EXCESS TAXATION PROMOTES BLACK MARKET BARTER

Let me first open this rant with the statement that I’ve made many times before.  “I understand that the government needs to tax the citizens to survive and govern.  I have no problem with that.  My objection is to abusive taxation for no reason other than Congress wants to spend more money than they have on things that the citizens don’t want.  Many of the ‘projects’ that our tax dollars fund have no bearing on governance or legislating.”

That said, perhaps you can understand why I rant so frequently on taxes.  At this time, increasing taxes is not helping bring more revenue to government agencies it is actually bringing less.  The higher taxes rise, proportionately fewer dollars will ever make it to the inane programs sought by our representatives.

The new economy is becoming more and more diverse.  As we experience George H. W. Bush’s “Read my lips” approach taken to the ‘Nth’ degree by the current administration, the underground economy is widening and going deeper than ever before.

Obama said during his campaign, “I can make a firm pledge.  Under my plan, no family making less than $250,000 a year will see any form of tax increase.  Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”  He continued to espouse, “You will not see any of your taxes increase on single dime.” He makes Bush’s “No new taxes” almost believable (and we know that’s not true).

That was on September 12, 2008.  On February 4 of this year he signed legislation increasing the federal tax on cigarettes by $.62 per pack of 20.  This doesn’t affect me in the least.  I use it as an example only to express the point that the people hit hardest by this increase have been those who can least afford the increase: primarily the poor and undereducated and underemployed (the greatest majority of his constituency).  Of course they have the opportunity to quit.  It’s not like smoking is addictive.

As an aside, that tax increase has also contributed to increased crime.   By raising the market value of a substance that many people crave, it has made the transporters an even greater target of hijackers.  But that’s another story.

That was only the beginning though.  Since then, to follow suit, we have seen both federal and state tax increases slapped onto: candy and soft drinks, coffee and tea, gasoline, electricity, heating oil, natural gas, highway usage (tolls)… and the list goes on almost endlessly.  It is not endless, however, because Congress is finding more and more things to tax and more ways to increase taxes that already exist – like your current health care.  A perfect example of a new tax is the Value Added Tax (VAT)  The VAT is a tax that will be added to virtually every transaction that includes the transfer of money from one person or group of people to another.  This tax of 10%-25%  will be added on after the local, state and existing federal taxes are applied.

So this excess taxation by our local, state and federal governments is causing people to do more bartering for goods and services without reporting those transactions and not reporting some or all of their income.  Many people who can are now working “under-the-table”.  And I’m not just talking about the Illegal Aliens, I’m talking about the people who have been laid off from their jobs and are doing ‘pick-up’ work to supplement their unemployment insurance.

What happens when this occurs?  Otherwise law-abiding citizens perform criminal behavior in order to survive.  It’s pretty simple to me.  I can’t believe our government entities can’t grasp the concept and understand how they are hurting themselves and the citizens with their greed.

Here’s how it works:

John loses his job as a master electrician due to lack of work and files for unemployment.  He has gone from a tax contributor to a tax receiver.  The government has less tax coming in and more going out. Because John’s income has been cut to one quarter or less of what it was last week, last month or six months ago, John has to do what is necessary to survive.   He purchases less.  Sales tax revenue is reduced. He conserves on his auto use.  Gasoline tax revenue is reduced. He doesn’t eat out at Miguel’s Mexican Restaurant as much.  Restaurant business and employees suffer with less patronage and fewer tips.  Several service personnel and perhaps a cook or two lose their jobs and become tax receivers.

And that begins the underground or black market economy.

When John does go to Miguel’s, Miguel mentions that he needs some electrical work done on his house but can’t afford to pay an electrician right now and doesn’t know how to do the work himself.  John says he’ll do it if he can bring the family in for dinner once a week for X weeks.  Miguel agrees and asks only that John will also tell his friends about the fine, authentic Mexican food at Miguel’s.

Now we have the city losing out on permit revenue because only John and Miguel know about the electrical work.  No taxes are paid on the “income” John receives for his work because it is not reported as income.  Miguel gets the work done for the cost of the food that John and family consume and he writes that off as it’s melded into the cost of goods sold (the kitchen staff would be paid anyway).  No sales tax is paid, because no sale is recorded.  Miguel gets third party endorsement to increase business and saves on his advertising budget.

Then Miguel goes to the dentist, and then the dentist calls a plumber…

Casual bartering has gone on since the beginning of time.  Though the transactions are supposed to be reported to the government that scenario almost never happens .  Now the government is forcing us into black market negotiations in order to survive.  At the same time taxes are raised, the overall revenue received is reduced and the only way for the elite to get their hands on more money is to continue raising taxes until we are left with no income or spending power at all.  That’s called depression.

And it’s all so that some Senator or Congressman can assure his/her re-election by granting $300,000,000 to a private non-profit agency in his/her district to conduct a three-year study on ‘the irresponsible mating habits of the female Tick-Spotted Moose Spider and the psychological trauma to the male of the species related to the behavioral disorder’.

Be informed and vote wisely.  And hey, have a great time at your garage sale this weekend!

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