Is That A Target On My Back?

By Robert Wallace
America’s Right

One short explanation for why the United States is in the financial hole we’re in is that politicians promise to give everyone everything while not raising taxes, but not that the financial collapse has depleted government coffers state governments and the fed are looking for new sources of revenue. The problem with just raising taxes – especially at the state level – is that not only do you depress business but you also chase people and businesses out of your state. So the question becomes one of mobility: who has an easier time “voting with their feet” by leaving if they don’t like changes to local laws.


Ilya Somin has an interesting piece at the Volokh Conspiracy addressing just this question. Here’s the conclusion that he reaches:

However, the much greater difficult of moving when you own a lot of stuff is an additional reason why voting with your feet is often easier for the poor. My experience is far from unique. Studies by economists find that homeownership (a proxy for wealth and possessions), tends to reduce labor mobility significantly. Another way of putting it is that the relatively high moving costs faced by the affluent make it less likely that they will move to a different jurisdiction to take advantage of its superior policies, unless the superiority is very great. The poor, by contrast, can often move to exploit relatively smaller interjurisdictional differences.

Obviously, if your wealth is really great, you can to some extent reduce the pain of moving by paying people to do everything for you.

I agree with the conclusion, but I want to take it a step farther. The middle class is supposed to be the sacred cow of American politics. Every politician promises to protect, enshrine, and expand the middle class, and every politician promises that – no matter what – they won’t raise taxes on the middle class.

But when desperate state governments look for new sources of revenue – where are they going to turn? The extremely rich can offset the costs of moving by hiring folks to do the hard work. The poor folk – who can be targetted for taxes without political danger as long as the regressive taxes are disguised (like taxes on cigarettes or gasoline) – can also up and leave. But where are middle class folks – especially upper middle class homeowners – going to go?

Even worse are the small business owners. These guys often get classified as rich because their company income can be counted as “salary” for tax purposes, but frequently make less in take-home cash than even the middle class. And if you think moving your house is hard, try moving all of your customers homes!

The same basic principles apply at the national level. While people aren’t as likely to move to new countries, the fact is that the poor and the very rich have the easiest time hiding their income and assets, while the middle-class and especially small business owners have the hardest time.

No matter what Obama and the Democrats may say about keeping their hands off the middle class, the fact is that from a tax perspective we’ve all got big targets on our backs. If Obama is going to even make a serious effort to try to pay for all this revolutionary reform he’s got in mind, he’s going to come knocking on middle-class doors to pay for it.

Because he knows we’ve got nowhere to run and nowhere to hide.

—————
Robert Wallace is classical liberal and a devout Mormon. He is currently studying economics in graduate school. He and his wife work as business analysis consultants, and they live as undercover conservatives with their two small children in a liberal bastion of a college town. He has been writing for America’s Right since December 2008.

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Comments

  1. Gail B says:

    Yep!

    And, what gets me is that we who are on a fixed income are targeted, too, with the increased taxes on sugars, gasoline, cigarettes, and other "sins," but not the alcohol!!! The politicians drink alcohol and would not want their taxes increased on their booze!

    And to make matters worse, the states' revenues are down because of the brilliance of Obama/Soetoro's regime's Stimulus Package, and people are losing their jobs or being furloughed to cut costs. Additionally, the states are having to raise taxes to close the gap.

    Have you ever heard of a mobile home increasing in value without having work done on it for improvement and while it ages? Oh, yes. Mine went up $3000. I called the tax office and asked if they would buy a 9-yr-old mobile home for what they valued it. "Well, no." "Then it isn't worth that amount!" The valuation was reduced to what it had been.

    The homestead exemption is being done away with in many areas, too. And the size of government continues to grow. Atlanta is closing community fire stations in what's being called brownouts, but the citizens are still paying for their fire protection. What's wrong with this picture?

  2. Rix says:

    The post proves a rather obvious point: the main target of all tax increqases is usually the middle class. The're an underrepresented and, as a direct consequence, overpaying majority. They work and pay mortgages – and that means less time for politicking, less mobility, and less chances to reach the urn on the Voting Day.

    Bottomline: the election laws MUST be changed to restrict voting to actual (and former) TAXPAYERS. No representation without taxation!

  3. PRECIOUS METALS GOBBLED says:

    http://news.yahoo.com/s/nm/20090831/india_nm/india420934

    Oh this is too ironic, and FUNNY.
    How do you sleep at night Gore?

  4. TRUTH ROCKS says:

    "In a time of universal deceit, telling the TRUTH, is a revolutionary act ." -George Orwell

  5. EXTINCT INTELLIGENCE says:

    "The Constitution is not an instrument for the government to restrain the people, it is an instrument for the people to restrain the government — lest it come to dominate our lives and interests." -Patrick Henry

    "We the People are the rightful masters of both Congress´╗┐ and the Courts–not to overthrow the Constitution, but to overthrow the men who pervert the Constitution." -Abraham Lincoln

  6. Anonymous says:

    I don't see no target on my back, just this little red laser looking dot.

  7. Gail B says:

    But RIX! If there were no voting without taxation, Obama/Soetoro's organized communities couldn't harvest dead people's registrations and votes. (Obama/Soetoro's HEALTHCARE would necessarily work FOR us!)

  8. Rix says:

    > If there were no voting without taxation, Obama/Soetoro's
    > organized communities couldn't harvest dead people's
    > registrations and votes.

    Honestly, Gail, I don't mind most of Obama's supporters to vote if they agree to be dead. :)

  9. mormon.org says:

    many thanks for providing valuable information on the topic. I am a fan of the website. Keep up beneficial financial job.

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