After 18 Years, Conrad Burns STILL Doesn’t Understand the Tax System

Bear with me here – it would help we who pay taxes to understand the tax system a little better – at least to understand it better than Senator Conrad Burns. After eighteen years in office, he still doesn’t see how it works.

If you want to know how working people pay the freight while the rich get a free ride, read on.

From the Billings Gazette, December 1, 2006, Burns Vows to Stay Active in State Affairs:

Burns told farmers he believes taxes on the wealthy are too high.

“Everyone says you have to tax the rich and give to the poor. If you’re into wealth redistribution, that’s fine,” Burns said. “How much class warfare do you need?”

Burns, long funded by big-money donors has, after eighteen years, adopted their world view. Though not wealthy himself, he sees the world through the eyes of the wealthy. He doesn’t see that working people pay more tax, at every level, than wealthy people. He doesn’t understand the tax system.

Here’s an example – I won’t belabor the fine points – this is bare-bones. Just understand the bottom line:

A single self-employed guy, Joseph P. Schmeau, makes oh, let’s say $65,000. His tax would be (2005 rates) $19,663. That’s 30% of his income.

Let’s change the example – let’s say Joe Schmeau is a child of wealth, that his grandmother left him stocks, and he lives off income from stocks. Say that he makes the same $65,000 that way. His tax would be $5,773, or about 9% of his income.

That’s all you need to know – Joe Schmeau, working stiff, pays almost three and one-half times as much tax as Joe Schmeau, child of wealth.

And Burns can’t see it. He thinks we’re being unfair to children of wealth. He can’t see it because he was captured by wealth and learned to see the world through the eyes of wealth.

There’s more – there are tax breaks available to the wealthy the rest of us know nothing about. There’s a movement out there on the right wing to eliminate the Estate (they call it the “Death”) Tax. That’s the tax rich people pay on their assets when they die.

Here’s another example, once again bare-bones, to illustrate the point:

Joe Schmeau was the child of Cinderella Schmeau. Cindy was smart and lucky, and bought IMB stock when it was cheap. When she died it was worth a million dollars, and she left it all to Joe. Because it was only a million dollars, her estate would pay no tax under the current limits. Joe would inherit the stock tax free.

Joe hangs onto it. IMB stock increases in value over the years, and when Joe dies, it is worth $10 million. That would have generated an Estate Tax in 2006, but because Conrad Burns thought the “Death” tax was so grossly unfair, he voted to eliminate it. So when Joe died, no tax was paid on the value of the stock – $10 million. That’s how Conrad wanted it.

Cinerella Schmeau never paid a dime in tax on the increase in value of the IMB stock, and neither did Joe. Together, they accumulated $10 million in wealth without ever paying one penny of tax.

Were that wealth to be accumulated by means of labor instead of investment, it would have been taxed at every turn at the highest possible rates. Half of it would be gone. But Conrad Burns thinks that the current tax structure is unfair to wealthy people.

That’s Conrad Burns’ world. He sees the Estate Tax as unfair, and is painfully unaware of the current rates of taxation on the income of working people.

But that’s what happens when you see the world through the eyes of wealth. And that’s what happens to people when they’ve been in office too long – they see the world through the eyes of their benefactors. For so long as rich people pay for campaigns, they will own our politicians, just as they owned Conrad Burns.