Let's limit the discussion to the actually rich, millionaires and
billionaires.
All discussions that I have heard on the subject of higher tax rates for
the wealthy miss an essential point. Yes, it seems to me that the
Republicans
have a valid argument about not raising rates on $ 250,000 wage earners.
Probably most people in that category do invest in the private sector with
the net result being more jobs. Doubtless not true in every case, but
true enough. Also, no-one can fairly claim that the simply well-off have
much
more political leverage than anyone else. For that you need to be wealthy.
Which is the point. The rich have public policy leverage, they not only
vote
in elections, they --in effect-- control votes in the Congress, plus all
50
state houses. And it is because of the protections given them by government
that they were able to get rich in the first place. Take the same people,
plunk them down in the middle of Zimbabwe or Guatemala or Albania
and how rich would they now be ?
In the USA, wealth buys access to political power which is simply
unavailable to all others. Don't even try to tell me that one of the Walton
kids is less powerful than John Q Public in Podunk or Pittsburg. The
Waltons
make a major difference in, among other things, ensuring the continuation
of disastrous free trade policies --which is mostly bi-partisan and
supported
for the same reason in each party, the backing of the rich. After all, free
trade
benefits the rich and essentially screws the rest of us.
Then we get to the rich who are part of defense and other massive
industries.
While it may be the fact that the products they produce may well are
useful,
the fact also is that they have leverage no-one else can dream about,
namely,
the power to persuade law makers to set things up in such a way that
their industries are virtually guaranteed major markets.
In other words, the price the rich should pay for such access to power
are the rates they should pay. About this, the Democratic leadership
had the right idea in principle but allowed their greed to kill any hope
for repeal of the Bush tax cuts. The problem was never families
who earn $ 250,000 --the issue concerns the mega-rich. Schumer
had this figured out but way too late to make a difference in DC.
And so, now the national debt, over the next 10 years unless
there is an outbreak of fiscal sanity in the next Congress,
will increase by about $ 1 trillion.
My humble opinion
Billy
===============================================
Commentary
The 'Tax The Rich' Con, Part IV: Epilogue
Charles W. Kadlec, 12.22.10, 6:00 PM ET
Vice President Joe Biden's claim that this year's failure to raise rates on
individuals with income above $200,000 or families with income above
$250,000 is "immoral" takes the "tax the rich" con to a whole new level of
Orwellian doublespeak. Biden's pious claims of fairness ignore how higher tax
rates empower the political class even as it reduces the ability of those who
seek to take care of themselves, their families, their customers and their
communities without government assistance.
Ignoring this power dimension of the "tax the rich" con is a mistake,
because it overlooks what is at stake: the liberty to lead our lives as we
choose without having to kowtow to government officials.
The claim for moral superiority is, itself, based on a false premise.
Paying taxes is involuntary, and therefore has none of the virtues of giving
of
one's self voluntarily through charitable activities or donations. It is
immoral because it cloaks the desire by liberals and progressives for ever
more control over the income and lives of the American people that has little
to do with taking care of the poor and the less advantaged among us.
Entrepreneurs and businessmen and women in the private sector follow the
profit motive. To earn an income and otherwise profit from their activities,
they must find a way to satisfy their customers first and foremost by
offering a better good or service at a competitive price. The basis for their
success is the search for and discovery of voluntary, mutually beneficial
exchanges with their customers.
The more successful they are at satisfying an ever-growing number of
customers, the greater their income and profits. The more Founder _Bill Gates_
(http://www.forbes.com/profile/Bill-Gates) did not become one of the
richest men in the world by stealing from his fellow citizens, but by
fulfilling
his vision of empowering individuals by making PCs progressively easier to
use and, ultimately, available to everyone.
Those in the public sector no doubt have a similar desire to make the world
a better place. But they follow the power motive. Their ability to address
what they view as unmet needs is achieved by using the coercive power of
government to take from some and give to others, or through regulations and
laws to tell people what they must do or cannot do. The basis for their
success is the expansion of their power--either through spending or
regulation--to impose involuntary exchanges on their fellow citizens.
Within this context of the pursuit of power, we can better see who stands
to benefit from raising tax rates on the prosperous middle class, those
individuals with incomes above $200,000 or families with incomes above
$250,000.
Let's start with the already rich. Higher tax rates reduce social mobility,
thereby protecting the already rich and their children from social
competition. Raising the tax rate on the prosperous middle class makes it more
difficult for these families to pay for their children's college educations,
build their capital and achieve financial independence. In other words, high
marginal tax rates make it difficult for the prosperous middle class to
achieve wealth. By contrast, those who are already rich have the flexibility
and the economic power to maintain their standard of living in the face of
higher tax rates.
Second, lawyers, accountants and consultants see their incomes rise the
more onerous the tax system as they help taxpayers navigate an ever more
complex tax code. High marginal tax rates also benefit the clever and
unscrupulous relative to those who play by the rules and whose income is in
easily
taxed wages.
____________________________________
Third, big business benefits from high rates of taxation. Higher marginal
tax rates reduce the number of potential competitors to knock existing big
businesses off of their perches.
As for smaller businesses, their profits are often reported as income
earned by their owners and are taxed under the personal income tax code. The
major source of capital for the expansion of small, private businesses is
after tax profits. Therefore, higher marginal tax rates make it more difficult
for small businesses to grow, and challenge their entrenched, big business
competition. Big corporations also have more flexibility in the design of
compensation systems that allow their executives to build wealth in the face
of higher marginal tax rates, thus giving them a competitive advantage in
attracting and retaining the talent critical to their success.
Fourth, the political class, including intellectuals who seek the power of
government, benefit when they're able to impose their ideas on the rest of
society. For starters, higher marginal tax rates increase the value of
every tax deduction and loophole, thereby increasing the power of elected
officials and their staffs to demand homage as they dispense tax loopholes and
other giveaways to those with political pull. Higher marginal tax rates also
make the prosperous middle class more dependent on government for such
items as subsidized student loans now, and retirement income and medical care
when they retire.
Fifth, the politically connected make out well when the tax burden is
increased. Higher tax rates shift the tactics for success in the private
sector.
They elevate the power of those individuals and companies who are most
skilled at collaborating with the political class to use the power of
government to gain advantage in the marketplace against domestic and foreign
competitors. This, too, favors established and politically savvy companies who
can afford the lobbyists and lawyers who help craft legislation, and makes
less valuable the businessmen and women who are focused solely on satisfying
their customers.
The most insidious aspect of the "tax the rich" con, however, is its attack
on potential centers of wealth that, in the aggregate, can resist the
growing power of government either by challenging government edicts in court,
or through participation in the political process. To be clear, I am not
saying all advocates of raising "taxes on the rich" are malevolent or see
those with high incomes as the enemy. But I am saying those operating under
the
power motive would be expected to find this hidden effect consistent with
their goals to expand government, and therefore unobjectionable.
This unbridled desire to rule the American people is a manifestation of
greed on the part of the political class--in this case an excessive desire for
power instead of wealth. And it makes their self-righteous calls for
"taxing the rich" morally repugnant.
Charles W. Kadlec is an author and the founder of the Community of
Liberty. He can be reached at [email protected]_
(mailto:[email protected]) .
--
Centroids: The Center of the Radical Centrist Community
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