Brad Wardell's views about technology, politics, religion, world affairs, and all sorts of politically incorrect topics.
A conversation
Published on February 21, 2007 By Draginol In Politics
This past week I had a very interesting debate with JoeUser's resident socialist, Col Gene. He is always trying to find new and creative ways to advocate higher taxes on anyone who makes more money than he does. His argument always boils down to the deficit and that rich people can afford it.  The former argument is nonsensical because politicans will simply spend all they get and more. The latter is a classic socialist argument.  Below is some of the conversation.

Socialist claim: What I have said is that the distribution of wealth is skewed too fare toward one side.

Wealth isn't distributed. In a capitalistic society, wealth is earned. Person A provides Person B with a product or service in exchange for money.

Socialist claim: very wealthy for example pays far smaller % of their income to Social Security taxes then the low and middle income workers

Of course. That's because social security is CAPPED. There's only so much you pay in and that's how much gets paid back. 

Socialist claim: If your annual income is 1 Million dollars you are paying about.6% of your income in Social Security Taxes where a person making $25,000 is paying 6.2%. How is that fair?

What does fairness have to do with it. If I make $1 million and put $60k into a bank aboutn I am putting in .6%. On the other hand, if I make $20k and put in $1000 into the bank then I am putting in 5%.  So what is your point?

Social Security is, in theory, supposed to be a retirement plan by the government.  If I were emperor, I would do away with it entirely and then no one would have to put anything into it.

Socialist claim: The wealthy can pay slightly higher income taxes (like those in effect in the 1990's) with NO adverse impact on their life style. If we have a slight shift in the wealth to the middle and low income working families it would not only help many meet their most basic needs but they would spend almost 100% of that income that was shifted and help the economy.

There are so many things wrong with this statement I'm not sure where to begin.

First, what we pay in has nothing to do with whether we can afford it or not. The government, like the electric company, exists to provide its individual citizens with a service.  Stealing one man's earned income to give to another is wrong.

Secondly, you clearly have no idea of what the "rich" do with money. You are correct in that their lifestyles wouldn't change if you taxed them more. That isn't the point. The people with the highest incomes INVEST their money. That's HOW you get rich in the first place. You keep investing your money to make more money.  That investment is what creates jobs, opportunity, and new goodies for us to use. 

Taxing the rich more won't hurt the rich personally, but it will, in the long-run, hurt everyone else through fewer jobs, a slower increasing in standard of living.

Moreover, the # of Americans who don't have access to "basic needs" is trivial. I've mentioned this before but the poorest 25% of Americans live pretty well on average. Most have DVD players, TVs, Internet access, cars, and a slight majority of them even own their own home. They even get free medical care via Medicaid.  But even that's irrelevant. It is not the responsibility of the government to give away other people's earned money to other people.

You basically see the government as something that RULES us. This is completely contrary to what the founding fathers intended.  They saw the government as a glorified neighborhood association. For the first hundred years or so, the govenrment only taxed for services rendered.
 

Socialist claim: If you have a seven figure annual income (that would place you in the top 1%) then you paying another 5% in federal Income taxes would not impact you life style. What will impact all of us is the fact we are operating this government at a substantial deficit and have piled up a National Debt of almost $9 Trillion dollars which we must pay interest on EVERY Year. We will be paying $500 Billion PER YEAR in interest. That interest comes from the taxes you and I pay and is money that is not available for other obligations like Social Security and Medicare benefits.

You are correct, it wouldn't affect my lifestyle. I'd just have to lay off a worker or two because that's where my excess income goes to -- investing in my business.

I have also pointed out, repeatedly, that it is well known that the budget would be easily balanced if we simply FROZE spending increases for a couple years. No cuts needed. Just quit increasing spending until the tax receipts catch up.  The tax recepts of the federal government have nearly doubled since Bush came in. Imagine the surplus we would have if they hadn't increased spending at an even faster rate.

Socialist claim: I worked about 40 Years and paid my taxes so my parents and grandparents could receive their Social Security and Medicare.

So you admit social security is a pyramid scheme. 

I also work but see it as a moral obligation to help my family myself and not rely on the government.  Free citizens do not need the government to do the right thing. They do the right thing because they are free people.  I'm sorry you need the government to intercede for to take care of your parents and grandparents.

The issue that socialists have is that they want the government to take over the economy.  For the past 60 years, the normal level of government intrusion in the economy has been around 18%. By 1998, the government had managed to get to over 21% of the economy. Something needed to be done -- tax cuts. 

Take a look at this graph from the CBO:

Graph

Historically, the federal government was only confiscating around 18% of the generated wealth of the country. Bush helped get it back to something approaching normal. As you can see, however, social security is slowly going to intrude more and more as you get out into the future. Socialists think that's a good thing. They prefer the government rule us.

The basic problem with most socialists is that they have no understanding of economics. They  think if we just raise taxes everything will be fine. But that's not how it works. If you raise taxes, you are simply shifting wealth from the private sector into the public sector.  And who has a better track record of producing wealth? People like me or some clueless politician in Washington? 

Moreover, even if you raised taxes the 40% needed on the wealth to balance the budget next year, it would only be a temporary solution. In other countries, the government represents up to 30% of the GDP and guess what? They have debts too. Governments will always spend what they get because they have an incentive to do so. 

That is why the tax recepts and spending receipts aren't a good measure of what our tax rate should be.  The real question is, what % of our economy do we want the government confiscating.  Once you make that decision, then it's just a matter of the government living within its needs and making sure enough taxes are being collected to meet that number.

Look closely at this graph.  The government's tax income today is the same as it was when Bush came in.  Yet we have these scary deficits you mention.   So what is the cause then? Spending. We increased spending across the board:

You see the problem? Since Bush came in, spending just went berserk. And it's not because of the Iraq war alone. The government went on a spending spree.

So to sum up:

  1. Rich people are rich because they invest their money.
  2. If you tax the rich more, it won't affect their lifestyle but it will mean they have less to invest (look at how quickly the economy jumped back largely thanks to the tax cuts).
  3. If the rich invest less, people lose jobs.
  4. It is immoral IMO to advocate that the government should confiscate money from one person to hand to another who provided no service to the original person.
  5. Tax rates and spending levels are the wrong metric. It's what % of the economy you want the government to be involved in.
  6. We have a deficit today because we increased spending.
  7. Tax cuts are why the economy grew so fast after the recession.

The reason why the United States has been at the forefront of economic progress is because we have laws that encourage people to work very hard.  The moment you start penalizing people from working hard, the worse off all of us are.  I work on average 55 to 70 hours per week depending on how busy I am.  I do that all year round. I take maybe 2 weeks off per year (which is really just making up all the weekends I work).  As it stands today,  I am working about 20 to 30 hours per week for the government. That is, I'm working what amounts to nearly a second full-time job just to pay for the government.

And I support paying taxes because my country does so mcuh for me.  What I don't support is the government confiscating my income to give to others who hasn't earned it.  I think it's a toxic, evil thing for a government to do. It robs the earner of freedom and it saps the will out of the receiver. It's certainly not compassionate.

Free men and women control their own destiny. When we give power to the men with guns, we cease being free.

 


Comments (Page 3)
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on Mar 09, 2007
Brad, excellent post except for one logical falacy:
"The real question is, what % of our economy do we want the government confiscating"

You're presupposing that the government has the right to steal money from people, and the only question is how much it has the right to steal. It doesn't have the right to steal any money. It has the right to charge those that use the services for the services if they wish to partake in the services and only if they wish. Just like all other fair trade.

As soon as the government assumes that they have the right to take with providing equal value in trade, they are thiefs just as surely as the gang on the street.

For more information people that wish to be educated on economics and the value of capitalism should read:

The Capitalist Manifesto

and

The Making Of Modern Economics

Both of these give you a true picture, without the retoric of socialism and bizzare ideas like Kaines who's theories have been used to run the western world into the ground, even though this theories only worked during a government induced depression and not in the real world...
on Mar 10, 2007

Brad, excellent post except for one logical falacy:
"The real question is, what % of our economy do we want the government confiscating"

You're presupposing that the government has the right to steal money from people, and the only question is how much it has the right to steal. It doesn't have the right to steal any money. It has the right to charge those that use the services for the services if they wish to partake in the services and only if they wish. Just like all other fair trade.

I'm afraid you are incorrect.  The income tax law confiscates based purely on income. If you want to disagree, feel free to take the matter to court against the government.

on Mar 11, 2007
It's not a theft, it's a tax, nor are you enslaved to pay it, you choose to work, and earn the income, therefore you accept the good with the bad, which is that the income is taxed.

You can choose to be a bum, and not feel enslaved to make any income or pay any tax, same with choosing to do lots of things. Shower, eat, sleep, each has it's own set of consequences which follow on to any choice you make.
on Mar 11, 2007

Dan,

You aren too dumb to participate on my blog.  If you think I am against taxation in principle, then your reading comprehension is so poor that you are wasting everyone's time.

I have said countless times that I not only believe in taxation but I believe in progressive taxation.

My objection is when the federal government confiscates income to hand to someone else. The government was set up to provide for "common cause" not to give money to one person that was taken from another person.

But you would know my beliefs if you bothered to read them. But I do think you read them, you just aren't capable of debating issues so you create countless strawman arguments. You've been warned about this in the past and so now you're done (based on the incredibly contemptible strawman you did here).

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