I Support the Rich. I Guess.

Anyone paying attention to any media outlets lately knows that the Bush Tax Cuts are coming to an end this year. Democrats want to continue taxing the rich ($200,000+ a year income) and give tax cuts to the lower rungs of the ladder. Republicans want to extend them for everyone. Actually, I imagine if they had their way, Republicans would lower taxes on the rich and raise them on the lower and middle classes. I don’t think they’ve said that, though.

My opinion on this is mixed. There’s “the rich” and then there’s the “filthy rich” with more money than god. $200,000 a year in income isn’t a whole lot in my mind. Not enough to get mad at them for. But, that’s what Democrats have done. And good for them for at least being able to articulate rage for once.

First, tax cuts aren’t handouts. They just mean the government doesn’t steal as much from me or someone else. Republicans by and large like tax cuts because they leave more money in people’s pockets as they earn them. Democrats want to tax people and then spend it on people with less of it. I have a problem with that moral idea.

The practical side of me thinks about the matter of wealth creation. How many people making $200,000 a year are suddenly going to try and make $199,999 a year? Tax brackets encourage people to skirt around the numbers, all in the name of keeping the money they earn. Plus, by and large, taxes discourage wealth creation. If I didn’t think I could make more money running my business, I never would have left my last salary job. If taxes prevent that belief or possibility, then wealth stagnates. When I start a business, I at least have the opportunity to make more money — maybe even $200,000 a year or more. Take that away and people just get content to sit around and earn beans.

Plus, most people aren’t stupid. And rich people have more than two brain cells AND money to fix things. Maryland created a “wealth tax” that taxed the super-rich with the expectation of making $106 million. Instead, they lost $257 million because the wealthy all got up and moved.

I don’t hate or feel angry at rich people — Sam Walton, Walt Disney, Steve Jobs, Bill Gates, these people spent a lot of time and effort to create something and I believe they ought to get rewarded for it. They happen to be immensely rewarded. Frankly, I’m fine with the idea that Sam Walton makes a lot of money vs. a guy in a trailer in Kentucky drinking beer and wondering why he doesn’t have any money. One guy worked harder, longer. The other sits in a trailer and drinks beer on weekends.

If you wanted to eliminate this problem, you’d institute a fair tax of 10% or some equally agreeable number and everyone would just pay that amount of their income.

People work to get money and a better life. They don’t work to pay taxes or pay for someone else’s quality of life (at least not in a recurring manner). I do have more of a problem with people who “come into wealth”, such as people who just happen to be born in the right place. I think people should work for their rewards, not inherit them — or at least not all of it. But I don’t have a problem with the wealthy. I hope to be one of them someday. Maybe I will, maybe I won’t. But just because I’m not right now doesn’t mean I should be angry and try to take their money.

One Comment

  1. I feel like you made the same mistake in this analysis that I often encounter in libertarian arguments. Taxes are in your analysis seen purely as value being removed. The (new or improved) services the taxes would provide are not taken into account. If these taxes are used for social service to improve the overall society everyone benefits. The rich benefit immensely when ‘their money’ is used to provide services to everyone, especially the poor, as the overall standard of living goes up. Check out http://www.alternet.org/economy/148501/why_germany_has_it_so_good_–_and_why_america_is_going_down_the_drain/?page=entire search for “if you don’t have much poverty, life is better for everybody. Not just better for the poor, but for everybody.” and read from there. For example if taxes were used to provide four years of college tuition to everyone out of high school who got accepted to a school both rich and poor would benefit directly, but everyone would ultimately benefit from the higher level of education among the lower income levels. Granted a large problem in the U.S. is that a large part of taxes goes to paying for the insane defense budget and paying off the national debt. The article above also touches briefly on the latter.

    While a flat tax seems like a good idea, for someone at poverty level 10% of their income is the difference between life and death. However, a flat sales tax is viable way of implementing a flat tax system that is not so disastrous to lower incomes. Progressive taxes tax those highest who can contribute the most with the minimal impact to their standard of living. Even if the tax cuts end, we will still be taxing the wealthiest in the U.S. less than what everyone above the poverty line is taxed in most European states. Prior to Reagan’s changes to the tax code those making more than $900,000 were taxed 70% of their income. Several other tax brackets existed between the current highest bracket of $200,000 and the $900,000 highest bracket of the 1970’s. U.S. citizens are required to pay taxes even if living abroad so let’s say we decided to tax everyone making more than 5 or 10 million dollars 50% or higher at a federal level. Hell, pick whatever yearly income you consider filthy rich instead of just rich and throw them into a higher bracket. Deficit problems would be quickly solved as would the solvency of social programs.

    Also the examples of rich people you chose almost achieved their wealth through dubious means. However, I believe the dubious practices of Walt Disney company started largely after his death. Sam Walton created Wal-mart – enough said. Walt Disney’s company has aggressively pursued changes to copyright law to extend their copyrights to prevent their material from ever entering the public domain. Steve Jobs masterminded Apple’s strategy of vendor lock-in. Bill Gates brought Microsoft to its dominant position in the OS market by buying QDOS, a barely legal clone of the then dominant CP/M OS, and licensing it to IBM while maintaining copyright. He then proceeded to abuse this monopolistic position throughout the 1990’s.

    Most of the lower classes are not sitting in a trailer drinking beer, but juggling 2 or 3 jobs (or trying to find any job opening) to make ends meet. They certainly can’t afford to go back to school with the costs in the u.s.. Even if they qualify for student loans the fact that you cannot get rid of student debt even through bankruptcy doesn’t make higher education more appealing.

    In short I feel like we need more tax brackets above $200,000 – many more – or a flat sales tax at federal level that applies to all or nearly all transactions. You are absolutely correct in saying that small business owners making above 200,000 are not filthy rich and they do work hard for what they earn, but until we have more tax brackets if you want to tax the ultra-wealthy you have to tax well to do small business owners more as well. The filthy rich should certainly pay more taxes and we should be angry if they don’t. We should demand they pay a share of taxes proportional to their massive income because we all pay the cost of their wealth consolidation. (The more wealth is concentrated the more prevalent poverty.) The democrats didn’t pick the 200,000 dollar bracket level as far as I’m aware unless the Clinton administration was responsible for it. I think Reagan created the current brackets. So blaming the Democrats for the current top bracket is a bit misplaced. I’m personally not opposed to leaving the tax breaks in place only for those making under $500,000, but I still think most of those making $200,000 can miss the extra income.

Leave a Reply

Your email address will not be published.