MasterPo says: This blog is about topics and issues that are of importance to me. I am not one of the countless blogging lemmings that are tripping over each other scurrying down the hill and off the cliff of blogging oblivion trying to write the greatest blog on the latest topic de'jour. Your comments are welcome.

October 29, 2009

Affordability Does NOT Mean "Rich"!

For some years now there has been a growing state of thought in this country that is a person can afford to buy something they must be "rich" in the sense they have more money than just the purchase price. So if someone buys a $1,000 item, the thinking goes, they must have more than just a thousand dollars.

For example, in the current so-called healthcare reform proposals people with high end "Cadillac" health insurance plans will be required to pay a tax on them. That presumes people with such coverage can afford to pay the insurance premiums plus a tax on it!

Another example: Back in the 1980's a "luxury tax" of 50% was imposed on items such as boats.

This presumed that someone who could afford a nice boat had extra money to pay a 50% tax on it at the time of purchase! In other words, if you have the money to pay $50,000 for a new boat then you must (so the philosophy goes) have an extra $25,000 to pay the luxury tax on it!

This thinking is patently not true!

Like most rich vs. poor philosophies, this one fails on several accounts.

It doesn't take into account the possibility the buyer may be spending every last penny they have to afford whatever the product (or service) is. The person may have saved, scraped by, borrowed every penny they could in order to be able to make the purchase. There simply is not any more money to pay a tax with!

Or, it could be the person has made the decision to cut waaaaaaay back on other expenditure in order to have the money to pay for this product or service. In their decision process this thing is worth the reduction in purchases of other items in order to be able to have the funding.

Or, it could be the person is working extra long, extra hard, maybe even a second or third job to be able to have the money to buy whatever. To them the product or service is worth the additional work effort to get the money to have it.

Or, it could also be the person really can't pay for whatever in the long run and will eventually need to sell it or discontinue the service. But at least for a little while they have it.

Whatever the reason, the fact remains that just because someone is able to purchase something does not automatically mean they have additional funds to pay big taxes on the product or service. Such think only serves to continue to foster the notion that "the rich" have been and always will be "rich" regardless of what government forces them to pay.

Even "the rich" don't have money coming out their butts!

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