The Obama Tax Tolls

Barack Obama makes two broad claims (lacking specifics) on taxes: one is that he will collect more in taxes, and the other is that he will not raise taxes on you.  According to Obama, he can do this by focusing huge tax increases on only 5 percent of the population.  Unfortunately, the 5 percent he has in mind is the 5 percent that has the most influence over the economy — successful entrepreneurs, the upper middle-class, and the rich.  

These are the people that pay the salaries and wages and insurance costs of most of the other 95 percent of Americans.  To believe that these tax increases will not affect you (assuming you are in the 95 percent that Obama claims to be “spreading the wealth” to), you have to believe that the 5 percent to be taxed will just decide to be poor, to lose money, and not to pass the extra cost of Obama’s new taxes on to you.

Does Obama really believe that the rich got that way by taking losses or swallowing costs?  When the price of gas or copper or labor or insurance or anything else increases, businesses and the people who own them have two choices: they can lose money or they can raise prices and pass the cost along to their customers.  What do you believe they will do?  If you need a moment to figure this out, you are probably a hardcore Democrat and you can stop reading now.

Anyone else, conservative, moderate, or apathetic, knows the answer: businesses cannot lose money.  They will pass along any increased taxes in the form of price increases.  The taxes they pay, you pay — eventually.  The only difference is that unlike the hated 5 percent of Americans that Obama openly brags of punishing with new taxes, you will not get a bill from the government declaring your new taxes.  You’ll just pay more for milk and gas and credit and clothes and iPods and everything else you buy.  At the end of the month, you will have less money and not know why.  Doubtless, Democrats will tell you to blame the rich for that too.

It is a simple truth that businesses do not pay taxes, only economies pay taxes. Regardless of whom you tax in an economy, the costs of that tax are very rapidly spread throughout the whole system.  Any business that fails to spread its costs in this way goes bankrupt.  Obama may brag that he will spread the wealth, but all he will really spread is his new taxes.

To see how punitive taxation really works, let’s look at an extreme example: sin taxes.  It was with glee that liberals in particular (and Americans in general) set about increasing taxes on tobacco.  Allegedly, this was an attempt to punish the evil tobacco companies and discourage smoking.  Between 1980 and 1990, for example, cigarette prices increased 154 percent, thanks in large part to increases in federal, state, and local taxes.  What happened to tobacco company profits in that same time?  Doubtless they plummeted as the evil tobacco barons finally got their comeuppance!  No, actually, their profits were largely left intact.  Philip Morris stock, for example, outperformed the S&P 500 over that decade by about 300 percent.  And it is still chugging along today.

The people who got stuck with the tax increase were smokers — already wheezing — and overworked folk who were doing society a great service by paying into Social Security during their prime earning years and then dying before they turned 65 and collected.  These brave, rasping, gravel-voiced tax machines then had less money with which to pay for televisions and couches and houses and sweaters and everything else in life, so the general economy suffered a slight decrease in growth.  In other words, we all pay tobacco taxes, even those of us who selfishly don’t smoke and want to drain Social Security dry.  A tax aimed at “rich” sinful corporations became a tax on common people and the poor.  All taxes work this way.

If you cannot avoid a tax on tobacco when you don’t even smoke, how do you believe that you will avoid Obama’s tax on success?  And a tax on success is all that Obama has proposed by singling out the top 5 percent of earners.

“I’ll screw somebody else” is not a very trustworthy political promise anyway, even if it does come from the liberal messiah, The Dalai Obama.  We are all in the same economy and any money siphoned out of one part of America, whether that is the top 5 percent or the most-emphysemic 5 percent, ends up affecting us all.

You cannot drain water only out of the deep end of the pool, and you cannot tax money only out of the top 5 percent.  When Obama claims otherwise, he is selling you a lie.

America’s economy is already sputtering.  Slapping it with new taxes, collected from 5 percent but paid by 100 percent, would be a disaster.  Combined with a Democrat majority in the Senate, a Democrat majority in the House, and a wildly left-wing cheerleading section in the media, there couldn’t be a worse time to put a tax-and-spend liberal in the White House.

The media may claim John McCain “just doesn’t get it,” but at least he gets who pays the taxes in this country.  You do.