For the past few decades the Republican Party has recited its mantra of lowering income taxes. Regrettably, many in the Democratic Party have since begun to parrot this mantra. Yet the critical question that a person needs to ask is whom are the Republicans trying to benefit?
The answer becomes clear when one realizes that the vast majority of the American public, those who work for an income, do not pay income taxes.
Let me explain. In our free-market system, businesses pay only enough to attract the labor necessary for them to produce or provide their respective goods and services. Net income, as all employers know, is what attracts labor.
Consider two hypothetical employers. Employer A offers a job paying $20 an hour with a 50 percent income tax for a net income of $10 an hour. Employer B offers an identical job at only $15 an hour with a 10 percent income tax -- resulting in $13.50 an hour net pay. The rational potential employee would be attracted to employer B. Higher gross pay is irrelevant; it is the net pay that attracts the laborer.
Now, imagine that income taxes are reduced by 50 percent. Would employer B still offer $15 an hour gross income, thereby resulting in $14.25 in net pay? Of course not, because $13.50 is what is necessary to attract labor. The employer would ultimately absorb the entire income tax reduction.
This example illustrates how, although the legal effect of an income tax falls upon both the employer and employee, the practical effect of an income tax falls solely on the employer.
If lowering income tax rates benefits a very small corporate elite rather than the vast majority of people, why then does the mantra of lowering taxes continue? Because the Republican Party, and to a lesser extent elements of the Democratic Party, represent the interests of that small corporate elite. And the only way that small corporate elite can create public policy in a democratic political system is to fool a majority of the American electorate into voting against its own best interests and for the interests of the small corporate elite.
We the people must cut through the obfuscation, propaganda and outright lies and stop being fooled by the rhetoric of the right. So the next time a coworker complains about income taxes, explain how he or she doesn't actually pay an income tax. And next time you hear the mantra of lower income taxes, think about what is really being said, why, and for whom.
Bret Thiele is a St. Paul, Minnesota Attorney.
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