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Producers vs Takers – if takers win, we all lose

A village of 100

Let’s boil America down to a village of 100 people. They can easily be broken up into two basic broad brush camps — those who Produce — and those who Take from those who, you know, Produce. Let’s look at some undisputed facts about America’s population as it relates to Takers and Producers.

The Producers

We’ll start with who pays 70 percent of all personal income taxes. That would be just ten of the villagers. Let that fact sink in a bit before continuing. I, and many of my good friends are part of that group. Know what hurts, but more than that, galls? Those same ten people provide a super majority of the jobs in the village. Jobs providing food and shelter for their employees. So, let’s review what we know so far. Ten percent of our village’s population pay 70 percent of the taxes, AND provide by far, most of the jobs in the village.

Yet, many, somewhere between just under or over half of the villagers, claim those ten people aren’t payin’ their fair share. Think that’s a bit cheeky do ya? It gets better, much better.

46 of the villagers don’t even pay taxes. Hmmmmm. They love the current system. Are you surprised? In fact, they elected a new leader not long ago who sided with them completely. Those greedy Producers, all they wanna do is make more money and pay less than nearly 3/4 of all the village’s taxes. Yeah, they provide most of the jobs, but all that does is make ’em richer. Are we gonna stand by and let that happen?!! NO! Let’s make ’em pay more taxes, till at least they’re payin’ their fair share.

The Takers

The 46 villagers benefit from all that taxes pay for, without contributing. Water/sewer, education, electrical power, and the rest are all paid for by, well… not them. They take all those benefits though, and with a sense of righteous entitlement. They’re also horrifically close to achieving a plurality in the village. It’s been comin’ for some time now. If they can just convince a few more neighbors that the strategy of livin’ off the bounty of what they’re able to steal vote into tax law, taking from Producers, they’ll have finally won — and probably for good.

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Which means sooner, much sooner than most realize, the village will end up with roughly 85 villagers, give or take. Most, if not all the ten who were payin’ 70% of the taxes? They’ll simply stop producing past the point of supporting their own families — or flee the village outright. A few others who make a bit less, but much more than most, will do the same.

California

It probably woulda been more accurate to have begun with my native state as the analogy, instead of America. It’s much farther along the path of ultimate economic failure. The Producers are leaving at an unprecedented rate. As mentioned above, fleeing would be the most accurate description. How else would you describe a family with multiple generations rooted in the state, leaving friends and family behind? Why would they choose to experience the financial and emotional upheaval that extreme option brings to bear?

The Takers never learn. What they know for sure, is that livin’ off producers has been workin’ most of their lives. Why change now, and mess with something that’s ‘produced’ such reliable results for so long? Indeed — why?

California recently exhibited this blindness towards reality. Since their Producers, people like you and me, plus hundreds of employers are racing to the nearest exits, they decided to tax Amazon’s ‘Affiliates.’ Now, Amazon has no presence in California. But, as the Taker role model state, it behooved them to tax California residents who were part of Amazon’s Affiliate program.

Amazon’s response was like Paul Revere — The Takers are coming!!

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They immediately fired all California Affiliates. Boom! Tax that, California. Know what 100% of nothin’ is? The so-called Golden State just found out in real time in front of God and everyone. In fact, they just did a humiliating u-turn reversing that law, but with a condition. (laugh track inserted here) Amazon had to agree not to continue signing folks up to put a new proposition on the ballot that would’ve ended this forever. As it stands, the new law is only good for a year, as I understand it.

The real question

Anyone with an IQ of three digits, all of which are whole numbers to the left of, and before  hittin’ that pesky decimal point, can see the trend of our village.

Are you a Taker? Or are you a Producer? We’re all about to find out there is no middle ground. When there’s nothing left to plunder, the Takers, in a final act of abject ignorance, will blame the Producers. A crime when you think about it, especially when there are so many mirrors available.

When the Takers win, we all lose.

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Written By

Jeff Brown specializes in real estate investment for retirement, has practiced real estate for over 40 years and is a veteran of over 200 tax deferred exchanges, many multi-state. Brown is a second generation broker and works daily with the third generation. With CCIM training and decades of hands on experience, Brown's expertise is highly sought after, some of which he shares on his real estate investing blog.

31 Comments

31 Comments

  1. Erion Shehaj

    September 26, 2011 at 9:35 am

    The premise you started with is incomplete and it represents only half of the equation. The portion of the overall taxes paid by the top ten percentis a function of the fact that they make over 90% of the total income. This is after all an income tax… Put differently a tax on income. The more you make the more you pay. Just like the more you make the bigger your tax benefit when taxes are cut.

    As far as the portion of people that pay no taxes, there are several subgroups in that. First you have retirees on social security making under $20k a year. Even without a mortgage and income taxes its hard to make it on that. Second you have other folks working full time jobs and making the same. Same issue.

    The way I look at this debate is this: if we are trying to undo the deficit mess we are in, we need to reverse some of what created it. And that is, entitlements (reform), tax cuts (increase) and wars (wind down).

    What say you?

  2. Jody Cowdrey

    September 26, 2011 at 9:45 am

    Unfortunately, you can't "boil down" our country into a population of 100, and even further by some imaginary dividing line between good people and bad people. Using the phrase "undisputed facts" with such a generality is ridiculous.

    Until we, as a whole, start looking at reality instead of sticking our necks in the sands and pointing fingers, nothing will change. If there were in fact 100 people in America, simple solutions might work, but not with a population of 300+ million.

    As "Producers", a more "productive" route would be finding real solutions instead of "taking" the typical emotional talking points and rehashing them, but if you're set on having winners and losers with no grey areas, then I'm afraid your as much, or more, a part of the problem as anyone.

  3. Kim Hannemann

    September 26, 2011 at 10:24 am

    Right on, Jody and Erion. Exactly.

    I have heard Jeff's tired argument so many times, and it's so incomplete and inaccurate. I, like Jeff, also pay taxes – income taxes, in addition to all the other taxes that EVERYONE pays – but I, like Warren Buffett and unlike Jeff, believe higher income earners should be paying more relatively speaking.

    And that is the likely extent of my similarities to Warren Buffett, in case you were wondering.

  4. Jeff Brown

    September 26, 2011 at 11:02 am

    I stand by the post without reservation. Taker Nation is now being heard from via comments. They're welcome.

    The only question I have for them is:

    Considering the Taker slant in our federal gov't the last 50 years, and the economic trends having Takers in charge of the House/Senate for the vast majority of that period, and having the current Taker in Chief in charge lately – How are the bottom line results workin' out for ya lately?

  5. Timm Eubanks

    September 26, 2011 at 12:25 pm

    I do believe it actually does work with 100 people in a village or 300 million. Mr Brown has simplified for a reason. It seems that the problem is that people (commenters) want to make it more complicated like shell a game. If you tax me anymore as a business owner, I am out of here!! That also means my employees are unemployed. Is that simple enough? Good economic plan! There aren't more in poverty and our economy in the tank because of evil companies but a government that keeps growing and is "helping" people and adding regulations, fees (taxes) to companies.

  6. mike

    September 26, 2011 at 3:25 pm

    I worked roofing for years. my boss brought me back at 9.00 an hour. I was laying shingles that it usually pays at least 15.00. he doesnt do any work. who's the takers again?

    • Timm Eubanks

      September 26, 2011 at 8:25 pm

      Then Mike you worked for a Schmuck! Good, small business owners, who want great workers pay them well and treat them with respect. May I ask, were you ordered to work for him by someone? He didn't do any work? I as a business owner, I find that hard to believe. If that were true, wouldn't you want to start a roofing business?

  7. Jeff Brown

    September 26, 2011 at 4:14 pm

    Um, Mr. Eubanks appears to be a Producer. 🙂

  8. Ryan Schattner

    September 26, 2011 at 4:16 pm

    I don't mind paying taxes based on what I make if it was a flat rate. The problem I have is once you hit a certain point you have to give away almost half of your money. I am in CA and I had to pay something like $15,000 in the "self employed" section. That does not include all of the other normal taxes we pay. I think it would be fair to just pay a flat 15% for everyone instead of jumping all of the way up to 33%+7% federal tax.

    Then again, taxes aren't the real problem. I can hire people in any other country and have work done just as good at 70% lower cost. Good luck creating jobs with that kind of global competition.

  9. sfvrealestate

    September 26, 2011 at 5:54 pm

    Um, Jeff. A few points. At the risk of stating the obvious, we're real estate brokers. That makes us middle men and women. We don't create jobs. And we don't provide a market, so you can't call us "takers" either. Rather, we'd be the parasitic fleas on the producers and takers. Sorry, but true.

    And your 10% paying all the taxes? What about sales taxes? And property taxes? If you consume, and we all do, you pay sales tax. In L.A., it's almost 10%. The producers AND the takers pay that.

    As far as the producers go, do you think they'd have any sort of market for what they produce without the takers? And without a market, would they be producing anything? They certainly wouldn't be selling it.

    And where does Amazon fit in? I did not get this part of your argument at all.

    And who gets their electricity for free? Or their water/sewer charges?

    Jeff, face it. You just don't like to pay taxes. None of us do. But some people (like me) like having our roads paved, our soldiers supported, our food inspected, our pilots supervised, etc.

  10. sfvrealestate

    September 26, 2011 at 6:02 pm

    I forgot to ask two questions: since in the 100-person village, if it fits population demographics, probably 20 people are children who can't work and 10 people are seniors who can't work, can we just get rid of them to help balance the equation? Why support the scofflaws, eh, Jeff?

    And two: if I read AG and don't patronize the sponsors, does that make me a taker or a parasite?

    • Timm Eubanks

      September 26, 2011 at 7:15 pm

      Funny, see using the shell game. The classic, seniors and children. If you love children so much, why not cut federal taxes and fees so one parent can stay home or a single parent can not work as long of hours? As for Seniors, how about letting them keep more their money when they are in the job market so they can have enough for retirement? Why give the power to the Gov't to decide who and how much they will give back to us? You really trust the same people who have scandal after scandal on both sides of the isle to take from you and give to others? We should be able to run the Gov't on much less money. Just the hidden fees sales taxes should be plenty. Here is an example of my actual rental car form last week: 3 days at $65.13= $195.39 / CFC (consolidated facility charges) fees $10.00 / Vehicle Lic Fee 3x.42 = $1.26 / Tourism fee $4.56 / Airport Concession fee $14.47 / sales tax $14.23 for a total of $239.91. Did I mention I had to fill that car up before returning and the local, state and Fed Gov't received money as well? It's not that we aren't taxed enough, it's that our Gov't is pissing away our money. I would prefer to keep my money and help and donate to charities that I trust. My 2 cents, oh crap, they just took one of those cents for tax!

      • sfvrealestate

        September 26, 2011 at 8:42 pm

        Timm, nobody held a gun to your head and made you rent a car. You could have used a Sedgeway. Or hitched a ride with a Producer. Or walked. And what's with the extra "m" in your name? You're unnecessarily using up the universe's supply of "m's," you taker, you!

        • Timm Eubanks

          September 26, 2011 at 9:55 pm

          I love a good come back! Damn that "M"!!! THX! No no one did hold a gun to my head to rent that car. But if I wanted to run my business, I had too. A Sedgeway or walking from Oakland Airport to my photo shoot location 70 miles North with 200 lbs of equipment probably wouldn't work. Do you hitch rides with other Real Estate agents to show homes or do you take your clients on a Sedgeway? C'mon let's both lean!!! 🙂

        • Timm Eubanks

          September 26, 2011 at 10:21 pm

          Ha! I see you are using the extra "f's in the universe. 🙂

  11. Jeff Brown

    October 6, 2011 at 12:42 am

    Hey sfvrealestate — Let me ax you a question. When I hire assistants in CA and the other states in which I do business, what would you call that? Taking? Or — wait for it — here it comes — creating jobs? Real estate brokerages don't create jobs? That statement was either meant in jest or . . . never mind.

    Let's not forget the transaction coordinator who's paid thousands each year for one reason: I'm a broker and created the need for her time and expertise, and must pay for it. Wouldn't ya know it? Another job. Then there's the photographer, who, since it didn't say Red Cross on his forehead, charged me for the shots he took of the listing I was marketing. Another job.

    I'm in Texas as I write this. I'm not the only reason, but a very significant reason why my investment lender in this state had to hire a full time assistant this year. Oops, another job.

    Since I'm not a Raider, or a Taker, I'll avoid the 15 yard penalty, and stop piling on. Geez, Louise, Myrtle. Ya can't make this stuff up.

  12. MikeDevlin

    July 8, 2012 at 4:01 pm

    These statistics are misleading and don’t tell the whole story. They leave out payroll taxes that every worker pays to make sure they will have Social Security and Medicare when they retire, which fall disproportionately on the middle class. And they don’t mention that the share of the nation’s income going to the highest earners grew rapidly in the past two decades – at the same time tax rates fell for the highest earners.
     
    In fact, because of growing income inequality, the top 10 percent of American earners now earns 42 percent of the nation’s income, and when correctly calculated, pay about 50 percent of the federal income and payroll tax burden – not much larger than their share of earnings.

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