We have been hearing a lot about greed lately – especially from politicians running for office.
A few months ago, the political types were demonizing greedy oil companies. The most recent scapegoat is the housing/mortgage market. The story line is that greedy individuals seeking ever more lavish homes succumbed to greedy predatory lenders and this has created a financial crisis.
Well let’s look at some numbers.
In 2005, there was about $8.5 trillion in outstanding loans on residential property in America. This includes residential loans of all types like first mortgages, second mortgages, lines of credit, etc. Making some generous assumptions which probably overstate the payments being made, it looks like Americans forked over about $0.57 trillion in mortgage payments.
Approximately 32% of the population is renting instead of buying a home. While probably double counting in some ways, I again made assumptions that err on the high side to come up with a figure of $0.27 trillion in rent payments.
Therefore, between mortgage payments and rent payments, Americans were paying a total of $0.84 trillion to put roofs over their heads in 2005.
How much money do the same individual Americans give to the government?
Well, the adjusted gross income reported to the IRS by individuals was $7.5 trillion total in 2005 and the tax revenue collected by federal, state and local governments in that same year was $3.2 trillion.
My best estimate from a number of different sources is that corporate taxes account for about $0.5 trillion of the taxes paid to government at all levels. If you have read my previous blog, you’ll know that these corporate taxes really ended up being paid by individual Americans out of their pockets. Once again, however, I’ll be generous and ignore this for the moment.
Under these assumptions, we see that individual Americans paid $2.7 trillion in taxes out of their $7.5 trillion in income. This is a whopping 36%!
Thirty six cents out of every dollar of income earned by Americans went to the government while only 11.2 cents of every dollar ($0.84 trillion in mortgage and rent payments divided by $7.5 trillion of income) went to housing expenses!
Said differently, the government requires 321% more money from its citizens than is required by all of the Snidely Whiplashes (mortgage companies and landlords) in the entire country. Americans are spending more than three times as much money to support the government as they are spending for the places where they live!
So let me ask you this basic question: Who is greedier – the citizens or the government?
You hear politicians and media pundits talk about greedy individuals and greedy corporations all the time. But seriously, have you ever heard these people talk about “greedy government interests”? You’ve never heard them utter that phrase.
Yet greed is precisely the right word to apply to a governmental system that takes 36 cents out of every dollar earned and then still demands to take more! One of my missions in life is to get the phrase “greedy government interests” into the public domain so that more people will understand the true nature of government.
Because we are in the thick of a presidential campaign, the perennial debate about who should pay taxes and at what level is in high gear. Obama claims he will give 95% of wage earners a tax cut and he will only raise taxes on wealthy individuals (household income over $250k) and on big corporations. McCain also wants tax cuts for the majority of citizens (CNN showed that 93% of Americans get a tax cut under McCain’s plan) and he also wants to reduce taxes on corporations.
The question of who pays the tax revenue need to run the country is important. But I’m afraid that politicians use this question to distract us from asking a much more important and fundamental question – IS THERE ANY LIMIT TO THE AMOUNT OF MONEY THE GOVERNMENT SHOULD BE ALLOWED TO TAKE FROM THE CITIZENRY?
My answer is “Yes” and I think that government has already exceeded a reasonable limit.
Politicians claim that they will protect us from the greed of others. I think it is a smoke-screen to cover up their own avaricious demand for an ever increasing share of the nation’s wealth. I’m not so worried about greedy individuals or greedy corporations. What I want to know is who is going to protect us from greedy government interests?
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You are so right. Of course those who support higher taxes and more government programs will claim that those who oppose their agenda are selfish, mean-spirited, and greedy, just as they will claim that those who are opposed to Obama are "racist."
And here is another scary thought from the science fiction writer, Robert Heinlein:
"A perfect democracy, a 'warm body' democracy in which every adult may vote and all votes count equally has no internal feedback for self correction. It depends solely on the wisdom and self-restraint of citizens...which is opposed by the folly and lack of self-restraint of other citizens. What is supposed to happen in a democracy is that each sovereign citizen will always vote in the public interest for the safety and welfare of all. But what does happen is that he votes his own self-interest as he sees it...which for the majority translates as 'Bread and Circuses'
"Bread and Circuses is the cancer of democracy, the fatal disease for which there is no cure. Democracy often works beautifully at first. But once a state extends the franchise to every warm body, be he producer or parasite, that day marks the beginning of the end of the state. For when the plebs discover that they can vote themselves bread and circuses without limit and that the productive members of the body politic cannot stop them, they will do so, until the state bleeds to death, or in its weakened condition the state succumbs to an invader--the barbarians enter Rome."
(To Sail Beyond the Sunset, 227)
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