Saturday, December 01, 2012

Tax The Rich

I continue to be amazed at the false propaganda and demagoguery that endlessly emanates from liberals and Democrats about the “Bush tax cuts for the rich,” and from conservatives and Republicans about the effect of increasing taxes on the rich on job creation. A pox on both their houses.

When the Bush tax package was passed it reduced taxes for the lowest incomes by 50%, for God’s sake. It reduced taxes for the middle class by 10% and for the top bracket by 9%. At the time the slant that was put on it was that it was a tax cut the benefited mostly the rich because the bulk of the total dollars being cut came from taxes on the wealthy, but that is an absurd argument on the face of it.

Comparing tax cuts in terms of absolute dollars is nonsensical. You cannot give a person earning $50,000 a $70,000 tax reduction, which is a minor tax cut to someone making $1.8 million. By the same token, a $2000 tax cut which helps someone making $30,000 per year is utterly meaningless to a millionaire. Tax cuts are meaningful only in terms of the percentage by which they reduce taxes, and the Bush tax cuts were most certainly not beneficial only for the rich.

I certainly have no objection to returning our tax code to the more progressive structure that it once had, and if today’s discussion were being held in those terms I would be on board. This “tax the rich,” or as Obama puts it, “make the rich pay their fair share.” Is an abomination in that it panders to what has become the American voter’s overriding demand: that we solve the problem without making the common man pay for it.

“Solve the problem,” we say, “just don’t make me pay the price.”

And for heaven’s sake let’s drop the “fairness” argument. Life is inherently unfair, and sane adults recognize that. “Fair” is what ten years olds argue about. The tax code should be more progressive, yes, but only because we tried that and it worked. Clearly, the one we have now is not working.

To make the pandering even more atrociously false, Democrats cite the revenue which purportedly will be produced by this miniscule tax on this small handful of people in dollars per decade while citing the deficit as an annual number so that the public will think that actual gains are being made, when in actuality this “tax the rich” solves almost precisely nothing.

But it doesn’t “harm job growth” either, and all of this nonsense about small business owners and S corporations is not a viable argument. One television host asked a “business owner” how it would harm him to pay and additional $8000 in taxes and his reply was that, “Then I don’t have that $8000 to spend on employees and employee benefits.”

Oh, please. The fact that that money is being taxed means that he has declared it as profit, and having done so means that he has already declared that he is not spending it on employees and employee benefits. The television host merely nodded like an idiot.

Personal taxes on small business owners are levied on profits, money which the owner has already made the decision not to spend on new employees. The argument can be made that, knowing that his taxes will
be higher, he made the decision to cut back on growth plans in order to generate higher profits, but… Wait, what?!

All politician lie. The only difference is what they lie about.

1 comment:

bruce said...

I was about to ask if business owners are really taxed on profit, not income, but I'm sure you'll have an accounting answer (perhaps on your own small business experience?) . MomLee might have a better handle on that. But you're right about the politicians lying part.

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