Rich Man's Burden

The following is a parable, so relax and enjoy it.  

Imagine a country with eleven people in the private sector.  Ten of them are the workers, and happy, productive workers they are, or so we are assured by the government’s official news agency, the Timely Washingtonian, a non-profit established by the extremely wealthy Reverend Money.  It wasn’t always the government’s official news agency, but when you have Money’s kind of money, shit happens. 

The ten workers produce one hundred units of NW (National Wealth). They are paid five units apiece for their labor. The eleventh member of the private sector is The Boss, who is paid fifty NW, just because … Well, just because, or as the Timely Washingtonian puts it: “Because it’s Just!”

Meanwhile, the government needs a lot of money (don’t they always?), so The Boss has to pay 40% of his money in a variety of taxes, and only keeps 30 NW, while paying 20 NW in taxes.  The workers, being poorer, pay 20% of their money in various taxes, so they keep 4 NW.  And everyone is so, so happy says the Timely Washingtonian.

But not everyone is happy. The Boss is not so happy because he is paying 40% of his money in taxes.  So he helps to elect a series of corporate whores … Scratch that: statesmen, beginning with his buddy, Ronald Raygun.  The Raygun and his successors zap the workforce, taking away such things as collective bargaining.  And they organize tax reform.

Over the years the workers become more productive, and eventually they are producing two-thirds more than when they started.  The Boss explains this is all his doing, as anyone who reads the Timely Washingtonian can verify.  So he claims all of the extra NW for himself. 

Meanwhile, with the new tax reforms he pays only 30% of his total income in taxes, but he and the “statesmen” make sure that he pays a lot of “come in” tax. And they cut the “come in” tax for the workers, who should be happy but seem to be ungrateful wretches.  As it happens, as the country produces more, the government is spending more, on such things as the corporate bodyguard force.  Where will the money come from?  Well, they can’t raise taxes on The Boss, so that leaves … But, they don’t want to raise the “come in” tax on the workers, because that would defeat the propa … Sorry, it would contradict the government news.  So they increase certain taxes that the workers pay, such as the “roll pay” tax. After the reforms the workers also pay 30% of all their earnings in taxes. “That’s fair,” says The Boss. “That’s fair,” says Reverend Money. That’s fair,” says Ronald Raygun.  The workers, who weren’t consulted, and weren’t even informed, don’t say much of anything.

Now let’s do some math.  Before, The Boss made 50 NW, paid 20 NW in taxes, and kept 30 NW. The workers collectively made 50 NW, paid 10 NW, and kept 40 NW, or 4 NW each.  The government got 30 NW, and The Boss paid 67% of that.  Now that the output is 166.67 NW, The Boss gets 116.66 NW, and pays 30% of that, or 35 NW, keeping 81.67 NW.  The workers make 50 NW, and pay 30% of that or 15 NW.  They each keep 3.5 NW.

But notice, The Boss used to pay 67% of the taxes, and now he pays 70%.  This fact is duly reported in the Timely Washingtonian: “The Boss pays 70% of all taxes. The workers pay hardly any ‘income tax!’ Poor, Boss! Ungrateful workers!”

Stay tuned for more reforms to help remedy this terribly unfair situation.