The Fallacy Of Taxing The Rich And Some Basic Common Sense Economic Principles And American History You Ought To Know About The Democratic Platform In 2020
That’s an interesting target. There are many people, young and old in America making that kind of money. They have accumulated wealth and presumably would like to retain and grow it. When you have that kind of wealth, you also tend to have great legal and tax advice which allows you to find ways to shelter that income from significant tax increases. If you are part of the “one percent” of Americans of great wealth, like Bill Gates or Jeff Bezos, you tend to pack up and move offshore. This is what the very wealthy did when France implemented significant tax increases. They left France!
So the “Plan” to tax Americans to the tune of $4.0 Trillion under the Biden Platform has some inherent risks associated with it. Let’s explore these with a simple illustration of the fallacies associated with such a plan and, in so doing, highlight and illustrate the grave misunderstandings of the “tax the rich” approach.
Suppose that every day, ten men, all high school classmates an friends, some very successful, others less so, and some struggling financially…but all friends who enjoy each others company, play a weekly game of basketball at a local gym. They decide to go out for beer and the bill for all ten comes to $100...
If they paid their bill the way we pay our taxes, it would go something like this...
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7..
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest and most successful) would pay $59.
So, that's what they decided to do..
The ten men drank in the bar each week following their basketball game and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball. "Since you are all such good customers," he said, "I'm going to reduce the cost of your weekly beer by $20". Drinks for the ten men would now cost just $80! "Wow, a 20% reduction…that’s incredible! Lift up your glasses and toast the bartender”, they exclaimed!
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men ? How could they divide the $20 windfall so that everyone would get his fair share? (Democrats are all about everyone getting their fair share, right?)
They realized that $20 divided by six is $3.33. But if they subtracted that from every body's share, then the fifth man and the sixth man would each end up being paid to drink his beer. That certainly was not the intention!
WHAT TO DO????????
Thinking quickly, the bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay. And So…….
The fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid $2 instead of $3 (33% saving).
The seventh now paid $5 instead of $7 (28% saving).
The eighth now paid $9 instead of $12 (25% saving).
The ninth now paid $14 instead of $18 (22% saving).
The tenth now paid $49 instead of $59 (16% saving).
OBSERVATIONS AND CONCLUSIONS:
Each of the six was much better off than before. And the first four continued to drink for free. But, once outside the bar, all the men began to compare their savings.
"I only got a dollar out of the $20 saving," declared the sixth man. He pointed angrily to the tenth man, "but he got $10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar too. It's unfair that he got ten times more benefit than me!"
"That's true!" shouted the seventh man. "Why should he get $10 back, when I got only $2? I’m a better player than he is anyway! The wealthy get all the breaks!" (it’s unclear if that man was a democrat but what he says seems consistent with the democratic way of looking at things)
"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!" Now, these four are clearly cut from the Democrat mold.
The nine men, filled with anger, then surrounded the tenth and beat him up, and drove him out of town! The next week the tenth man didn't show up for the basketball game or the after-game drinks. So, the nine others sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
And that, boys and girls, students, teachers, professors, journalists, government ministers and citizen voters all, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas, where the business atmosphere is somewhat friendlier. Get the picture?
Democrats have been using this lie for decades. You can certainly increase taxes and say they are targeted to impact the wealthy, but the wealthy will leave and then the taxes fall on the middle class. Rarely do Democrats point that out in any of their rhetoric.
End of Lesson # 1 on the U.S. Tax System. Time for lesson #2
SOME COMMENTS ON OUR ECONOMIC SYSTEM:
Now, let’s turn our attention to the New Wave of Democratic Socialism engulfing our nation, and in particular, our youth, college students, college and university professors, news broadcasters and folks like Alexandria Ocasio-Cortez, Bernie Sanders, Corey Booker, Elizabeth Warren and Kamala Harris who collectively and individually attempt to sell us their fantasy story that all the free stuff they are offering can be paid for by increases in taxes on the rich. But you know now that when you continue to tax the rich they may leave which then leaves the middle class…you and I…to pick up the tab!
Thus, today, we have the Bernie Sanders/Joe Biden Progressive $93 Trillion spending plan for the U.S. Economy. Biden audaciously states, without trepidation or equivocation, that this plan “will pay for itself” by the increases in taxes and the complete restructuring of our entire economy. And, on top of that, they suggest that the plan will “create 20 million more jobs”. Of course, the plan does not delineate where those jobs will come from, but that is what it says.
I may be wrong in this assessment, and readily admit that my following remark may sound a bit cold and even crass, but I’m going to guess that Bernie Sanders and AOC and Joe Biden never took a course in accounting, finance, economics or…..common sense. And, forgive me, but anyone who buys into this program ought to have their head examined. Consider the following:
1. Our annual tax revenues are roughly $4.3 trillion each year (incidentally 2019 tax revenues under Trump - even with his tax cuts - were the highest in history! )
2. We spend roughly $5.0 trillion….so we spend more than we take in. That, ladies and gentlemen suggests to me that we have a spending problem, not a revenue problem….and in the midst of this, Democrats want us to spend more. That doesn’t sound to me like a rational building plan, but a blueprint for economic disaster. Economic suicide might be more apt. If you listen to other people in the Democratic Party they profess even greater hypocrisy. They pledge more free stuff and giveaways, all seeking to buy the votes of Americans who think this kind of thing doesn’t cost them anything! But it does cost and the cost is far greater than they can imagine, The cost is freedom, theirs and ours!.
Let’s talk about that for a moment.
SOCIALISM VERSUS CAPITALISM
It is an undeniable fact that the economic system we know as Capitalism has produced the single greatest example of growth and prosperity known to man. And, here in the United States, we have achieved that status in a period of 244 years since the founding of our Republic. There are nations around the world, Britain, France, Spain, Italy, China, Japan, Germany who have been in existence for ten and twenty times longer than that of the US, who have not achieved what we have in a fraction of the time. And the Progressives in the so-called Democratic Party want us to scrap all this in exchange for socialism. They speak of the problems of our country but they do not address the question of….."if we have so many problems, why are so many people trying to come to America?"
Think about this: What nation in the history of the world has adopted socialism as their economic system and prospered? Can you name one? Who is it? We have seen socialism fail in nations like Venezuela, Argentina, the USSR and Cuba. Do we wish to be like them? When was the last time you saw or read about caravans of Americans migrating to Cuba, Venezuela, Argentina…or for that matter to any other nation on earth?
Sir Winston Churchill described socialism in this manner: “Socialism is a philosophy of failure, the creed of ignorance and the gospel of envy. It’s inherent virtue is the equal sharing of misery” He reiterated, “The inherent vice of capitalism is the unequal sharing of blessings while the inherent virtue of socialism is the equal sharing of miseries”.
The most disturbing aspect of all the rhetoric on the democratic campaign trail these days is that Joe Biden and Kamala Harris are competing against President Trump in November 2020, and genuinely believe that the majority of American voters simply do not understand economics nor do they understand our tax system. They believe that by spewing hatred and negative comments directed towards our President and promising free stuff which “someone else…the amorphous government”…..will pay for, this will gain them your vote!
And, if truth be told, they are partially right. Our high schools and universities have really not done a good job in educating students. Indeed, they have become more temples of advocacy rather than learning, which has contributed to the propensity of young students protesting in our streets without having a foundation or understanding of what it is or why they are protesting.
Take a close look at the democratic cast of characters. Yes, Joe Biden and Kamala Harris are the Presidential and Vice Presidential candidates, the “standard bearers” of the Democratic Party. But they are but puppets. The real puppet masters are the Socialist/Communist wing of the Democratic Party led by people like Bernie Sanders, Alexandria Ocasio-Cortez, Elizabeth Warren and Corey Booker. The questions that need to be put to them are: What exactly are they offering? What is their platform? What will it cost the taxpayers? How will their approach improve the lives of Americans? How do they intend to implement their programs? No one has put these questions to them as yet! And they have done nothing as yet to shed light on the answers.
Do we have problems here in the US? You bet we do…and we put them out there for the world to see. I have traveled all over this world over the last fifty years, and I can tell you without hesitation, there has never been anywhere I would rather be than right here in the US. I am proud of our nation and its heritage; proud of its military; its incredible medical system; its creativeness and innovation; its system of values and fairness and its Constitutional Republic.
It seems to me that it is time for each of us to ask ourselves the question: “do we still know the freedoms our Founding Fathers intended for us?” James Madison wrote…”We base all our experiments on the capacity of mankind for self-government”. This idea that government s beholden to the people, that it has no other source of power than the sovereign people, is still the newest, most unique idea in all the long history of man’s relationship to man. But today we are told that we must choose between left and right and to me, that is utter hogwash. That is not the choice we face.
The choice we face is up or down. Up to the maximum of individual freedom consistent with equal justice under the law, or down to the depths of totalitarianism which is the natural successor of socialism. As President Ronald Reagan has said, “those who would sacrifice freedom for security and to become beholden to a government have, whether they realize it or not, chosen the downward path.” The great Roman historian and philosopher Plutarch warned centuries ago…”the real destroyer of the liberties of the people is he who spreads among them bounties, donations and benefits.” Which Party does that sound like to you?
I am fed up with our cities being torn apart by mobs who are hell bent on destruction. They rob and pillage businesses, desecrate churches tear down memorials and assault innocent citizens and police. And this all occurs in Democrat controlled cities across the nation. Yet, we do not hear any condemnation for this from the Democratic leadership. Indeed, they call them “peaceful protests”.
I am also tired of hearing the promises of Democrats who have been saying, since the launch of President Lyndon Johnson’s Great Society in 1964…”what greater services we could render if only we had more money and more power”. Fifty-six years and $5.0 trillion later they are still saying this. What they mean, however, what they always have meant, is that they want more control. Their clear objective is more centralized government, the very antithesis of what our Founding Fathers desired for us.
Democrats understand full well that they cannot control the economy without controlling people. So we find ourselves today at a crossroads. Either we accept the responsibility for our own destiny, or we abandon the principles of the American Revolution and subscribe to an intellectual belief that a far distant capital, Washington D.C. can plan our lives for us better than we can plan them ourselves. That is the choice today. Strip away all the fear mongering, all the free stuff and the pie in the sky creation of a modern day utopia, and what you are left with is a loss of individual freedom.
Well, today at age 75 I am still learning. I still marvel at the genius of our Founding Fathers even to this day. The more I read about them, the more I appreciate their bravery, their character, their integrity and their willingness to sacrifice their fortunes, their lives and their sacred honor to create what today stands as a beacon of hope for all mankind, the United States of America.
So I will conclude with this little piece of American History. On the eve of our struggle for independence, a man who might have been one of the greatest among the Founding Fathers, Dr. Joseph Warren, then president of the Massachusetts Congress, said to his fellow Americans, “Our country is in grave danger, but not to be despaired of….on you depend the fortunes of America. You are to decide the important questions upon which rests the happiness and liberty of millions yet unborn. Act worthy of yourselves.”
I thank God every day I wake up that He made me an American! I intend to act in the manner prescribed by Dr. Joseph Warren and vote “Up to America” and for the continuation of the principles and ideals so many have sacrificed everything to build.
I will vote for President Donald Trump.
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E.P. Unum is US (Or should be)! H/T McIntosh Enterprises - Aug 19, 2020.
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