Why we tax the rich- for dummies

Why should we tax the rich? Its a question that reminds me of a childhood argument I had with my parents every time they bought me a new pair of shoes. I wanted the latest (and most expensive) Nike tennis so they would always remind me of how much it cost to make them, how much some poor kid got paid and how much us suckers were willing to pay.  My elementary response was, “would those kids even have a job if it weren’t for Nike?” Unfortunately at this point I can see any of the GOP candidates (with minor exception) respond the same way.  Even as a child I could see the Conservative and Republican ideological brands were shinier but it was years before I considered the substance inside the slick packaging. Where did all that money go, were these kids really being treated fairly, did my purchase really affect the price and does it all really even matter anyway? The answer is yes it does matter, because we have entered a world where regardless of your ideology or the corporate tax rate the American standard of living can not be realized for the same wages companies can pay workers overseas. This is my anecdote for the situation that has led to shrieks of ‘class warfare’ on all sides and the latest brewing economic movement to “#OccupyWallStreet“.  It comes down to the simple fact that if folks can’t feed there families and afford basics like transportation, education and insurance after working 40hrs a week there will be more working class uprisings. When working and middle-class people have jobs they don’t have time to riot, but give them 6 months of watching their family suffer and you bet they will take to the streets.

Here is the simple concept:

Yes, America is business friendly, which is why we have the world’s largest economy. So what in practical terms does it mean to be business friendly? Most times the talking heads will say “lower taxes” but clearly its not the only criteria because without tax revenue you could not have the others like: tap water, sewer lines, roads for customers and product shipments, local law enforcement, fire protection, an educated workforce, and so on.  Somehow people seem to forget the enormous investments that were made during the Great Depression. Yes some of those projects were making weapons for WWII but make no mistake that was still government spending that put millions to work. There was also domestic spending on large infrastructure projects for transportation and energy that created a foundation that private sector interests could take competitive advantage of and become successful. Now that many of these larger corporations have grown internationally they only see the US as a market and not a neighbor whose success is seen as mutually beneficial. The folks who blame the government for all their problems should remember that they are in fact part of the government. That’s the catch in a democracy. If our government is out of control or ineffective it is up to us to fix and put it back on track.

I’ve noticed a lot of double speak emerge in the “get the govt. off my back” class. On one hand I hear the FED must stop printing money, on the other I hear its ok for the 1% to continue to collect a larger portion of the wealth. The issue is not that the rich are getting richer but that relatively the poor and middle-class are getting poorer in comparison. Yes the wealthy pay almost 50% of income tax in the U.S. but I’m sure Congress would lower the threshold if thats what people really wanted. Another more practical way is for wages to go up, but when corporations raise cain over a 4% increase in the marginal tax rate somehow I don’t see it in the cards.

When I hear rhetoric like “Americans work hard and should keep their money” I have to agree. The comment however seems to suppose that there is some positive correlation between how hard one works and their income level. There is no such correlation, if there were construction workers and middle school teachers would be the highest income earners. The latest line to enter the class warfare lexicon is ‘job creators’ so let me introduce another, ‘wealth creators‘. The workers who push the paper, turn the cranks and otherwise redistribute company revenue are the only reason these companies are profitable.  A person who works full-time but can’t afford basic living expenses is not an employee but an indentured servant at best and a slave at worst. So when Bank of America lays of 40,000 workers as they plan, a good question is, “who picks up the tab for unemployment?” Of course its the tax payers, the same people who funded the financial bailout while job creators squandered the country’s investments and retirement. Sure, the company does pay a portion in unemployment insurance but it will never cover the true cost of unemployment that includes deep social, economic and psychological problems like alcohol and physical abuse.

The point:If American’s invest in business then business must absolutely be required to invest back into these same communities otherwise they are not job creators but wealth destroyers. The idea of our form of government is to ensure opportunity for all and not equal outcomes. There is away out of this mess and it involves consumers and citizens being more aware of how they spend their money. Buy local when you can and see how your money stays in the community. Its no wonder why cities like Austin thrive even in recession, people here love the mom and pop shop and Mom and Pop love their city.  So as we ride thiseconomic wave its not about how big our particular ship is but if it will still be floating when the next storm hits.

11 thoughts on “Why we tax the rich- for dummies

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  1. America was built by the hard working backs of Americans. The rich made their money off those backs, then promptly turned their own away from the very people who helped them get to the position they are in. Who REALLY needs 20 BILLION dollars anyway? What good does it do ONE person? I mean, after 2 billion, doesn’t it just get meaningless?

  2. What would be a fair amount for the rich to pay? Would you like to see only the top 1% pay all of the taxes? That would seem more fair right? Or how about we just get one super rich guy and make him pay ALL of the taxes… Because that isn’t sustainable and not logical.

    You say that there are people who cannot live off of 40 hours a week. That they cannot afford the basics of living. First, let me ask you, how many TVs do they have in their house? Cable? XBox? Not only that, what sort of job do they have that they cannot afford the very basic necessities? I’m sure it is difficult to find a job without a high school diploma, but does that make it my responsibility to feed and clothe that person because they are lazy?

    To create an optimal environment for business to thrive no one is asking for ZERO taxes as you imply, but merely fair (lower) taxes. Think about this… do manufacturers pay taxes AT ALL? The answer is NO, the consumer does (that is you, me, the rich and the poor). Public Water, Fire Department, Police, etc is all a LOCAL matter… the Federal Government does not need to regulate what happens in Mauriceville, Texas… Mauricevillians know best what is best for them.

    I agree that everyone is part of the government, but when we have half of the citizens (and lord knows how many illegal aliens) living off of the system then it is hard to change our current welfare system… You also mention that congress would lower the tax rate if “that is what the people wanted”… well, hate to inform you of this but we are not in a Democracy… We live in a Constitutional Republic. This means that we have a set of rules to follow and live by and THEN the people can decide within those rights what they want… i.e. I want to kill some random person and 99% of the world agrees does that make it right? That being said, our set of rules lists everyone as equal… well how equal is person A paying 25% tax rate versus Person B paying 50% tax rate? THAT my friend sounds more like slavery than a person ‘in poverty’ because they cannot afford the PS3 and the Xbox…

    Just another question, have you ever worked in construction? Or been a middle school teacher? I have never taught, but I have worked construction… I have also managed restaurants, ran retail stores, ran a multimillion dollar division of a company and ran smaller companies… I have to tell you, it is more draining and mentally taxing to run a simple restaurant than it is to work construction… much less a multimillion dollar corporation…

    All of that being said I believe you think you have the best intentions… but treating one person worse than another person is wrong. Taxing one person at a higher rate is saying like saying that person isn’t as free as you. Not only that, if we punish the hard working and rich and reward the poor and lazy then where is the incentive to work hard and succeed?

    1. Thanks for your comments they are very thoughtful. Also thank you for recognizing that I do have the best intentions, its the only way we will ever get past the rhetoric and solve problems. I’d love to address you point by point and I think I will over time.

      My grandfather was a general contractor so my first summer jobs as a kid were construction so I knew I wanted to do something else specifically because it was incredibly labor intensive. I also disbelieve that higher wages means someone is working harder. I’m not here to support the lazy. I just want to see people who work that hard be able to support a family and afford insurance and the right to grievance when they get hurt on the job.

      I welcome any further dialogue.

  3. One problem I always have with Jeramy’s rhethoric is the assumption that success = hard work and that poor=lazy. What I think he fails to understand is the infrastructure that even ALLOWED the ultra-rich to become so in the first place. I wonder if he honestly believes that the ultra-rich could have gotten anywhere if it wasn’t for the wonderful roads, sewer, electric and other luxuries that didn’t even exist in this country at the turn of the century that enabled Americans to be the dominate fiscal power in the world. The poor aren’t even a blip on the radar when you group the fiscal power of the ultra-rich in comparison with “working class” and poor. Additionally, 50% of the mega-rich did nothing to earn it. They inherited it. Thereby providing your truly lazy people. They sit on their rich fat butts and do nothing except applaud themselves for how rich they have remained.

  4. There’s no argument that justifies treating men, or their property differently. A poor man who benefits more from public largesse should pay exactly the same percentage of taxes as the super rich. Don’t repeat Buffett’s BS, I’m not a sheep. Corporations pay 35-40% taxes, investors pay another 15% in realized capital gains, then they pay again against their salaries. The problem is that our working class is now in direct competition with international workers. A widget built in China is cheaper to build because they can produce cheap energy, use cheap labor, with less interference, and at a LOWER tax rate than we charge. Get used to it. In an open market we are all in competition with each other. “hard work” is the wrong ethic, smart, efficient, innovative productivity is what we need. Friedman once asked why the Chinese used men with shovels for large construction projects, their answer was that it put more people to work. Friedman responded, “then why don’t you use spoons”? The objective of a businesses to make profits for the owners, not provide a living for workers. I don’t care about people’s intentions. The results of good intentions of people imposing “fairness” often ends in tyranny and poverty. Look at the USSR, Cambodia, Cuba, Zimbabwe, Greece, wherever…

    1. So I follow you half way but what comes next after “American” companies move to countries like China and leave real Americans behind? Yes work smarter not harder but thats a hard sale to make amid $4 billion in cuts to education. I care about end results not ideology. We agree business is about profit not people, But I am a person not a corporation so thats what Im concerned about. I’m not gonna sit back and watch any form of government of economic principle shred the wealth of our nation because thats just “capitalism”. We have a constitutional republic and if most people are benefiting they will take to the streets, and rightfully so.

  5. Gonna give y’all a quick lesson in Capitalism.

    Lets say there is a desperate college kid who cannot afford to buy his mother a Christmas present. So he goes in the garage and melts some crayons to make a candle. His mother just loves the thought when it comes time, and the neighbors don’t want to make the lady feel bad so they say wow, thats great, can i get one too… So the kid sells the neighbors some and this continues until the kid has more orders than he can handle by himself. So at that point he hires someone to help him… NOT because he likes to hire people, not because it is his duty but because he wants to make more money and out of necessity. So this continues until he has a very well known and successful candle making business. Well Sheila Jackson Lee (insert any evil politician here) thinks that he is making too much money and he needs to pay his workers more and he should personally pay more in taxes. Well, the kid, now millionaire, decides to shut the doors and fire the employees because he doesn’t need money anymore… His invention and ingenuity created the business. If his employees were able to do so then they would have…. The worker is replaceable, not the entrepreneur.

    1. This is a good analogy for capitalism, the deal is this is not a pure capitalist country. I think thats a good thing.Capitalism like every other ism has enormous flaws. I happen to think systemic poverty is a flaw. I support small and local business but for whatever reason once it reaches a point the human interest calculus changes and thats where I see the cost benefit change. Once that kid forgets he started small and that each person matters whether its the first customer or the first employee things change, for the worse. I believe in a balance. True the highs wont be as high and the lows not as low but the boom and bust of capitalism bares an enormous human cost thats not worth supporting an ideology.

      1. Sadly, it is not very much of a capitalist society at all… we are damn near a socialist country. But, we know that socialism never works… it hasn’t in the past and it won’t in the future. Unfortunately, poverty is inevitable… not everyone is meant to succeed. God did not create us all equal. If he did then we’d all be geniuses inhabiting other planets right now… OR, we would have to dumb down to the lowest common denominator all be idiots who are barely scraping by and living off of government… That is the downside to socialism… it makes everyone equal, sure. But they are all equal in less freedom and prosperity. You might say that you disagree with socialism as well. BUT it is hard to say that since you don’t support capitalism. There is Capitalism on one side, and anything that is not true laisse faire capitalism is just some form of socialism, on its way to being fully there. And as for little Johnny (not his real name, but that is a true story btw), who gives a shit if he is a evil person or not? If he doesn’t treat his customers well they will shop somewhere else, if his employees don’t make enough they can seek employment elsewhere… if he’s a giant dick and exploits the cheap labor of the working class then so be it! they have a choice to be there… we don’t need any entity telling us what to do, period. Lets say it was food instead of candles, we don’t need a health department. One outbreak of food poisoning and who the hell is going to eat there ever again? That is the joy of capitalism… freedom of choice. I know you don’t want anyone to starve or anyone to be in poverty or anyone to suffer… but that’s life. If God didn’t want us to suffer then we wouldn’t. He DID, however, want us to be free… I don’t know the source off of the top of my head, but it is a great quote:

        “Free men will NEVER be equal, Equal men will NEVER be free…”

  6. I would just like to say that if it was not for the Federal and State goverment small towns like Mauriceville would not have good streets, sewer systems, and electricy. That stuff that people take for granted cost way more money than any tax base of small city can afford. If we going to be fair why are we over taxing are cities (in texas Austin, San Antonio, Houston, and DFW)
    I loved to see rural america have to pay it’s own way. Let’s see a county like Orange pay for it own highways. It’s not fair for more populated places to pay their way anymore. If they weren’t so lazy they would move to the big city and be part of a real taxbase.

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