Friday, September 11, 2009

Tax This, Tax That

People mistakenly assume that the "burden" of a tax rests on the payer. Not so. For example payroll taxes by employers are actually paid by employees in the form of lower wages. If there were no payroll tax, employees would be paid this money. The same is true of employer provided health care and any other employee benefit. Even workplace litigation is ultimately borne by employees as employers are forced to hire fewer employees at lower compensation because of the threat of workplace litigation.

Who pays cigarette taxes, beer taxes, gas taxes? You guessed it. You do. Who pays the big settlements in lawsuits at big corporations? You guessed it. You do. The majority owner of big tobacco, big oil, big insurance is the pension fund of the average worker. So, when you slap a tax on insurance companies, you are taxing workers..they own the companies. When you slap windfall profits tax on oil, you are taxing workers...they own the companies.

The people who advocate these taxes think that big oil is owned by some lazy, mean-spirited, right wing, rich slob. Nope. That's not the case. You own it. Do you have a retirement plan? Then you own it.

So, the next time you hear that only half of the country pays taxes, think again. Maybe only half pay federal income taxes, but all of these other taxes fall disproportionately on low income folks. Obama's tax on insurance companies will fall on lower and middle income folks. They own the insurance companies.

The average American is in worse financial shape today than twenty years ago, even though the cost to an employer of an employee has rocketed out of sight. How can that be? The disposable income of a worker is ultimately reduced by payroll taxes, health care provision, family leave provisions, expected litigation costs from anti-discrimination laws, workmens compensation taxes, unemployment compensation taxes....should I go on. Protecting workers makes them much more expensive to employers. At the end of the day, employees pay these costs not employers.

Only in the very short run, does the employer pay these costs and what the employer does is immediately attempt to reduce his workforce. So, in the short run Obama health care schemes will cost workers their jobs. In the long run, employees will pay for the Obamacare that he says is being paid by employers and insurance companies. Obama is not telling it straight.