Fix It Yourself

A recent survey shows that the average America spends more in taxes than in food, clothing, health care, electricity, and phone bills combined. These stats are for 2018 but they aren't all that new either. A web search shows similar headlines from previous years. I noticed when I first started my career that I was paying more overall in taxes than my rent, utilities, and groceries combined. That is, I was working not just to provide a household for myself, but also the equivalent of another household for someone else.

Even then, taxes seemed like a burden that would be better avoided if possible. Today that sentiment is even more urgent, as it has become more apparent how much of those tax dollars are against are own interests. We now suffer double taxation, as our hard-earned money is taken and then used as a weapon against us. Many have thought of ways to reduce the amount of their wealth that goes to the government. Many rich people hire expensive tax lawyers to reduce their burden. One of the reasons I drove my old car for so long was I didn't like the thought of writing that big tax check at the DMV. But that was not the best approach.

Most of the money that gets auto-deducted from our paychecks goes to Washington. When you count all the different taxes that get taken (including the hidden ones, like the half of your social security bill that your employer foots) it amounts to around a quarter to a third of your income that never even makes it to the bank. By comparison, a 7% percent sales tax that goes to state and local coffers doesn't seem so bad. Neither does the annual real estate tax that the city collects, which mostly goes to fund local school and cops. Generally, the more local levels of government give us better rates of return for taxes paid. (It is negative for federal.) Unfortunately, the collection scheme is inverted and we send the largest chunks away to the state and federal capitals.

As far as taxation goes, it is preferable to purchase merchandise than to hire labor, because the tax rate is lower and funds are more locally held. It is even more preferable to purchase real estate. This is a common choice we make when home repairs are needed. Often, the cost of labor to hire the job out and the cost of materials & tools (assuming you don't have them already) are similar. From a position of purely tax incentives, it is better to buy the tools and do the work. If I buy $100 of labor, the laborer will only keep ~$70 and the crooks in Washington get $30. If I buy $100 of tools, ~$7 will go to the state and city, while I keep $93 of tools for myself. So, for $100 I can get $70 in labor or $93 in tools.

Much of the benefit of specialization of labor is eroded by high income taxes. In an ideal world, if I make $30 an hour writing blog posts and another guy wants $20 an hour to mow lawns, I should hire him for an hour at $20 and I'll come out $10 ahead by working. However, after taxes I only take home $20, so there is not really a financial incentive. Further, the lawn mower - if he's keeping his books in order - will pay a third too, only keeping $13.34 for himself. Thus, my hour of work has only gained me $13.34 worth of labor. I'd be better to not work that hour and to mow the lawn myself and gain the market value of $20 worth of labor.

I rarely hire work done in the house, largely because I've learned there's no benefit in hiring someone else to screw something up that I could screw up myself for free. According to the comment section on a recent ZMan post, others see similar trends:

1. It is hard for homeowners to find competent tradesmen
2. It is hard tradesmen to find competent employees
3. Middle class homeowners increasingly hire out all aspects of home repair and maintenance

I can attest to #1 and #3 through direct experience and observation, and I'd say it's a symptom of our collapsing society, which is where a society can no longer maintain its level of complexity and must revert to some previous level. Homes and automobiles have gotten more complex, but finding anyone who can maintain them is getting ever more difficult. Thus we have complex but poorly maintained dwellings which result in all sorts of costly repairs. The cost of losing sight of traditional virtues (like self-reliance) and promoting a diverse populace is that the quality of life will decrease as the new population is unable to maintain the old neighborhoods. The best bet if you want your home maintained properly and don't want to pay the high prices caused by taxation and scarcity of competence: fix it yourself.