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:
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:
-
Rich people are rich because they invest their
money.
-
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).
-
If the rich invest less, people lose jobs.
-
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.
-
Tax rates and spending levels are the wrong metric.
It's what % of the economy you want the government to be involved in.
-
We have a deficit today because we increased spending.
-
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.