Saturday, August 4, 2012

Cheap Government?


Let’s say you got lucky and just won $20,000,000 (the cash out amount) in the latest lottery.  Before you received a single penny of these winnings, the federal withholding taxes on this amount would approximate $7,000,000.  Unless you had very creative accountants and lawyers, chances are you would end up paying close to that amount in taxes.  On the other hand, if you are Mitt Romney and earn $20,000,000 you probably had nothing withheld but did pay estimated taxes in the amount of $3,000,000 and probably ended up getting a refund so your total taxes on $20,000,000 was $2,700,000.  Now no one questions the fact that $2,700,000 is a lot of money.  The issue, however should be why someone like Romney would pay $2,700,000 when the lottery winner would pay $4,300,000 more federal taxes on the same amount of income.  By the way, it is not just Romney that would enjoy tax advantages over lottery winners, but anyone with “carried interest” or capital gains would end up paying far lower taxes than the lottery winners.  The reason, in case you are unaware, is because of political clout.  Lottery winners do not regularly contribute to the campaigns of lawmakers who craft the tax laws.  Lottery winners will not contribute to the campaign of Romney thus having a voice in how their lottery winnings are taxed.  The reality is that winners of Olympic Gold Medals will probably pay a higher percentage of income tax on their winnings and the endorsement earnings that will come from medal winnings than Romney pays on his income tax.  To make matters worse, Romney is campaigning on his view that he should pay 20% less than he pays presently.  Why is this right?  We do not need low tax/less regulation government we need competent government.  Right now we have cheap, low cost government and it should be obvious to everyone, particularly those still looking for jobs, that like everything else we buy, we get the government we pay for.  Cheap government favors those who can afford to buy votes over those who cannot.  Cheap government gives benefits to those who pay the campaign costs rather than those who need the services of government.  The fact that Romney will pay $4.3 million LESS in taxes than the lottery winner who will pay 61% more on the same income should be sufficient proof that cheap government like anything else that is cheap, does not work very well and never benefits the buyers.   

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