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Some politicians and local activists were anxious to punish "gouging landlords" and "rental robber-barons". They figured that they could play Robin Hood and redistribute some of rich landlord's profits to "needy".
Now my friend's costs have gone up. So what did he do? Naturally, he raised rents to cover cost of additional tax. And since it is easier to accept a reasonable rent increase than to move, his tenants stayed put and paid more.
Ironically, most of his tenants are same people who politicians and activists consider "needy". So now government takes an extra $20 a month out of their pockets through "tax on landlord".
If tenant is on an assistance program they may get some of this money back. Of course amount they get back will be reduced by expenses and administrative costs for government to collect, control and distribute money.
So who really paid for this tax? The landlord? No, in end it is always people - you and me.
All taxes are paid by citizens themselves, regardless of whether they are paid directly, as in sales and income taxes, or through increased prices of products and services, or through "fees" imposed by governing agencies. How does your car registration "fee" differ from a tax?
Not only does each citizen directly or indirectly pay every penny of tax money that is collected in this country, but most people's perception that "rich" and "corporations" don't pay their "fair-share" is accurate.
These people and businesses can afford to pay an attorney $10,000 to show them how to save $500,000 in taxes. Most likely, you can't. The tax laws are made with loopholes for "rich" and for certain businesses.
Part of this is because it is these people who own or control majority of property in this country. And no progress can be made with out a significant investment of capital. If these people and businesses are given right reasons to invest their capital (such as tax breaks) economy will continue to function and grow.
If they are overburdened with taxes they will either move to Bermuda or start a cycle of inflation by raising prices. Either way, you, Joe Citizen, will end up paying more either directly in form of taxes or indirectly as your cost of living increases.
It is a double-edged sword. Joe Citizen wants "rich people" and businesses to pay their fair share (though Joe does not realize that he ends up paying it anyway) but government knows that they can't kill golden goose (and economy needs a good "goose" every once in a while).
So tax laws and regulations are passed which seem to target "rich people" and businesses but with enough loopholes so that no real tax increase occurs. And politicians can blame other party for loopholes. But both know this is business as usual.
Make Joe Citizen feel good about paying his taxes by raising taxes on "rich" and "wealthy corporations", but give them loopholes so that little more is accomplished than adding another volume added to tax code.
And Joe Citizen continues to pay his taxes each year.
© Simple Joe, Inc. David Berky is president of Simple Joe, Inc. One of Simple Joe's best selling products is Simple Joe's Money Tools - a collection of 14 personal finance and investment calculators. This article may be freely distributed so long as the copyright, author's information and an active link (where possible) are included.