Unintended Consequences

We the people are always looking for a way to save money, it is almost instinctual.  We look for the easiest way to live, conserving energy for more important things.  When government institutes a tax, it causes us to labor longer to accomplish goals.  As a result we look for ways around the tax.  Often times there is.  Look at the largest corporations, how many stories do we read about how this company or that one paid no income taxes.  We believe that they are cheating us, but are they not doing what all of us do?  Warren Buffet as an example is said to pay a lesser percentage of his income in taxes, than his secretary.  Mr. Buffet is a very well off man.  In fact there is something called the Buffet rule going around Congress recently. 

He could pay more.  There is no law against sending a check to the treasury.  And he has structured his finances to minimize taxes, as any of us do.  Some find that by limiting deductions for example, we can save more using the standard deduction, and it makes tax time easier as well, not as much record keeping.  Companies and very wealthy individuals can move money around the world to avoid taxes.  I remember a time in Missouri, where retailers were required to pay tax on their inventory, like a property tax.  One local department store chain had stores both in Missouri, and in Illinois.  They would ship inventory to Illinois before inventorying their warehouse, to avoid taxes.  A few weeks later the stores would ship the inventory back.  Seems shipping charges were less than the tax, so it saved money.  The saved money did not line the pockets of the CEO, but was used to finance expansion, or other activities that would improve the company.  The taxes would just disappear to the state capital.  Is that cheating?

Now a days, companies will do business all over the globe.  They leave the money in their foreign operations, rather than bringing it home, to avoid income tax on that money.  That money funds the enterprise and helps it to grow.  Are they cheating?

One dollar in taxes, taken from any person in the country, goes to a central location (Washington, DC) then is doled out as some politician prefers.  Once spent that dollar is gone.  One dollar spent by private enterprise, helps that enterprise grow, producing more dollars.

I read a story today.  It was all about how smokers are shifting to pipe tobacco and rolling their own cigarettes, rather than pay the high taxes on cigarettes.  It reminded me of a few years ago seeing a store in Kentucky selling tobacco seed in small packets.  The taxes on cigarettes was supposed to fund education.  Now, the taxes are down about a billion dollars.  Are smokers cheating? 

If we tax pipe tobacco, will buying seeds from Kentucky become a trend?  Maybe, but many will not want to process the seeds, either because they don't have the space, or the ability to grow the plants.  Aren't taxes like this and others on liquor actually playing to peoples puritanical desires, rather than the over all economic benefit?

It's all unintended consequences.  Gambling in Missouri was sold to the voters as a way to fund education.  When the lottery and riverboat revenues started rolling in, the state congress rolled money currently funding education to other things, because they were getting all the gambling money.  Did the politicians cheat us?

I remember finding a plastic 'coin' years ago.  My grandmother told me it was a sales tax token.  It seems that at one point in time, sales tax was so low it was fractions of pennies.  The current rate in my area is now almost 8%.   Not only did the rate go up, but inflation increased the cost of basic goods bringing more money into the state's pocket.  Did politicians cheat us again?

One final thing.  In a recent election, the county I live in felt it needed to rebuild the court house.  It was out of date.  It's also a bad economic times.  They proposed using an expiring tax to do that.  The tag line was "this won't raise your taxes."  Bottom line was it stopped taxes from going down, far be it from a politician to do with less of our money.  It passed in the election.  Are they still cheating us?