George Rebane

Dan Walters of the SacBee has a puzzle – ‘Are California taxes too high or too low?’ – that seems to vex him, and apparently a bunch of his readers.  He concludes that since during the recession we are earning less, we are paying less taxes, and therefore our “tax burden” is actually lower since the state is taking fewer of our dollars.  Before we all start dancing in the streets, maybe we should mull it over a bit.

I guess a good place to start is with how do taxes burden us.  Well, the simple and correct answer is that if we don’t get to buy what we want or need with our earnings, after the government takes part of it away in taxes, then it’s a burden to us.  However, if our after tax earnings are still enough to accomplish our plans – why we worked to get the money in the first place – then the taxes are not burdensome.  To be sure, we’d still like to keep our loot, but the amount we pay is not really burdensome.  Burden, after all, still means a load ranging from uncomfortable to unbearable.

What Walters has a problem with is tying simple arithmetic with the human condition.  Here’s an example.  If a person earns $100,000 and is taxed 30% of it, he then gets to spend $70,000 for his own needs.  And a person earning $60,000 taxed at ‘only’ 20% gets to spend $48,000 for her needs.  Finally, if a person earns $40,000 and has to pay 10% of it in taxes, then he winds up having only $36,000 to spend.

Now say it costs about $40,000 a year to put some food on the table, fuel in the car, pay for a roof over the head – not anything fancy, but just the basics.   Since all three buy their food and fuel from the same stores, it’s easy to see that lower tax rates will still impact the lower wage earners more.  It removes a bigger percentage from the basic nut with which they need to get by.

The problem with Walters and his thought followers is that they think of ‘burden’ from the government’s viewpoint as being the total amount of taxes it collects from the people.  And from that perspective, if less is coming into state coffers, then the people must be paying less taxes, and therefore the state is not so much of a burden to them.  But that thinking is turned on its head, as we’ve seen from the example, when lower state revenues are the result of a recession (as Walters argues), and now the $100,000 wage earner is earning $60,000, and the $60,000 wage earner is down to $40,000, and … .

People who accept Walter’s elitist argument are unclear on the concept of how and for whom taxes become a burden, and its overall human dimension.  I suppose that kind of viewpoint comes from collecting individuals into a bundle called ‘people’ who pay an aggregate amount of taxes into the government’s coffers.  So when, for whatever reason, that aggregate amount is reduced, then to such thinkers, the tax burden on the ‘people’ is also reduced.

Looking at California’s reduced tax revenues, you can all go now and celebrate your reduced tax burden.  But a few of us might just stay home and cry in our beer.