The Food Chain

When I was in school, I remember learning about the food chain. An animal eats a plant, then a bigger animal eats that animal, a bigger animal eats that animal, and so on. Plants get their energy from the sun so in the end, you can trace all life back to the sun. Even though a coyote eats only meat, you can trace his energy back to the sun by following its food chain.

The government food chain is that all government revenue can be traced back to the individual. Our politicians often play the game of making you think that someone else is going to pay for this program but it can all be traced back to the individual. Let me illustrate with a few examples:

1) "We're going to pay for this by taxing big corporations" - Corporations are in business to make money and to be viable in the marketplace, you need to show profits that are consistent with others in your market. When governments collect revenue from corporations, this eventually gets passed onto the consumer through higher prices which is a tax on the consumer.

2) "We're going to pay for this by taxing the rich" - Rich people don't just put their money under a mattress. They buy things (houses, yachts, cars) and they invest. Both of these activities create jobs which helps the overall economy. When the rich have less money to spend due to taxation, there is less money in the economy for jobs which ends up being a tax on individual workers.

3) "We're going to pay for this through savings in other programs" - Currently, Medicare reimbursement rates are not sufficient to cover the costs of treatment so hospitals and doctors charge more to the non-Medicare patients to make up the difference. If the government chooses to further reduce Medicare reimbursement rates, costs will go up for everyone else and treatment options will go down for the Medicare patients. Both groups of individuals lose in this case and end up paying this tax. True savings that can really reduce costs need to come from efficiency and productivity gains in the system.

Therefore, when you hear some politician tell you that this program won't "cost you a dime", remember that all government revenue can be traced to you eventually. Just as all food chains can be traced back to the sun, all government revenue can be traced back to the individual. Think about that when being sold a new government program - if it were my money, would I spend it on that? In the end, it IS your money so spend it wisely :-)