The American Dilemma and How We Can Fix It

Posts tagged ‘Income tax’


The Constitution, as amended four times, makes it very clear that we consider the right to vote as inherent in those Americans who meet the standards that we have set for eligibility.   No other issue in this document has been addressed and revised so many times.

Over the years we have set to strike down those rules which deny the franchise because of race, financial condition, sex and age.  We have attempted to include as many Americans in the process because it is our belief that in a republican democracy we should hear the voices of as many citizens as possible.

The governed should have the right to select those who govern.  This was the principle which caused the Boston Tea Party and which ultimately brought about our break with King George III and our becoming an independent country.

In an earlier post I addressed the question of whether meeting the current criteria is enough to qualify a person to cast her or his ballot.

In that post I posed the question, should a person who doesn’t have an equivalent knowledge of the fundamentals of American governance and our current political leaders to that which we require of immigrants seeking citizenship, have the right to vote?  Constitutionally, the answer is yes.  But is that wise or is that a good principle?

This may surprise some of my readers, but I think that the concept of restricting the vote only to those who are qualified may have a great deal of appeal to our more socially liberal friends.  How many times have you heard the argument from those who are “Pro Choice” that rules for women should not be established by men?  They don’t have any “skin in the game” – if you’ll pardon the expression.  So I think that this post will appeal to people on both sides of the social spectrum.

I started thinking about this the other day because the son of one of my neighbor’s works at a Native American casino in California.  We were discussing his responsibilities and duties with his employer when I asked the question, “Do the Indian casinos pay Federal Income Tax?”  My neighbor didn’t know the answer to that so I started to research the question.

The answer is that they do not.

Because the casinos exist on “Sovereign Land” they are exempt from the laws regarding the payment of Federal Income Taxes that the rest of us enjoy.  Why they are required to pay a portion of their revenues to the states in which they are domiciled in contravention to the principle we have established at a Federal level is an issue of some confusion to me.

In theory and I’m sure in practice as well, these are enterprises which are run “in trust” for the members of each tribe – a sort of co-operative arrangement.  The massive profits are annually distributed to members of the tribe in the form of “dividends.”

Needless to say, without the obligation to pay Federal Income taxes on their take, puts these casinos at a distinct advantage over their competitors – companies like MGM Mirage and Harrah’s.  Their cost of doing business is significantly lower.

It is precisely for this reason, more favorable tax treatment, that so many American corporations have chosen to conduct many of their operations in overseas environments with more beneficent tax laws than we have in this country.  It is the reason that so many U. S. dollars stubbornly remain overseas instead of being repatriated.  But that’s an economic argument that we’ll save for a later post.

The real question is, should the tribal elders running these operations have the right to vote for those in Congress and for President who enact and sign laws into being including tax laws from which they themselves are exempt through treaty?  This is essentially the same argument that my “Pro Choice” friends make regarding men enacting laws governing women.

Frankly, I have a great deal of empathy for our Native American brethren.  They, perhaps more than any one group, have been victimized throughout the history of this country until recently.  But clearly they do not have the same onus on them to pay taxes on their casino enterprises and that brings to mind the spirit of the Founding Fathers who believed that only the governed – those who were subject to the law – should be entitled to vote for those who made the law.

Of course, this thinking leads to a far more sinister and wide-reaching issue regarding those who do not contribute anything to American society through the payment of Federal Income Taxes – the nearly half of our population who are now in that condition.  Should they have the right to determine how much “the wealthy” or the remains of the “middle class” should pay to support them?  Should those who are contributing to society only by taking from it have the right to vote?

I leave that question to my astute readers to debate and look forward to hearing your comments.


I believe it is a fair statement that none of us likes to pay taxes – whatever form they take.  If you’re lucky enough in this economy to have a job, you find that when your paycheck is handed over to you it is significantly lower than the amount that you grossed that pay period.  That’s part of the problem with making money.  In fact there are four problems with money, all of which relate to the imposition of paying taxes.

1) You make it and they tax it (Income Tax, FICA Tax, Medicare Tax, State Income Tax).

2) You spend it and they tax it (Sales & Use Taxes).

3) You save it and they tax it (Income Tax, Dividend Tax {already taxed once to the company in which you hold a few shares of stock}).

4) You die and they tax it (Inheritance Tax).

Now while in the world of Presidential ads the focus is on who is paying income taxes and at what rate, we ignore one very important fact.  That conversation is lost on almost fifty percent of the population who pay nothing in Federal Income Tax.

But there is another form of taxation which affects virtually all of us – whether we are working for a living, retired and spending our savings or are on welfare.  That is the issue of state and local Sales and Use Taxes.

Just for purposes of definition a sales tax is imposed in forty-six states on purchases of goods and in some case services which are purchased within and delivered in that state.  Use tax is a tax that the state looks to collect  for goods, which if they were purchased in the state, would be subject to the sales tax.  But in the case of a use tax, the vendor operates outside the state and delivers its product to a purchaser within the state.

Even though the vendor does not collect a sales tax, a use tax in the equivalent amount is supposed to be paid by the purchaser.  The system of collection depends on the honesty of the purchaser to report his purchases and pay the appropriate tax.  Probably ninety-nine percent of this tax goes uncollected from individual purchasers.

So those of us who have ever purchased anything from Amazon or any other vendor who have not charged our state’s sales tax should examine our conscience before we cast aspersions on those who we feel are not paying their fair share.  Did we comply with the law and report these purchases to our state’s governing tax authorities?

We generally refer to our Federal Income Tax Code as a “progressive” tax system – in that higher income is taxed at a higher rate.  By contrast, the imposition of a sales tax is, by its nature a regressive tax system because it uniformly charges the same rate to all purchasers irrespective of income level or ability to pay.

We know that the proportion of their income that the poor pay in sales tax is significantly higher than the amount the well-to-do pay.  And the worst form of this discriminatory tax is that it is borne by the poor who live in states where food intended to be used at home is taxed.

Thirty-one states and the District of Columbia either have never imposed a sales tax on food purchased for home consumption or have abandoned it.  Interestingly, two states closely associated with President Obama, Hawaii and Illinois both tax food.  This tax on food is the most regressive and discriminatory tax on the books because it most adversely affects the poor which includes a significant portion of the black and Hispanic communities.

With all the talk about “tax equity” on a Federal level, I cannot help but wonder why the President, during his tenure as an Illinois State Senator never addressed this question, never proposed a repeal of this tax, never did anything that would have benefited his constituents.  Is this the caring, understanding President that former President Clinton is now championing – the “man with a plan,” as the ad states?

I happen to like former President Clinton.  How could you not like a man who during his impeachment trial based his defense on the definition of the word “is”?  I mean that shows chutzpah to the nth degree.

I only wish the current resident of the White House had as much moxie.  He didn’t when he represented my Chicago district while in the Illinois Senate.  We never heard so much as a peep from him when he represented the people of the State of Illinois in the U. S. Senate.  And as President – if what we’ve seen over the last four years is a plan, I would suggest that based on all the economic evidence, it is a plan to fail.

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