The Truth About Taxes
by Larry Perrault on December 4, 2012 at 11:23 AM
Look, as the nation stands today, I’m not at all certain that it’s constructive in any way, or even morally appropriate to continue to play this counter-constitutional game of states and individuals standing by for the federal government assigning various and differing tax rates and intruding in the conduct of commerce across the country. I should clarify that I realize that the Sixteenth Amendment approved an income tax in The Constitution. But government assessment of private property rather than fixed taxes on items, and the unequal treatment of citizens, fit the spirit of the document like antlers on an eagle. Actually, I’m certain that it’s neither prudent or moral, and not merely incidentally unconstitutional. And I’ve always thought that, but like everyone had ceded to the reality that popular culture had defined for and sold to us. But as long as we will continue to do it, I’d like to say a few things about today’s popular discussion over taxes. Should Republicans “compromise” or “cave” (depending on your perspective) on raising tax rates for individuals earning over $200,000 or couples earning over $250,000 for a supposedly deficit-reducing budget deal? No, they should not, for every reason unless they are conceding that political posturing is the bottom-line and that the public is so deluded that it could never be persuaded of the simple foolishness of the very idea, let alone the action.
In the first place, even if magically a tax rate increase had no effect on behavior and actually produced the revenue projected from a static picture, that revenue would amount to little in terms of deficit reduction. Even if Republicans are going to spinelessly decline to present a case for the truth, as they so often do, they certainly should consent to no tax rate increase without a much greater and immediate reduction in spending; not another promise of future cuts to ultimately be reneged on. Some would call me crazy, but I believe it’s the right thing to explain and contend for the truth, whether it is accepted in the polls or not. I don’t think people with no faith in the truth have any business posing as leaders of a(n at least formerly) free people. And the truth is that not only will tax rate increases not produce the needed revenue, they will compromise economic vitality by taking money out of the economy, and with it the work and compensation that that money would have created, and drop said money into the nearst thing in human reality to a black hole.
This is foolishness and irresponsibility for anyone who knows that, and I wouldn’t perpetrate foolishness on a society I’m supposed to serve for posturing of any kind. But the scale of Republican ineptitude in confronting falsehood (loud and ubiquitous though it may be) with truth, always astounds me. First off, I’m not wealthy even by Obama’s definition. And neither have I a direct stake in helping “wealthy buddies.” Only the indirect stake in society that all of us hold. If popular culture hadn’t sapped us of our common-sense, we would all be defending free commerce and personal property rights. God has designed human nature so that society is benefitted in the conduct of free commerce, regardless of the motivation of the actor. Here are a couple of short videos of George Mason University economist Walter Williams: The Power of Profit, Free Market Morality. If this stuff is really too complicated for Americans, it’s because popular culture has confused them with mush. It seems a lot of people are no longer capable of explaining it to them. They usually won’t offer a simple explanation like Williams’. And they fall short on explaining other realities as well.
I don’t favor or disfavor the rich (whoever that is) or anyone else, which is basic morality and explicitly biblical. And The United States used to hold to the principle of equality under the law. With graduated income tax rates alone, we had abandoned that long ago. And today some Republicans are signaling their weak-kneed willingness to “compromise” on allowing tax rate increases for “the wealthy” as part of a deal. Weekly Standard editor and FOX News commentator Bill Krystol is the son of an important founder of the neoconservative movement. Irving Krystol described a neoconservative as "a liberal who's been mugged by reality.” Bill Krystol recently said that Republicans should compromise and “cave” on raising tax rates . He knows it won’t work but he thinks it’s politically unwinnable to be seen as defending millionaires. Ben Stein has often said that the rich (like him) should pay more because the country needs more money and they can afford it and still be rich. I like Ben personally but I hate Keynesian Republicanism that thinks government must just manage the economy more prudently. Stein is a financial advisor. But it seems he must see investments purely in terms of dividends and not how they are actually used.
The Israel of The Bible had a system to fund necessary community functions. It was called a tithe: 10% FOR EVERYONE. That’s equality. What you earned and how was your business. But polls say a clear majority of Americans would like to see “the rich” pay more even than the absolutely disproportionate portion that they already do. Why? What’s in it for the Americans who want this? And what’s in it for America as a whole? The answer is, ABSOLUTELY NOTHING! Worse than that, it doesn’t help society, but hurts it in a big way. Let me see if I can give a Walter Williams-type plain explanation of the truth about this “tax the rich” foolishness:
People say “the rich” can afford it. Set aside that even the projected revenue increase that never comes about would not put much of a dent in the deficit. Set aside also that in much of the country, $200,000-$250,000 per year is not exactly the leisurely rich. But just imagine all of a very wealthy man’s assets in a pile on a table. If you tax it, the very rich man will still buy what he intended for himself and his family? Especially if the charitable deduction remains, he’ll probably still make those contributions. People are right. It won’t affect the very wealthy. So what will be sacrificed? Take his personal expenses and contributions from the top of the pile. The taxes will be taken from what remains. And what remains is the surplus money that he or managers invest in hopes of a capital gain. Multiply that by all the wealthy people who pay the tax. And all of that money is not lost to their lifestyle, but is never invested in the expansion of new commercial enterprises. You haven’t hurt the wealthy. You have hurt all of the people who would have gotten new or better jobs with new or expanded enterprises. The rich aren’t soaked. It is those who are looking to improve their lot who will not get the opportunity. Never mind that the government will not get future revenue from taxes on capital gains never earned.
Very simply, the whole idea of the federal government appropriating private wealth by “taxing the rich” is just…well…dopey. In all of the talk about the looming “fiscal cliff” (I could live the rest of my life without hearing that again) and possible debt reduction (though Obama and Democrats have offered nothing of spending cuts either immediate or specific), talks have usually boiled down to a demand for increased tax rates on “the rich” and possible spending cuts later. And such promises from the other side are never kept. Republicans keep playing Charlie Brown to Democrats’ Lucy with the football. The problem wouldn’t be solved and when failure occurred, Republicans would have their names all over it. They could call me stubborn, but I wouldn’t support something destructive to society in the name of compromise.
Often, Democrats talk of the need to return to the rates we had under Clinton. There was economic growth after Clinton raised the top marginal rates, they say, though they never explain how that worked. They can’t, because it’s ridiculous: you tax people more, so they invest more? Right. But, again if we are going to cede federal management of private enterprise, Republicans should ostentatiously say, “Fine: Let’s have the tax rates during the growth of the Clinton years, including the capital gains rate after it was cut in Gingrich’s negotiation for the upper income tax rate increase. So it’s wiser to keep your money invested in the economy that to take it as personal income. THAT’S why there was economic growth. Here’s something Marc Thiessen wrote about the full effects of letting the deadline pass: Let’s go over the fiscal cliff.
If Republicans really wanted to gig the Democrats, they could propose that we also return to the spending rates under Clinton. Since then, they were greatly increased under George W. Bush and MASSIVELY increased under Obama. Cut back to Clinton spending levels, and now you are talking serious about deficit reduction. But in fact, Obama has proposed another $1.6 trillion dollars of spending and unilateral authority to raise the debt-ceiling as he will. It’s really difficult to believe, especially after the failure of the same strategy thus far, that Obama genuinely wants to prosper the country.
What he proposes is maniacally deluded or destructive. Let’s be clear: he’s a joke and a disaster. And regardless of what fraud there may have been in the 2012 election, the public failed to decisively turn him out. Sure a lot of people know he’s a problem. But too many people are totally lost on American virtue and health. Too many it seems, for a nation to carry and prosper.