The brilliant Matt Bruenig has written another great article that expands the way that I look at economics, Nontax Revenue Accounts for 92% of Growth in “Taxpayer Money” Since 1970. The basic idea is one that I’m well aware of because I see it everywhere I go. Politicians are terrified to raising taxes. So they create fees and tickets and, as a last resort, sales taxes. The result of all this is to remove the tax burden from the rich and pile it onto the poor.
Think about traffic tickets. If a poor person is caught driving 35 in a 25 mph zone, the cost of the ticket is exactly the same as if a billionaire is caught doing the same thing. Think about that because it’s shocking. It means that the poor person is massively punished while the billionaire is effectively not punished at all. In fact, that billionaire might be able to fight the ticket and win in court. It really isn’t very hard when you have a lawyer since police officers have skimpy notes and no actual memory of the event. But even if they just pay the ticket, it is unfair. It is, in fact, what I’ve been arguing that the rich really want: each person paying the same amount in taxes — even a flat tax would be unacceptable to them.
Bruenig noted that we should stop discussing “taxpayer money.” For one thing, after people pay taxes, it is no longer theirs. But more important, discussing government money this way frames it in a deceptive way. This is how we get pundits on Fox News and CNBC talking about all the taxes that the rich are paying to the government — completely ignoring the taxes and all the other revenues that the poor pay. They just don’t count, even though as the title of the article indicated, since 1970, 92% of all government revenue increases have come from these sources. In 1970, roughly 12% of total government revenue came from these highly regressive sources. Now the number is almost 21%.
Another area of this is benefit cuts. The government doesn’t just take money and then go out to Las Vegas for a vacation. It gives that money back to the country and its people. This is an issue that Dean Baker has written about a lot. People want to cut Social Security, but they never think about the fact that voters will not be keen to continue to pay 15% of their paychecks if they aren’t getting anything back for it. Cuts are effectively just another form of tax.
As long as we continue to focus on taxes — which is what the power elite want us to do — we will see these revenues decrease. And we will see more and more of the cost of running the government and providing services fall on the backs of the poor and the middle class. So just looking at the tax burden on the rich, we see them paying less. And we see the overall tax burden reduced to be replaced by even more regressive fees, tickets, and reduced services. The power elite have been very clever. They’ve managed to make people living in an oligarchy think they live in a democracy.