After all, paying taxes is "patriotic."
Throughout his presidential campaign, Barack Obama preached that we need to spread the wealth (although he has been careful not to spread his wealth to his poverty-stricken relatives.)
A Rasmussen Reports found that 69 percent of Democrats thought Obama's plan to "spread the wealth" was a great idea. By promising "goodies" Obama insured their votes. Now that that Obama has been elected president, he and the Democrat Congress Critters will begin to implement his plan. But are you ready to redistribute your wealth?
Time for a quick logic test.
Who is most likely to hire employees – a person waiting for Obama's handout or a business owner? If you failed to select the business owner you flunked the logic test and should stop reading now.
Many on the Left ask, what is wrong with spreading the wealth? I'd reply nothing as long as it is voluntary. Most of us voluntarily give to families, and religious and charitable organizations. But the "spread the wealth" plan envisioned by Obama is not voluntary. Your wealth will be confiscated by force and given to those who Obama deems worthy. Another example of silliness was when Joe Biden said it is patriotic to pay higher taxes. Confiscating money from you is no more patriotic than allowing a pickpocket to do the same.
Obama suggests that spreading the wealth around is "Change" and a "new kind of politics."
But the idea of redistribution of wealth is not a new idea and can be found in the Communist Manifesto. The class warfare ideas in the Communist Manifesto aren't new and have been tried before with tragic results. Robert Mugabe was elected president of Zimbabwe on a promise to spread the wealth. He instituted a land reform plan that confiscated property from the property owners and gave it to those he thought were more deserving. Zimbabwe went from an exporting nation to a financial basket case. Zimbabwe has experienced a severe food shortage which left about two-thirds of the population starving. Mugabe and Zimbabwe is a single example of the failure of Socialism and the spread the wealth mentality. Most third world countries followed a similar path.
When confronted with the Socialism charge, Obama equated Socialism with sharing his toys as a youth. Sharing his toys was voluntary – confiscating property for "fairness" is Socialism.
Obama went on to dispute the Socialism charge and said, "That's how we've always grown the American economy — from the bottom-up." I disagree. Obama's vision of sharing the wealth mimics Mugabe's faulty vision.
I think we need to encourage business growth. Any successful farmer can tell you not to eat the seed corn. You need the seed corn for planting next year's crop. Wealth is the seed corn for a growing economy. Oppressive taxes on businesses and entrepreneurs will dry up the seed corn. The wealthy have more flexibility with their money. They can choose to spend their money or not. If they choose not to spend or invest their money, fewer businesses will be started, more businesses will close, and more people will lose their jobs. A radical plan to redistribute the wealth didn't work for Mugabe and won't work for Obama.
Taxing the wealthy has been a popular mantra for those on the Left because it is easy to mobilize those that want a handout. Mugabe succeeded in selling the Socialist message and Zimbabwe has suffered wealth flight. The wealthy are the segment of society that can easily move and take their wealth with them.
Many of our states have already seen businesses and individuals leaving a high tax state for a low tax state. Some businesses have even left the U.S. and restarted in a low tax foreign country. These businesses relocated to escape oppressive taxation and regulation – not for lack of patriotism.
To prevent wealth flight, the government should cut taxes and focus on encouraging individuals and corporations to create more wealth rather than confiscating the wealth and destroying the seed corn.
A good point and taxing the rich, income inequality, and taxing those evil corporations was a good mantra of deception for the Omessiah. Unfortunately all of these represent lies.
Taxing the producers (rich) reduces their willingness to take risks thus reducing opportunity for others since the "new enterprises" that would generate jobs won't happen.
Income inequality…everyone can test the data on their own. Those that are statistically and numericaly challenged will agree that income inequality is a great problem. Others will say "Wow, look at the upward progression of our population!" Transfer payments to alleiviate this non-problem are welfare no matter what name and contribute to non-achievement and job loss.
Taxing the evil corporations…love this one. Any moderately competent individual could work out the fact that raises in taxes on corporations or other businesses leads to higher prices. Unfortunately our population has the intellectual capacity of a head of cabbage. Politicians love business oriented taxes because they can say they taxed "excessive profits", blame the businesses for higher taxes and have their herds of mindless followers believing their taxes were not increased. Business taxes can be properly classified as a hidden sales tax. I guess the only thing that would ever make the politicians accountable on tax policy would be the Fair Tax with it's associated constitutional amendment…but the Democrat lie on this one is it adds 23% to all your purchases, another victory the the Goebbels factions.
As we move toward the democracy/socialist vision of the Omessiah keep in mind the content of Federalist Paper 10 and its comments about democracy:
From this view of the subject it may be concluded that a pure democracy, by which I mean a society consisting of a small number of citizens, who assemble and administer the government in person, can admit of no cure for the mischiefs of faction. A common passion or interest will, in almost every case, be felt by a majority of the whole; a communication and concert result from the form of government itself; and there is nothing to check the inducements to sacrifice the weaker party or an obnoxious individual. Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths. Theoretic politicians, who have patronized this species of government, have erroneously supposed that by reducing mankind to a perfect equality in their political rights, they would, at the same time, be perfectly equalized and assimilated in their possessions, their opinions, and their passions.
A republic, by which I mean a government in which the scheme of representation takes place, opens a different prospect, and promises the cure for which we are seeking. Let us examine the points in which it varies from pure democracy, and we shall comprehend both the nature of the cure and the efficacy which it must derive from the Union.
The two great points of difference between a democracy and a republic are: first, the delegation of the government, in the latter, to a small number of citizens elected by the rest; secondly, the greater number of citizens, and greater sphere of country, over which the latter may be extended.
Guess I should have proofread before I posted. Here is comment with corrections to typos.
A good point and taxing the rich, income inequality, and taxing those evil corporations was a good mantra of deception for the Omessiah. Unfortunately all of these represent lies.
Taxing the producers (rich) reduces their willingness to take risks thus reducing opportunity for others since the "new enterprises" that would generate jobs won't happen.
Income inequality…everyone can test the data on their own. Those that are statistically and numericaly challenged will agree that income inequality is a great problem. Others will say "Wow, look at the upward progression of our population!" Transfer payments to alleiviate this non-problem are welfare no matter what name and contribute to non-achievement and job loss.
Taxing the evil corporations…love this one. Any moderately competent individual could work out the fact that raises in taxes on corporations or other businesses leads to higher prices. Unfortunately our population has the intellectual capacity of a head of cabbage. Politicians love business oriented taxes because they can say they taxed "excessive profits", blame the businesses for higher prices and have their herds of mindless followers believing their taxes were not increased. Business taxes can be properly classified as a hidden sales tax. I guess the only thing that would ever make the politicians accountable on tax policy would be the Fair Tax with it's associated constitutional amendment…but the Democrat lie on this one is it adds 23% to all your purchases, another victory the the Goebbels factions.
As we move toward the democracy/socialist vision of the Omessiah keep in mind the content of Federalist Paper 10 and its comments about democracy:
From this view of the subject it may be concluded that a pure democracy, by which I mean a society consisting of a small number of citizens, who assemble and administer the government in person, can admit of no cure for the mischiefs of faction. A common passion or interest will, in almost every case, be felt by a majority of the whole; a communication and concert result from the form of government itself; and there is nothing to check the inducements to sacrifice the weaker party or an obnoxious individual. Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths. Theoretic politicians, who have patronized this species of government, have erroneously supposed that by reducing mankind to a perfect equality in their political rights, they would, at the same time, be perfectly equalized and assimilated in their possessions, their opinions, and their passions.
A republic, by which I mean a government in which the scheme of representation takes place, opens a different prospect, and promises the cure for which we are seeking. Let us examine the points in which it varies from pure democracy, and we shall comprehend both the nature of the cure and the efficacy which it must derive from the Union.
The two great points of difference between a democracy and a republic are: first, the delegation of the government, in the latter, to a small number of citizens elected by the rest; secondly, the greater number of citizens, and greater sphere of country, over which the latter may be extended.
I've spent the last two months preparing for election day, and yesterday my partners and I pulled the trigger on our plans.
We will no longer fund one of the companies in which we have been the major investor. We projected a two year timeframe for it to be come profitable. If it doesn't, we lose our investment. If it does, it now won't be profitable enough under an Obama administration to justify the investment. Without our funding, the company will probably collapse in about three months.
We were preparing to launch another small company in 1Q 09. We've notified the others involved that we will be pulling our funds. Again, there's not enough reward to justify the risk.
There are a number of perfectly legal ways to reduce our present and future tax exposure. We'll be putting that new structure together over the next several weeks.
The net result is that we will no longer provide any capital for business expansion, and instead devote our individual and collective efforts to income preservation.
No more than 10-15 people should lose their jobs and/or not be hired, since we're just a small business enterprise. But I'm sure there are countless others going through the same mental calculations that we are, and coming to the same decisions.
Having put $5 million into a business enterprise in the early 2000s that failed, we see no reason to put any money into new business activities that may also fail — and if successful, will be taxed at such a rate that it doesn't justify the risk. We're not stupid.
Welcome to the era of Obamanomics.
Phil, good points. I participate in a couple of LLCs. We are beginning to divest through sales to employees of two of them. Originally we were going to hold the paper on the buyout, now it is cash or we fold it and sell what we can of the few assets since the ones we are selling are technology organizations. Our restaurant in New Orleans will probably just close unless the next administration drives people to drink. We are closing the restaurant portion of the business and going to premade preportioned microwavable items to help soak up alcohol. The only saving grace on this one is that it is a historic building so our investment may have some value if we close it.
Structurally we are moving to becoming organizations without employees contracting all labor and being careful not to have tax regulations require us to treat any of them as employees. Slightly more expensive in the short term dramatically less expensive in the long term. Whenever we see an opportunity for sale we are going to take it and wait for everyone to realize that start ups are needed.
For my part I always had at least one small business while working full time for various companies and industries. Now I only participate as the general partner in one of the LLCs and do consulting to our others. It is good being semi-retired.
Mickey:
We outsourced all our employees (except one) last year. My attorney advises me to form an LLC that operates as a Subchapter S. There's some good tax savings there vs. the way I pay my taxes today.
My brother in law owns a pool company that will be out of business shortly. Everyone was holding off on new contracts until after the election, and now they're telling him "no way". I was going to do some renovation to my home next year, but that can wait too.
Figure 5 or 6 people lose there jobs when my brother in law goes belly up — not to mention the day labor he hires. Figure another few laborers and skilled carpenters go looking for work in 09 that would have come from my home renovation. Then multiply this by hundreds of thousands of similar decisions nationwide, and you have a full fledged Obama Depression.
Guys like you and I will survive poorer, but okay. We'll spend a week at the beach in July instead of a week in New York City or overseas. But the people who depend on folks like us for a job (or to fill the hotels and restaurants) are SOL.
That's "change" you can count on.
That's exactly what I've been saying–while we should give voluntarily to help those in need, as the Church seeks to do, giving loses its soul when it's not done voluntarily. In fact, it becomes stealing and the appropriation of stolen goods. The liberal illuminati does not understand the moral and intensely personal value of giving, and that it's never the government's role to force the issue.
Good article, but I have to comment regarding the ‘redistribution’ remark. Redistribution of wealth is far older than Marx, whose only real enhancement was making it a positive feature of government policy divorced from circumstance. To Marx, redistribution was an object in itself, a matter of ‘social justice’ divorced from practical questions. He ignored it works poorly in large, diverse economies dependent on profit on which to thrive and does not work at all in small hemorrhaging societies. Plymouth Colony tried a form of biblically inspired socialism and nearly died of it. Rome had its ‘bread and circuses’, with which its factions bought the support of mobs and placated unrest. Ancient Athenian factions likewise bought votes in its direct democracy getting measures passed (though that was more a case of large interests buying up the votes of smaller farmers to get things like warships built, paying for said votes out of their own pockets rather than the public treasury; they were the ones to benefit most by these measures, to be sure, but at least they had the decency to do it with their own money).
45 out of the 102 original Plymouth colonists died the first winter (1621); one of my ancestors among the survivors. The following spring, some local Indians befriended them, teaching them to hunt and fish the local game and grow maize enough for that winter. That fall they gave thanks to their creator for deliverance; resulting in elements of our national annual Thanksgiving Day folklore. The third year (1623), Governor Bradford effectively discarded the colony charter (Mayflower Compact) mandating communal ownership of land and crops as anti-productive. Of course, Marx would have argued the Plymouth experiment was too soon. Things remained harsh for the colonist for some years, but the crisis of the first year was averted and the colony was put on a sound ‘market economy’ basis. The romantic notions of those first colonists gave way to the flinty, frugal New Englanders we think of in later centuries. Yet, even flinty Nor’Easters grow soft(headed) reverting to type, because eastern Massachusetts is, once again, a socialist colony.
Governmental welfare is as old as government itself, and even the Romans engaged in political-welfare. In those cases the object was the shaping of policy. What is new is state-welfare; whereby, the state itself is the object, policy is fixed in ideology, and welfare is the means. What we see in government today is an amalgam of market-capitalism with socialism in which capitalism supplies the means and socialism/statism is the object. This is socialism riding the back of capitalism like a leach drawing only enough blood it does not kill or seriously slow the host. This is soft socialism, but it is socialism all the same; and, to the degree it bleeds the economy, affects economic health. This is the philosophy Bill Clinton espoused without apology, shared by Obama and a host of Democrats and Republicans alike. Obama brazenly declares he means to “spread the wealth around”; he just has the experience of earlier socialists telling him spreading it too far kills the source of wealth. He’s still a pirate; he’s just not one of the really dumb pirates.
When ever Fascist Thugs or redistributionist establish the new economic politics within the sphere of human events, the story "Robin Hood and his merry men “ will rise it head out of the forest. If redistribution becomes rampant in all spheres of living within the borders of the United States, then stealing a loaf of bread to feed one’s family will become a daily standard. Yes the Sheriff of Nottingham did have a bounty on those that killed his “Green forest” deer, but Robin and his merry men found ways to keep both meat and bread on the daily supper table.
I believe that a new insurgence of Robin Hoods will transpire if Barack Obama establishes the bureaucrats who will inaugurate the American version of the Marxist economic policies called redistribution. Cunning means of theft of those who are the very wealthy will become the predominate sport to replace the failing television games of football, basketball and baseball. Remember Robin’s primary foe was a redistributionist Thug who stole from everyone for his own power and gain. When the middle class is removed, and the Fascist rich hold all the wealth in the country, the poor will find a way to survive.
The question is, are we going to let this group of redistributionist thugs go this far or will they somehow be stopped dead in their tracks by another force to be reckoned with? Why let it go as far as the Robin Hood scenario, when it could have been stopped earlier. It was reported that 1.3 million more Democrats voted and 1.3 million Republicans decided not to vote this election. Also sadly only 23 per cent of the American Catholic Bishops spoke out against Obama's policies with 77 per cent sat on the fence. Catholic voted like the general public 55 percent voted for Barack Obama and 45 per cent voted for McCain. Many of those who did not vote where people who just did not like McCain.
But what happened to the Catholic and Protestant vote? It is the true the media omitted the truth daily, but if a Christian pastor was unwilling to speak out against Obama then most Christians believed that Obama must qualify as an acceptable Christian Candidate for president. And that is not the case.
So what I believe needs to be done is the re – selling of conservatism to every church and parish. So conservatism needs to be put back together, packaged, and sold once again like in the 1960s and 1970s to bring us back to a Ronald Reagan. This does not have to be by the Pastor anymore, but by conservatives who work independent of the local pastors regularly. We all must use the internet for campaign financing, for campaigning and for getting information out. And we need to make a security system that prevents the other side from doing to Sarah Palin's email what they could do to us. It's time to get computer savy and literate.
It seems that those who oppose a fair progressive tax system and call it "the redistribution of wealth" would rather drive the citizens of this country farther apart than bring us together; first, by continuing to feed the "us versus them" mentality (divide and conquer?), and then by promoting the false belief that the less fortunate among us owe their very lives to the folks with the money.
In every economy there are winners and there are losers. And there is a ridiculous notion circulating among the corporate illuminati that the winners stand above and are somehow independent of, and perhaps even more important than the losers. But the fact is you cannot have winners without losers, and visa versa. Both are equal parts of the same whole.
So, the fundamental question becomes this: do those who benefit most from the economic and labor policies of this great country owe anything to those who benefit the least? I think the only answer is Yes. A progressive tax system helps to ensure that. Without the losers, the winners would be nothing. And since the losers are already nothing (at least in the minds of some winners), well … there you have it.
Anyone who owns a business or invests in a business must understand the vital connection between owners, stockholders, customers and employees. The fact that our economy today is in serious jeopardy (and some of our corporate CEO's are flying in private jets lobbying for handouts!) is proof that many of the folks with the money and the power just don't get it.
John Ross, how can a progressive tax be called "fair" without making great attempts to subvert the English language? The "less fortunate" frequently are victims of their own actions which suggests that charity from churches and other volunteer organizations is a far better way to help them than robbing others that did not make the poor decisions. The charities do something the government does not…they attempt to make their clients into contributing members of society instead of leeches.
Is there a vital connection between all of the stake holders? Yes and the best way to handle all of the taxation questions is to make politicians truly accountable by making taxes visible. Look at the Fair Tax for some examples beyond the Democrat Party lie of 23% increase in prices to the fact that politicians would not have businesses to blame for higher prices that were caused by politicians…OOPs that is not politically correct Democrats had nothing to do with the melt down did they?
You sound very envious of those that worked and achieved!
Mickey G, I would submit that the English language has already been subverted, primarily by the privileged and the powerful. For example, the word "work." Today, many people "do business" which is not the same thing as "work." Again, I think one of the primary reasons our economy is in crisis is because there are a lot of people who get paid a lot of money but who do very little "work," though they may "do business." Compensation is a marketplace thing, but the highly touted market is in reality just a different kind of jungle. And it is still the weak who are played and preyed upon. Being the richest country in the history of the world, I'd like to think we might finally have grown up enough to move beyond that.
Odd that you would say I sound envious of those that worked and acheived. Most would consider me quite successful. But I have spent considerable time on the other side. And because of that, I can tell you that although the less fortunate are indeed frequently victims of their own actions, that only tells part of the story. You could say that the privileged are victims of their own actions as well. And since they often wield great power and control, their bad decisions often take a lot of innocent people down, while they walk away unscathed, and even better off.
Personally, I've never been motivated by money beyond paying the bills. But I've always been fulfilled by a job well done. When I hire someone, the most important quality I look for is self-motivation. You have to enjoy what you do. A prospective employee also must demonstrate a willingness to work as a team, in decision making and in the actual work. When things go well, everyone gets the credit, not just the boss. But everyone takes his/her share of the blame when the chips are down.
I think Biden was right when he said paying taxes is patriotic. And I don't mind paying what I can when it directly benefits the American people. I'm proud and happy to contribute. I should also say that I was quite happy with the Bush tax cuts, although I was doing just fine without the extra money. How about everyone kicking in to shore up S.S. and Medicare, or to pay down the national debt? There's a sensible idea! (If I have to drink Budweiser rather than Rex Hill Pinot, so be it.)
Mr. Ross wrote “… those who oppose a fair progressive tax system and call it "the redistribution of wealth" would rather drive the citizens of this country farther apart than bring us together … by continuing to feed the "us versus them" mentality … and then by promoting the false belief that the less fortunate among us owe their very lives to the folks with the money.”
This rests on some deeply flawed assumptions. First, it ignores our tax system is already highly progressive drag on the economy. One-in-five Americans pays absolutely no income tax whatsoever (representing those below the arbitrary ‘poverty line’). For these ‘least affluent’ Americans (many of whom are under 25 and not, therefore, truly poor in the sense they are significantly disadvantaged), a further tax burden on the wealthiest has no immediate social merit and, therefore, invalidates the main criterion used for taxing even more progressively. However, it will have negative secondary impacts on the quality-of-living of these ‘poor’.
Second, progressive taxation (PT) has as its original objective an all out assault on capital as the means to this ‘social justice’.
“In 1848 Marx and Engels proposed that progressive taxation be used "to wrest, by degrees, all capital from the bourgeois, to centralize all instruments of production in the hands of the state. Although communism has failed, the idea of progressive taxation, as a means of achieving "social justice," [it] remains ingrained in the modern liberal psyche”. – James Dorn, Cato Institute ( http://www.cato.org/pub_display.php?pub_id=6297 ).
This is a little different from the modern interpretation of progressive taxation as a means for achieving this same ‘social justice’ without a complete evisceration of capital as Marx and Engels envisioned (not that capital-despising liberals don’t still fantasizes its’ demise).
Third, in its modern incarnation, PT is promoted to redress certain inequities arising out of both natural and created disadvantages. These ‘disadvantages’ have, for more than half a century, been addressed through a multiplicity of programs (welfare, education, tax progression, preference, &c), none of which has put the least dent in shrinking the percent of population defined as ‘poor’. To the contrary, our ‘poor’ have mysteriously grown from a few percent to just under 20% and, before Reagan, exceeded 23%. This suggests the definition of ‘poor’ has been rendered elastic to satisfy some other agenda (say, buying up voter loyalty) having nothing to do with poverty or justice. Thus, the ‘least-rich’ Americans demonstrate a solidarity that is inexplicable other than as a vested self-interest in perpetuating the welfare state. It is by design, therefore, the poverty-line coincides so closely with the 20% of Americans who pay nothing in taxes and receive the most in benefits, and can be counted on to vote Democrat. Combined with more affluent blocks receiving other forms of welfare (subsidies, grants, loans, bailouts) plus unions, government workers, and elites gives Democrats a near majority in most contests. If it weren’t for those crazy conservatives (those of us unwilling to buy into the sham of taking our own money with which to buy up our votes), the DNC monopoly would be complete.
Having failed to curb poverty (or, rather, unable to justify it on the basis of declaring a success that would eliminate the rationale for keeping it going), the argument PT was then extended to enlist economics as a separate justification having no bearing on social merit; defending it, instead, on a thoroughly irrational basis that it somehow stimulates the economy by spreading wealth around. This totally misses the point of wealth as distinct from basic needs. Basic needs consist of a minimum diet, clothing, and shelter. Everything beyond these represents luxury (e.g., having a phone, car or bus fare may seem terribly necessary, but are unessential so long as basic needs are met).
If the objective is meeting basic needs, that was achieved long ago (i.e., no one in America is starving and very few are homeless other than as a consequence of bad lifestyle choices) and is best accomplished by encouraging capital in such ways as results in the maximum number of people working productively. Wealth redistribution, to the contrary, discourages working; resulting in more people relying on government handouts to satisfy their needs and wants. To qualify for this redistribution, they must live below an arbitrarily set income (at least on paper – resulting in a culture of deceit to simultaneously comply with and exceed what becomes a ‘lifestyle’ criterion). Meanwhile, unequally taxing the rich results in a disincentive to hire and heavily taxing capital-gains results in a disincentive to invest.
If increasingly progressive taxation helps the economy grow, then why are Obama’s advisors now cautioning him against making any income tax changes until after the 2010 sunset provisions kick in? “David Axelrod, Obama’s chief political adviser, said Sunday the cost of Obama’s economic rescue plan would be pricey. He … hinted … the president-elect may hold off on raising taxes for the wealthy and instead just allow the Bush tax cuts to expire in 2010. Despite Obama’s campaign promise to immediately roll back the Bush tax cuts for people making more than $250,000, conventional wisdom says it’s never a good idea to raise taxes during an economic slowdown.” You don’t say! Pricey … you mean so pricey it would make this bailout seem a bargain? If it is inadvisable raising taxes in a slowdown, then when is it a good idea to raise taxes that weaken the economy? If it is inadvisable now, might that be because there is no real economic benefit to the poor and middle-class from increasing taxes on the rich? After all, we’ve already heard from the left this is mainly about ‘fairness’ and not primarily about keeping the middle-class from seeing our 401K’s tank. If it is ‘unjust’ keeping the poor from the fruits of their non-labor, what difference does it make making them wait another two years in dire straights? Surely, the economy can wait so the ‘poor’ will get the relief they so desperately need (e.g., stylish clothing, new cars, DTV’s, IPods, shot at the lottery, &c) now? Despite all the hyped DNC rhetoric (and no little class envy) to the contrary, that it is government-spending that grows the economy and gets us out of jams, even our loony-liberal-leaders realize making good on this particular promise in the midst of an actual recession might cause an economic disaster so bad even they could not sweep the Keynesian fallacy under a rug. It would rip the veil off so wide even their base constituency, the poor, would realize Democrat = idiot economics.
According to IRS, the top 1% of all taxpayers pays 33.7%, top 5% pay 53.8%, and the top 50% pay 94% of all federal income taxes (http://usgovinfo.about.com/od/incometaxandtheirs/a/whopaysmost.htm ). The least affluent taxpayers pay next to nothing or receive so-called ‘tax rebates’ amounting to a tax of -5.4% (bottom quintile average) on taxes never paid to begin with. 68% of all federal income taxes are paid by the wealthiest 10% by families making an average of $286,300 (recall your progressive tax only applies to income, not capital gains). Obama promised to increase income taxes on those making over $250,000, so this is the segment most affected by increased progressivity. Obama promised taxes on those making less than $250,000 will remain about the same.
75% of small business operators employing 10% of all employees file as individuals rather than as corporations, so their earnings are reported as income. Let’s say you are a small business-operator making $250,000/yr and your taxes are about to go up. Assuming we revert to 2001 tax rates but applied to 2008 brackets, the addition taxes you will have to pay is $10,071. Small businesses now have a choice to make whether they keep business where it is to stay below the magic $250K or grow their business at an additional loss. If their profit margin is slim, they may even decide to layoff people or relocate their business somewhere more favorable (say Ireland). This is if Obama does no more than allow the Bush tax cuts to lapse. If, on the other hand, he keeps his promise to increase taxation on those making $250K still further, this becomes a slam-dunk. A 5% tax increase on the least affluent quintile has no impact whatsoever on jobs or investment, hence, no impact on the economy (making it pointless to either raise or lower their taxes). A 5% tax increase on the 4th and 5th quintiles (those Obama targets), on the other hand, has a huge impact on jobs and investment; driving up joblessness and tax avoidance while driving down available credit. This, in turn, shrinks the tax base forcing government to raise taxes and/or print more money in a hopeless upward spiral of funding government and managing public debt.
Poor people don’t hire others to work for them (http://www.rushlimbaugh.com/home/daily/site_112608/content/01125112.guest.html ), rich folks do. The rich represent not just owners but also management; and it is these whom progressive taxation targets most.
http://www.heritage.org/Research/Taxes/bg2203.cfm – How the Obama plan negatively affects small business (incl. progressive taxation)
http://www.cato.org/pubs/tbb/tbb-0204-4.pdf – Top Ten Civil Liberties Abuses of the Income Tax, Chris Edwards, Director of Fiscal Policy, Cato Institute:
Creates vertical inequality – progressive income taxes treat citizens unequally
Creates horizontal inequality – people with similar incomes treated unequally by the many exemptions, deductions, credits, and other intricacies
Complexity, ambiguity and uncertainty – Certainty in law is a bulwark against arbitrary and abusive government. Uncertainty under system of income tax because it rests on inherently difficult-to-measure tax base, uses inconsistent definition of “income”, and labyrinth of narrow and limited provisions created by politicians intent on social engineering.
Huge Size and Instability of Tax Law – Citizen required to know laws and comply. Federal rules are massive and constantly changing; spanning 45,662 pages. 441 changes to tax rules in the 2002 tax-cut law alone; guaranteeing a decade of tax instability with phased-in changes lasting until 2010. Income tax instability typified by changes in taxes on capital. 25 substantial changes in treatment of long-term capital gains since 1922. Pension tax laws substantially changed every year since early 1980s, creating regulatory backlogs and leaving employers unsure how to comply. Last year’s tax-cut law had 64 separate rule changes for pension and saving plans.
Lack of Financial Privacy – broad-based income tax necessitates large invasion of financial privacy that a low-rate consumption-based tax would avoid. IRS gains access to a myriad of personal records including mortgage records, credit card data, phone records, banking and investment records, real property transaction data, and personal correspondence. IRS has authority to obtain records without court supervision likened to the Inquisition by Supreme Court.
Denial of Due Process – Fifth Amendment right to due process ignored by the federal (and state) income tax bodies. Due process requires government provide citizens a clear notice of a claim against them and allow accused a hearing before executing enforcement action. IRS engages in many summary judgments, and enforces them prior to judicial determinations. The complexity and ambiguity of the income tax violates due process. In 1926, the Supreme Court noted a statute that is “so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application, violates that first essential of due process of law.”
Shifts Burden of Proof to Taxpayer – For non-criminal tax cases (vast majority of cases) the tax code reverses the centuries-old common law wisdom the burden of proof rests on the accuser. Except in narrow circumstances, IRS does not have to prove the correctness of its determinations. When the IRS makes mistakes, as it often does, citizens carry the burden to prove IRS was wrong. Efforts to shift proof burden back the IRS in 1998 IRS Restructuring and Reform Act failed because new rules do not apply to 97 percent of IRS actions deemed administrative in nature.
No Trial by Jury in Tax Courts – Sixth and Seventh Amendment guarantees trial by jury, yet federal tax system sidesteps these protections. Contesting an IRS tax calculation prior to assessment, must file a petition in the U.S. Tax Court; but since this is an administrative court, not an Article III court, jury trial is not allowed. To obtain a jury trial and related rights for civil tax cases, must file suit in a U.S. District Court. Before that can happen, the alleged tax, penalties, and interest must be paid in full. If the citizen wins, still difficult retrieving the money. IRS rules effectively eliminate all but a ‘criminal’s’ right to trial by jury in tax cases.
Unreasonable Searches and Seizures – Fourth Amendment guarantees (before government can search private property and seize records) government must show “probable cause” to court criminal conduct exists. Yet IRS summoning authority under tax code section 7602 allows it to obtain records of every description from any person without showing probable cause and without a court order. Also has been an explosion in information-reporting required by IRS, and big expansion in its computer searching for personal records. Late 1990s, IRS won power to access financial data on VISA cards issued by foreign banks. Many instances of IRS abuse in search and seizure revealed during 1997 U.S. Senate hearings.
Forced Self-Incrimination – Requirement to file tax returns sworn to under penalty of perjury invalidates the Fifth Amendment protection against self-incrimination. Refusing to file a return exposes citizens to prosecution for failure to file; whereas disclosing information on tax returns constitutes waiver of Fifth Amendment protections. IRS regularly releases our information to federal, state, and local agencies for both tax and non-tax enforcement purposes.
As for people who do very little work but get paid a lot of money, more power to them if they also create jobs and make my little 401K grow (which, mostly, they do).
I realized after posting (#12), there was another point I wanted to make to Mr. Ross. Where he characterizes progressive taxation as 'fair' and chastizes those opposing it as driving “the citizens of this country farther apart than bring us together … by continuing to feed the "us versus them" mentality … and then by promoting the false belief that the less fortunate among us owe their very lives to the folks with the money.”, he seems to be perpetuating a gross injustice originated by the left for the express purpose of driving a wedge between those more and less enterprising. By what criteria does he show progressive taxes have ever been fair, achieved a 'fair distribution' or, failing that, at least economically useful. Failing that, how then can he chastize us as "'divisive simply because we oppose measures dividing us to no purpose. If we drop intentionally hyperbolic terms like ‘fair’, ‘drive … apart’, ‘false belief’, ‘less fortunate’, and ‘very lives’ from his comment, we are left with “ … those who oppose progressive taxes … promot[e] the belief that the less fortunate owe … folks with money.” The “… the less fortunate owe their very lives to folks with the money” (or to anyone, for that matter) idea is strictly a liberal notion, not a conservative notion other than from long exposure to liberal class-warriors.
If there is anything in this country driving people apart it is our ‘progressive’ system of taxation. All of our politically derived divisions have tax consequences (adding complexity to our tax code), and all of these are somewhat arbitrary divisions (e.g., standard-deductions, educational credits, disadvantaged-business credits, capital-gains v income, job-credits, low-income housing credits, ‘green’ credits, minimum alternative tax, new-market credits, carbon-credits, &c) created to satisfy some liberal 'progressive' demand. These distinctions create not only class divisions and envy as between people but also as between businesses (e.g., fossil/renewable, small/large, industrial/non-industrial, green/unsustainable). Consider, if there were no progressive tax and, instead, we had a flat income or consumption tax, not only would we not have 5 to 6 different income tax brackets and far less paperwork to deal with, we would not then look at each other as belonging to different species of taxpayer. It is only because we have drawn these arbitrary lines as between ultra-rich, rich, middle-class, low-income and poor that we even make such hyperventilated distinctions. In fact, everyone in this country is poor and everyone rich. No one believes himself/herself so insulated against poverty that a little more stuffed away in the family mattress will not make us a bit safer; yet everyone here is capable of meeting the most basic needs of food, clothing and shelter. Beyond this ‘minimum to survive’, ‘rich’ is a relative state; and if you reduced the gap in dollars to zero, you will still have differences of ability, cunning, greed, violence, attraction, consumption, corpulence, stature, location, persuasion, position, &c with which to divide us and complain. It is not belief in a more consistent, less burdensome tax system that drives us apart, Mr. Ross, it is envy that does that; and it is your much extolled ‘progressive’ taxation that fans the flames of this envy as no other; drawing the well-meaning yet unwitting to it believing they are acting ethically if not always rationally. Switching back to a flat tax system will not eradicate envy, but it would, at least, return some objectivity to our appraisals and descriptions of one another.
Bob: You've once again illustrated the difference between the Right and Left.
You've given a thorough, detailed analysis of taxes in general, and how they impact the society. Taxes are an instrument of social policy as well as a means of raising revenue to meet fundamental needs (defense, public works, etc.)
Rather than deal with this analysis, the left treats us to platitude and slogans about fairness, patriotism, haves-vs-have nots, and the winners of life's lottery, none of which address the institutional and systemic issues you've raised.