The other day I was talking to my friend, whom I will not publicly embarrass here.
We were talking about the recent government bailouts of bank and car companies, and the impending tax increases that President Obama wants to foist on the nation, starting with the oft maligned “rich.”
The conversation went something like this with my Democrat friend. (Yes, I do have Democrat friends…)
Me: “How is Obama going to pay for all these bailouts? He’s going to have to raise taxes through the roof. You can already see the media stirring people up to hate the rich. How much is he going to tax people? He’s going to destroy our economy.”
My Democrat Friend: “Come on! A guy who makes $30,000 is taxed 15% and takes home about $26,000 to live on. A guy who makes $1,000,000 is taxed at 35% and pockets $650,000. How much does he need?”
Actually, according to the formula, which is graduated up to $357,700 this year with 35% being the top end of the income tax scale, after paying an average of 30% on his income and adding another $103,791.75 in tax just for good measure, our millionaire example would take home about $596,209.
Granted, you can still live in a nice home, drive a decent car, and even eat out once-a-month on that salary, but I think we’re missing the larger point.
Why does the government deserve a higher proportion of your earnings if you make more money than your neighbor?
Let also consider what’s fair.
Who is on this “Fairness Board” anyway? Who gets to decide what a fair amount is for your salary? Do I get a say in that?
Across the board, let’s say everyone pays 15% of their income. Is that fair? Is everyone paying their “fair share.”
Well, let’s see. If I make $30,000 at 15% my share is $4,500. If I make $1,000,000 at 15% my share is $150,000. I make more, I pay more, but it’s all at the same percentage.
Why does the government deserve more of my money if I am more industrious than my neighbor? (Of course, I don’t believe the government “deserves” any of my money, but we realize that some administration is needed and stipulate that it takes some money to provide the services our governmental institutions are called upon to perform by our Constitution.)
To say that our society should tax those who earn higher incomes more heavily than others, though, is to imply that the bureaucrats in Washington DC are far superior in their financial knowledge and wisdom than those who actually earned the money, and that they will always use their superior intellect to spend the money they garner in taxes for the greatest good of humanity, and to the ultimate benefit of our economy…unlike those greedy rich folks they took the money from.
Well, I’m sorry, but I don’t view the folks in Washington DC as the pinnacle of efficiency. In fact, they are the poster children for the fraud, waste, and abuse hotline.
The federal government creates NOTHING. The legions of workers in Washington do not contribute one cent to the gross domestic product of the United States. The only way they can provide a service or thing is to take money forcibly from the private sector which produces valuable goods and services.
When the federal government takes your money, they use it to fight unnecessary, unconstitutional wars around the world, prop up failing businesses run by their supporters and friends, keep friendly (even if oppressive and cruel) dictators in bannana republics in power for their own purposes, shower themselves with huge salaries, bonuses, and perks that people in private enterprise don’t get, and generally squander your hard earned money on high profile, but largely unnecessary, projects designed to help them stay in power. Of course, they throw a few dollars at the common people to make them feel good…after the money makes a few stops along the way.
Now, let’s take a look at our million dollar earner again. Sure he’s making $596,209. But what about that $403,791 he provided in taxes to the federal government? Don’t forget, that’s just his share of federal income taxes. He still has to pay state taxes, and all the taxes placed on goods and services like gasoline, airline travel, retail sales, etc…
If he was smart enough to earn $1,000,000 in a year, I would think he probably wasn’t going to spend it all. He would probably save some money in liquid funds at a decent interest rate which would give banks capital to loan out to others in exchange for interest. Then our rich friend might invest some money in more long-term funds which again would provide capital for banks to invest in the community and provide him with a greater return on his investment which lessens his dependence on government in the future.
Now, our rich friend, with his “excessive” wealth and superior financial analysis skills, might start another business right here in the United States. That business would employ more people, which, in turn, would provide more revenue to the federal government.
He might also become a mentor, or an “angel investor” for another entrepreneur. Maybe he would loan his protege $250,000 to start a business that would make his young apprentice rich while at the same time providing good paying jobs with great benefits to dozens, or even hundreds of people. Which would, in turn, provide more income to the federal government in the form of income tax and other taxes in the form of tariffs imposed on imports and exports.
It is a fact that rich people are more charitable than poor people. Which makes sense because rich people have more to be charitable with.
Perhaps our wealthy friend would fund a kidney transplant for someone in need. Or maybe he would build a wing for a private hospital. Or donate money for reasearch of a disease that has affected a loved one and has touched his heart. Or begin a scholarship fund to help children escape the cycle of poverty…just as he did.
However, unlike his “charitable” counterparts in the federal government, I am pretty sure that he will be watching his investments. He will be guiding his protege or following the stock market to protect his money from being misused. I am also certain that he will even be keeping an eye on his charitable donations to make sure that they are being used for their intended purpose.
People who actually earn money have a much greater capacity to protect it and insure it is not squandered than those who simply move it around by pressing keys on a computer or voting on it in a room full of people who make their living by taking the fruits of others’ labor by force.
I’m always leery when the government says, “The rich need to pay their ‘fair share.’ They don’t need all that money. Give it to us. We’ll take care of you.”
They’ll take care of us. Just like they’re such good stewards of the Social Security and Medicaid funds. Just like their stellar performance in educating our young people. Just like their “competent oversight” of the bailout money. Where did it go again? Bonuses for executives? Trips to Aruba? Spas? Retreats? Seminars in Las Vegas?
Do you think the federal government is going to “stimulate” the economy with this money? Or do you believe the federal government is going to squander it?
I don’t know about you, but I wouldn’t trust my Congressman to hold my checkbook.
Reprinted from the Book:
My Two Cents: On Politics, Religion, Sex, And All The Other
Things We’re Not Supposed To Talk About At Thanksgiving Dinner
(A Compendium Of Observations And Common Sense Solutions To The
Issues Threatening The Survival Of America)
by Patrick A. Taylor
Copyright 2005-2014, by Patrick A. Taylor
All Rights Reserved
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