Thursday, September 30, 2010

What Stuff Costs

I have some strong feelings about taxes and tax cuts, ranging from the closing of our local pool to the shabby shape of roads in my hometown. Some of this stuff may come out in the blog at a later date…but, today, I just want to share a tip-of-the-iceberg fascination with what stuff costs, and a breakdown of overall percentage of income represented by those costs.

So, okay. Taxes. At a ridiculously simple level, an argument about taxes can be stated as one of opposition: Conservatives are identified with "smaller government/less taxes," while Liberals get painted with a "bloated bureaucracy/more taxes" brush. Whatev. For this argument, those over-simplified definitions don't really matter. What matters is what stuff actually costs, and how cheap you can get those things.

Why I care about this is that, let's face it, there are just some things that we all kind of "need," and there reaches a point beyond which you simply can't get those things any cheaper. For the purposes of this blog, I'm comparing a fictional schoolteacher who makes $50,000 a year with a CEO who makes $5,000,000 a year. We're only talking base numbers, here, again, for the purpose of comparing a percentage-of-income investigation. Okay? Here we go.

This is for a married family filing jointly, and figuring ZERO DEDUCTIONS. I'm just going on raw numbers here; other stuff complicates things to the level of…well, to the level of the federal tax code, I guess. A family making $50,000 a year falls into a 15% tax bracket, whose tax of $6,663 actually represents 13.33% of their earnings. Same family, CEO-style, making $5,000,000 a year would pay $1,720,308 in federal income tax, representing 34.41% of their earnings. All other things being equal, that leaves our teacher-family with $43,337 and the CEO richies with $3,279,672.

Onward. I didn't even TRY to figure out housing costs for these two opposites, but let's say they're both home-owners…or, snidely, mortgage-owners. That is to say, neither are renters. Let's outfit that house, shall we? Since both families have to mow their lawns, they'll need a lawn mower. Our teacher goes to Sears and buys a Craftsman walk-behind push mower for his small yard, paying $150. That represents .3% of his earnings. Our CEO, with a much bigger yard, needs a rider: still at Sears, he shells out $6,000 for a comparable Craftsman model…but, that only comes in at .12% of HIS earnings.

Both houses need some new appliances. Still at Sears, our teacher buys a 14.4 cubic foot white refrigerator and a standard 30" white stove (gas or electric). 'Fridge runs $460 (.92% of his income) and the stove is $268 (.54%). Mr. CEO can afford stainless for both, a 21 cubic foot 'fridge and a whopper 48" stove, dual ovens, the works. 'Fridge is $2,635 (.05% of income) and the stove is a formidable $10,639 (.21%). Oh, and wonder of wonders, the water heater in both homes conked out at the same time! For $259 (.52% of income), the teacher gets a 30-gal. unit, while the CEO spends $1,600 (.03%) for a 50-gal monstrosity. Of course, it should go without saying (but, I'll say it anyway) that the cheaper appliances aren't Energy Star rated, while the more expensive ones are…and, on a sliding scale, so that the more expensive the appliance is, the better its Energy Star rating. Which, of course, makes a big difference in your electric bill every month.

Multiply this out across everything that everyone needs. A new roof. A car to get to work. Gasoline and insurance for the car. Groceries: milk, eggs, ground beef, bread. Sure, maybe the CEO buys super-expensive Horizon organic milk and cage-free eggs…but, at the end of the day, the teacher needs those things too, and even the cheapest versions eventually reach a "rock-bottom" point. Beyond that, they just don't come any cheaper.

What I'm saying is this: you may think taxes suck. You may call them "unfair." But at the end of the day, there are things that we all need, and those things represent a bigger percentage of overall earnings for the "poorer" earner than they do the "richer" one. To wit (and with only a small dose of irony): it's CHEAP to be rich! The stuff that you need, from lawn mowers to milk to gasoline, represents a much smaller percentage of your income than it does for someone who is…hell, who isn't even really POOR, but maybe just lower-middle class. Now, how do those costs (and associated percentages) feel to someone who really IS poor? When we talk about a sliding scale for taxes, and the idea that wealthier people can afford to pay more…it's because they actually can.


Post a Comment

<< Home