5 ways the government taxes (and hurts) the poor

The issue of taxation in the United States and in most developed countries is a complex matter. With the tax code bigger than a lot of books on quantum mechanics, existential philosophy and crime noir combined, complying with the current tax system can be quite the headache for most middle- and lower-class individuals.

Indeed, the rich can easily abide by the tax code because of their immense wealth and resources – they can pay an accountant to find them exemptions, credits and other loopholes that can benefit themselves and their family. The middle-class and poor don’t enjoy these same advantages.

Although the most popular narrative regarding the taxation topic is to simply tax the affluent, the real request from the general public is to simplify the tax code and diminish its negative effects and terrible consequences on the vast majority of the working population. Many say the solution to this is either a consumption tax or a fair tax where everyone pays the same amount of taxes.

The real solution is a zero percent tax, but that’s a fairy tale that will never come to fruition anytime soon.

Taxes in most Western nations are detrimental and destructive to the poor. Our esteemed public officials regularly purport they want to aid the impoverished, the most vulnerable in society. However, their actions do quite the opposite as they apply a tremendous burden to impecunious households across the country, whether it’s a soda tax or an inflation tax.

Ostensibly, the government remains placid in the status quo. Any serious discussion on tax reform is dismissed, while those who call for abolishing the present tax code are ridiculed and ignored like lepers. Think the poor don’t pay any taxes? Here are five taxes the government coerces the poor into paying:

1. Inflation Tax

The inflation tax is one of the greatest enemies to the people. The wealthiest crony capitalists are unaffected by this because they personally benefit from the freshly created money, but as it trickles through the economy, the rest of us get a devalued currency that can barely purchase you a loaf of bread. Men like Ben Bernanke and Paul Krugman promote a weakened currency so one must ask: why do they hate the poor so much?

2. Sales Tax

Poor consumers already have a difficult time buying the goods and services they need to live from day to day. With that acquisition, though, comes a sales tax, an additional cost for a consumer who already lives paycheck to paycheck, or a senior who is on a fixed-income. This value-added tax, also known as a VAT, is harmful because it cannot be avoided at all.

Bureaucrats argue the revenues from sales taxes are redistributed to assist society. When was the last time the government actually solved a real problem and helped society? Poverty is still rampant, homelessness is still ubiquitous and streets remain filthy.

3. Social Security Tax

Proponents of big government suggest mandatory retirement taxes benefit everyone because it provides security in retirement and it helps those who don’t save for retirement. This is disingenuous and egregious because what makes the government the authority on what consumers should and shouldn’t do? Also, the retirement system is nothing more than a Ponzi scheme.

Indeed, saving for retirement is a prudent decision, but that’s a personal issue, not a government one. Furthermore, what if someone doesn’t want to save for their winter years? Here is what Julian Adorney of the Mises Institute writes:

“Saving for retirement is generally a good idea; most people anticipate needing a monetary cushion to see them through their golden years. But it’s not the best approach for everyone. The young woman with terminal cancer, for instance, probably won’t be around to enjoy the fruits of Social Security. She can best maximize her happiness by spending that money now, whether it’s on fun experiences, or on taking care of her children, or on better medical treatment. Similarly, for the destitute man who can afford to either save for retirement or feed his children, it takes a heartless bureaucrat indeed to force him to do the former. Yet that is precisely what Social Security does.”

4. Junk Food Tax

No one should maintain a diet consumed with soda, potato chips and chocolate bars. However, this is a lifestyle choice, and sometimes households can’t afford anything more than a can of coke. In addition, what if a family wants to celebrate a birthday or hold a special get together and want to have these kinds of fixings? A junk food tax, soda tax or fat tax is a terrible way to solve the prevalence of junk food diets because the only thing it does is fill government coffers.

5. Millionaire Tax

The so-called one percent are continually vilified by the general public. Why should they? Unless they’re stealing, violating the non-aggression principle or partnering with government, the one percent should be celebrated because they achieved the American Dream and attained wealth on their own (Bill Gates produced a product that the consumers wanted). With that being said, the wealthiest of people have the resources to leave when taxes become too high, which means, if they own a business, can close up shop and cause workers to be jobless.

This is the effect of a tax on the wealthiest of citizens.

Here is what the Heritage Foundation wrote on President Obama’s tax increases:

“The effects of macroeconomic growth (or lack thereof) influence everyone in the economy. All peo­ple’s microeconomic decisions contribute to the macro­economic picture. When business owners purchase fewer machines or hire fewer workers, the growth of the overall economy suffers. This limits the wage increases people can expect, as well as their opportu­nities for creating savings that fuel future investments.”

The amount of taxes we endure today is the result of big government, a desire for the government to be meddling in every aspect of our lives, whether it’s economically or socially. This type of thinking should be eviscerated if we wish to slay the  monster known as government.

Here is what Milton Friedman once said: “They think that the cure to big government is to have bigger government… the only effective cure is to reduce the scope of government – get government out of the business.”