Why You’re Poor

Philip writes:

I can’t seem to get ahead. Everybody around me complains about high gas prices and food prices, but I was having trouble even before all that began. What’s the secret to the American dream?

It’s easy to see who chooses their daily thoughts based on TV broadcasts and news services. Suddenly, the reason nobody can make ends meet is that gas is expensive and food prices are up.

The true reason most Americans can’t make ends meet is that they pay too much in taxes and receive little in return. Getting around taxes is a major part of finding the American dream, which is ironic. Whether doing so is moral or not is up to each person to decide, but you can be sure that most rich Americans have decided that it is.

Let’s look at the taxes paid by an OB/GYN doctor in Sano, Japan, where I live. Then, we’ll compare what she would pay on the same income in America.

She earned last year 16.1 million yen, which is $149,000 at the current exchange rate. She paid $22,600 in income tax and another $11,000 in residential tax. After filing, she received $1,100 back.

Total annual gross income: $149,000
Total annual taxes paid: $32,500
Total annual net income: $116,500

Let’s say she moved to Los Angeles to do the same work there at the same annual gross income. She’d pay $33,400 in federal income tax then another $13,900 to California.

Total annual gross income: $149,000
Total annual taxes paid: $47,300
Total annual net income: $101,700

Per month, she pockets an extra $1,200 per month in Japan by the raw tax numbers alone. That buys a lot of gasoline and food, even at current prices.

But that’s not the end of the story. What does she get for her taxes paid in each country?

In Japan, she gets health care, car insurance, and retirement.

In America, she gets bank bailouts, Social Security for other people but not her because she’s still young and it will be gone by the time she retires, and the world’s most expensive military that was unable to defend the World Trade Center but was able to invade a country that had nothing to do with the destruction of said trade center.

So, after paying her lower tax amount in Japan, she has only basic bills left. In America, after paying her extra $1,200 per month in taxes, she still has to go out and get health insurance, car insurance, and scrape together something to retire on. What do those three items come to?

Health insurance costs vary, but let’s say she pays $300 per month for that, another $100 per month for car insurance, and then puts away $200 per month for retirement. That’s another $7,200 gone per year to buy services that American taxes do not cover. That brings her annual net income in Los Angeles down to $94,500.

In sum, she loses just 22% of her income to Japanese taxes, which cover most of the basic necessities of life. She loses 37% of her income to American taxes and the services not provided by those taxes.

This is a good clue as to why you can’t get ahead.

For another one — if you don’t mind foul language — listen to the late, great George Carlin:


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