government has taken one third to one half of it, by force. "By force" of course meaning the threat of levy on bank accounts, foreclosure on your home, jail time, public ridicule or other methods to ruin your life or enjoyment of such.

Oh but wait. We still have state sales taxes (6% in my case), food/beverage tax when eating out (2% to pay for the Indianapolis Colt's stadium [welfare for multi-million dollar football teams?]). Plus gas taxes (around 40 cents a gallon), plate/excise taxes on our vehicles (another few tenths of a percent). PLUS, all of the embedded taxes in the things we buy (remember - the taxes companies pay are only collected by them in the price of the products they sell).

So if we start adding everything up. How much do we all REALLY pay for this big, massive, bloated, intrusive, unresponsive government animal? EASILY, half of what we make and considerably more for most.

It's no wonder Americans have a hard time saving money. Our Federal, State and Local governments have stolen it all before we get to buy food, shelter or a movie ticket. The income tax didn't exist prior to 1913 and when first enacted was only a few percentage points to the very wealthy. Property taxes are a holdover from when kings allowed the serfs to work the land in exchange for a tax or lease on the property. Or sometimes a tax on the fruits of a persons labor (income tax).

It's time to start rolling things back and it's time to change the tax collection system. There are some good ideas out there. Presidential candidate Ron Paul wants to roll back the spending and immediately get rid of the IRS ( There is also legislation before congress called The FairTax Act ( that has 60 co-sponsors and would move everything to a simple sales (consumption) tax.

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