Hiya Goatsters, While the world was absorbed by yesterday's Islamic Jihadist attacks, the Maine House Democrats voted to blow up the Governor's bill to terminate Maine's Estate Tax. This got me arguing with a number of my "you don't need all that, so we're going to take it" friends, which got me thinking about taxes in general. I'd like to illustrate some of my thinking using the pub as a chalk board. A flat tax is like the 8% sales tax you pay on beers at The Goat. 8% on the first, the last, and every beer in between. Everyone, regardless of income, pays the same rate. This isn't fair, say some, it puts a larger burden on those with less disposable income since the 24 Cents tax per Bud Light is a greater portion of their salary than it is for their better off buddy sitting on the next stool. I would concede that point if it weren't for the facts that; 1) The more affluent buy beers that cost more and so pay a higher total tax, for example, the tax on a Delirium is 64 cents. 2) The rich buy more beers and pay more total taxes simply to numb the pain of listening to the whining by the less prosperous over how expensive the Bud Light is and how for the price of two beers at The Goat they could have gotten a six pack at the supermarket and also only paid 5.5% tax on it. A progressive tax would be if everyone paid no tax on their first beer, 14% on their second and third beer, and 40% on every beer there after. Obviously, those who could afford more beers would be paying an increasing share of their incomes with each beer purchased. And that's a good thing, right? Not so fast, poor minorities would complain that it was racist since it unfairly discourages people of color from having the same amount of beer as wealthy white people. Like a lot of taxes, it could be claimed that this progressive tax might serve to modify people's bad behavior too; In theory people would be more likely to only have one beer so their tendency to drive home while over the legal limit might lessen. Except, here's where the law of unintended consequences kicks in. Rather than reducing drunken driving, a progressive tax might increase it since one beer is never enough and people would want to avoid paying higher taxes on additional beers. Instead, they would drink one beer at The Goat, hop in their car, drive up to The Depot, get back in their car, drive down to The Seadog... and so on. Another way a progressive tax might work at The Goat; Let's say Bernie Sanders is drinking beer at The Goat one day (highly unlikely, I know). We all know that Bernie has a net worth of around half a mil... pitiful for a politician, but still that's about ten times the net worth of the average Goatster. So we charge Bernie $9.75 for a Bud Light and reduce the cost of everyone else's Bud Light by fifteen cents.... Until Bernie leaves, which won't be very long, he's old and has an early bed time, plus he wouldn't like being milked like a Vermont Holstein just for being wealthier than average. Now, An estate tax is like that guy who has a couple beers, pays the sales taxes on them, then decides he can't drink his last because his wife called and told him to come home. So before he hands off his last untouched beer to his buddy, lawyers and accountants (at $200 an hour) are summoned to determine the exact value of that beer and then the Federal government swoops in and charges him $1.20 (40% of the Estate) and, tagging along, the Maine State tax guy nails him for another 24 cents. By the time his buddy receives his inheritance, it's warm and has gone flat. Unfortunately, property taxes can't be discussed in the context of this essay because, as they say, you never own beer, you just rent it. Live music this weekend features the amazing Bread And Circus on Saturday night for a show that starts around 8:30. Catch a quick preview here: Friday we will be showcasing Jazz artist David Lawlor at 7:45. See you at The Goat, Scottster
