Left Coast Voices

"I would hurl words into the darkness and wait for an echo. If an echo sounded, no matter how faintly, I would send other words to tell, to march, to fight." Richard Wright, American Hunger

Archive for the tag “public roads”

Tax Mysteries Uncovered! (part 2 of Why Some People Pay More Taxes…)

In part 1 I started to explore how a business owner benefits more than an employee from public roads. Let’s go a little further with this simplified example.

 We’ve already seen that an employee benefits from public roads in that he or she can get to work to earn some money. The business owner gets the same benefit from his trip, plus the benefit of the worker coming to work to do something of value to the business.

 But let’s look at other uses of roads by the business. We have already said that the business in this example is “old-fashioned” in that it actually makes something, in the U.S.A., and without the aid of robots or too much automation. Then the business sells its product to either consumers or retailers. How does the business get its products to buyers? Most likely in trucks.

 These trucks use the same roads that we all drive on and pay for through our taxes. So this use is a benefit for the business and the business should pay its “fair share” for the construction and maintenance of the roads.

 But it’s even bigger than that. Trucks loaded with cargo cause exponentially more damage and simple wear-and-tear on roads than do passenger cars – even big SUVs. Because of this, roads have to be built much thicker and stronger in the first place, but they must also be re-paved, have potholes and cracks fixed, etc. much more often.

 The result is a situation that mirrors the discussion in part 1: both the business owner and the worker use the roads to go to the store to buy things. But the business uses the roads to make a profit. Once again, the imperative is simple: Pay for what you get!

 Okay, we’ve mostly talked about businesses so far. In part 3 I’ll start looking into individual benefits from the things that taxes pay for. Again, this is not to say that some people are “bad” and therefore need to pay more taxes. It’s simply based on the same principle we all observe every day: Want two donuts instead of one? Pay for two. Want a Fat Tire instead of a Coors? Fat Tire is better (6,428 times better, by my calculations) and it costs more – if you want it, you have to pay for it.

-Tom Rossi

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Tom Rossi is a commentator on politics and social issues. He is a Ph.D. student in International Sustainable Development, concentrating in natural resource and economic policy. Tom greatly enjoys a hearty debate, especially over a hearty pint of Guinness.

Tom also posts on thrustblog.blogspot.com

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Why Should Some People Pay More Taxes than Others? (part 1)

Lately, I’ve been hearing, over and over, about how those with more wealth “can afford to pay their fair share.” It’s as if there could be no motivation except “doing what’s right.” Well, I think it goes beyond that. There are solid reasons for our graduated tax system, and solid reasons that the wealthy and corporations should pay more than a middle class wage-earner.

We rightly think of taking what you haven’t paid for from a store as stealing. We also say that, buying something cheap gets you an inferior product – “You get what you pay for.” These two elements add up to this imperative: Pay for what you get. What I’m talking about here are the goods and services that taxes pay for: public roads, police, fire protection, education, and many others. We all benefit from these, but those with more wealth, property, or who own a business get more of the benefits than do wage-earners.

Let’s take the example of a small, privately-owned company that manufactures a product. Let’s also assume that this is an old fashioned company whose work is still performed by human beings rather than robots.

If the company makes a profit, (tricky accounting notwithstanding) then it essentially makes a profit from each of the individual activities that go into its products – at least on average. What this means is that, by definition, the work of an employee who is paid $50,000 per year earns the company some amount more than $50,000 per year. Otherwise, there would be little point in employing that person. Let’s drill down and examine this employee more closely.

The employee lives in a residential community that is some distance from the company. So, the employee has to drive to work, as there is no convenient public transportation option for the trip. The trip is made in the employee’s private car, but on public roads and, as we know, roads cost money. The road that the employee takes to work is paid for by taxes and, ostensibly, provides benefits to those who pay the taxes.

So let’s look at who gets the benefits from the road. The employee’s benefit comes in the ability to get to a paying job. But the work that the employee does at the company also benefits the owner – in an amount that exceeds the employee’s pay. Thus, whatever benefit the employee derives from the ability to drive to work on the road, the owner also derives some benefit from the very same trip because it allows an employee to come to work and produce.

The road enables the employee to do the work that makes $50,000 per year, which makes a profit for the owner. The owner get his or her own benefit from driving on the road, plus a significant benefit from the road use of each employee. So shouldn’t the owner pay a larger portion of the cost to build and maintain the road?

I’ll continue this analysis in part 2.

-Tom Rossi

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Tom Rossi is a commentator on politics and social issues. He is a Ph.D. student in International Sustainable Development, concentrating in natural resource and economic policy. Tom greatly enjoys a hearty debate, especially over a hearty pint of Guinness.

Tom also posts on thrustblog.blogspot.com

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