How many times is a dollar taxed? A dollar is just a piece of paper; its only value is an agreement. It is a medium we use to trade value. A dollar represents a certain amount of value. If you produce a product, it is worth what people are willing to pay. You sell your product for a certain amount of dollars. For example, if you go out into the woods, chop down a tree, and use the wood to build a table, you have converted your effort into creating a product. If you sell that table for $100, your time and effort are worth $100.
For example, we’ll assume every sale has a 7% sales tax, and everyone pays 25% in income tax. If you have to pay a sales tax of 7%, you only have $93 left. After income tax, you only have $69.75 of the $100 you created. When you spend that $69.75, the retailer you spend that money at faces the same 7% sales tax and 25% income tax. Now, only $48.65 of the original $100 you created is in the hands of the public, and $51.35 produced is in the hands of the government. This is after only two transactions. How many times does a dollar change hands in a year? Hundreds?
The original value produced $100
After one transaction, there is only $69.75 left in the hands of the people.
Two transactions – $48.65
Three transactions – $33.93
Four transactions – $23.66
Five transactions – $16.50
Six transactions – $11.51
Seven transactions – $8.03
Eight transactions – $5.60
Nine transactions – $3.90
Ten transactions – $2.72
Eleven transactions – $1.90
Twelve transactions – $1.32
Thirteen transactions – $.92
Fourteen transactions – $.64
Fifteen transactions – $.44
After just fifteen transactions, $99.56 of every $100 produced by American citizens is now in the hands of the government. This is if the dollar is only spent once every 24 days a year, yet money changes hands far more often. Most Americans would be furious if they realized this is a significant reason people cannot afford the standard of living they used to have, and many are too young to know how it used to be. The WWII generation had large families with single incomes. It wasn’t uncommon for a man to be the income earner for the home, have a stay-at-home wife, and have anywhere from 4 to 8 kids. Today, many families have two income earners and can barely afford to have 2-3 kids.
Americans struggle to survive while bureaucrats and their cronies are becoming multi-millionaires. Could it be because nearly all we produce ends up in their hands?
For Americans to return to the standard of living enjoyed in the past, the people must place hard limits on taxes (well below the point of diminishing returns), the size of government and prioritize investigating government corruption. Perhaps a Bureau of Government Corruption Investigation should be formed.