Who Pays Taxes - and How? L. Boulware

Government collects this money through both direct and indirect taxes. Both kinds wind up being paid almost entirely by consumers. But taxing consumers directly and visibly is unpopular and very bad politics. The electorate keeps forc ing government to minimize direct taxes and collect its major rev enue indirectly through taxes hid den in prices and collected from consumers in two ways. The first is through the levies on business which are erroneously believed by most citizens to he levies on the owners. These taxes are not and cannot be paid by the owners in any business that sur vives. They are merely collected for government by business in prices which have had to be in creased enough to cover the hid den indirect tax. The second way government collects money indirectly through consumer prices is by inflation which,· historically and now, is simply a tax of the most deceitful, most brutal, and most debilitating kind. How it comes about is this: Government does not dare tax to equal expenditures, because that 1969 WHO PAYS TAXES - AND HOW 751 would require disillusioning the majority of voters who believe something-for-nothing can be ob tained for the many through gov ernment or other gang force.

So government borrows. If it can borrow from individuals with a.. proven history of paying back loans - this would not nor mally be inflationary since the arrangement is self-correcting. But government quickly finds it can not borrow enough from individ uals since they know government is on an inflationary course and will not pay back as much value as it borrows. So government is forced to bor row from the banks. The money is put on deposit. This results in creation of new money to match the amount of the borrowing but not matched by any new supply of goods. This is politely called "monetizing debt." Actually, it is just printing worthless money which is added to the existing sup ply and dilutes the value of exist ing dollars by just that much. The consumer pays his part of this as a·· hidden tax in every purchase thereafter. So, who pays taxes? Everybody does. No few do or could supply the enormous sums which govern ment is spending and which long since exceeded the total income of everybody west of the Missis sippi.

Such huge taxes cannot be sup plied from any few considered wealthy. Even the best-off 10 per cent of all families - down to in clude the $1,000 a month level pay only 28 per cent of the na tion's tax bill. The rest has to come from the remaining 90 per cent of the population. These 180 million persons - while as a group recei ving 85 per cent of benefits to individuals - have generally no idea they are themselves supply ing 72 per cent of everything gov ernment spends. The further down the income, savings, and even the relief scale a citizen is - that is, the poorer he is - the greater is the relative impact on him of the taxes levied on business and of the tax of in flation levied on him through gov ernment cheapening his money. Consumer tax and price prob lems are not solved by what ap pears to be a shift of the burden to business. Borrowing hardly de lays at all their impact to the con sumer. The only remedy to stop inflation is at its source. The best way to start is to cut out the futile and wasteful part of the govern ment spending and to tax openly to match the remaining expendi 'tures. Public servants will do this once they become convinced that a majority of their constitutents knows the facts and wants it done.

; DURING my freshman year of high school, I took upon myself that patriotic but arduous task of mak ing myself a. fervent anticommu nist. Books pertinent to the sub ject were studied with more zeal than were algebra and world geography, and I proceeded to accumulate a voluminous library exposing that most evil monster formulated by Karl Marx. Com plex numbers, the binomial the orem, and the main waterways of Europe held but a secondary status in my education. My ener gies were channeled toward more profound subj ects - dialectical materialism, slaughter of the ku laks, and Comintern policy. Mr. Bearce promised to try an article when he recently subscribed for The Freeman. Here it is. 752 A FREE ,LANCE IN THE FREE MARKET ROBERT G. BEARCE One of my first priori ties was to really know what communism was, that is, what it was that I abhorred with so much enthusi asm. This was accomplished by writing a definition compiled from dictionaries, various encyclopedi as, and literature on Marxism Leninism. I labored on this mo mentous undertaking for a full two weeks, using in the process at least two score sheets of note book paper. Only after the most scholarly and diligent study was I able to gloat over the final draft defining communism in two or three precise, hard-hitting para graphs.