Taxing the Rich, and a question of fairness


The premise of a recent debate on Fox News was that taxing the rich will not solve the current financial crisis that we are in.  The liberal involved in the debate, continually tried to switch the premise of the debate to the question of fairness.  He stated that he thought we should tax the rich more so that the scales of economic justice were evened out and someone else was given a fighting chance.  “It’s a question of fairness,” he screamed over and over.

At this point in the debate, the moderator should’ve stopped the proceedings to ask the liberal what good this “fairness” would do for the country as a whole?  Other than making us all feel like wonderful people, what will be gained by taxing the rich more?  Most people have so much invested in “others getting theirs, so that I can somehow get more of mine” that they fail to examine what good it will do.  “I’ll just sleep better knowing (feeling) that my neighbor down the street doesn’t live so high on the hog.  He needs to get his too.”  This is the general sentiment that most people feel, and most politicians know is a raw nerve that is easily tapped.

If we stick to this “tax the rich” arena of the national debate, we will get President Barack Obama re-elected, but other than focusing on an issue that Obama’s team knows is politically expedient what will be gained?  As anyone who has been paying attention knows, it will not have little to no effect on our deficit or our debt, but it will be fairer, and we need to return to that level of taxation that gave us a sense of fairness to all.

The top marginal tax rate for the highest income earners in our country is currently 35% {1}.  What is a fair rate?  Let’s say we all agree that the rate should be near 40% (as it was under Clinton) {2} on annual income the rich pay to the federal government.  If we do this, we will only push our definition of fairness to greater levels.  We won’t be more satisfied, in other words, when we tax the rich more.  It will only lead some politician, or some talking head, to declare that we need even more taxation for even more “fairness” to the constituents who have less.  It’s a never-ending charade that gets the purveyors of this vein of populism re-elected, and the only result will be less money in the private sector, and more money in the public sector.  Nobody, outside of those politicians that draft the legislation, will honestly believe that the country is fairer.  But it will bring the debt down a little, you say.  It will be a good start, you say.  Actually, there will be no provisions made on the politicians to spend less.  This is about increasing taxes.  This is the good start.

“Let’s return to the Clinton era level of taxation,” the liberals say.  “When all of us were prospering.”  Yeah!  Good line!  High fives all around.  “Okay, say Republicans, “Let’s also return to the Clinton era level of spending.”  Sorry, but the base-line spending of the Federal Government has increased to such levels that we can’t quite return to those levels without…without riots in the streets.  Unless, that is, you want to decrease spending on defense, then we’ll talk.  We can’t cut spending on education though, or entitlements, or park service payments.  Let’s just talk about raising taxes for now.  It’s a good start.  Let’s start there, and then we’ll talk about lowering spending levels later.  If Republicans were to agree to this, with the promissory ruse attached to it, they would have egg on their face when Democrats campaigned that the levels of taxation were reached in a bipartisan fashion.  When they don’t fall for it, they’re called a do-nothing Congress.

In this Fox News debate, the liberal said, “If we tax the rich more, it will give others more of a chance.”  The question of how one person receives “more of a chance” as a result is never explained by liberals.  Most conservatives, who know a little bit about economics don’t understand how this is supposed to work.  There is that chance that it might make us feel better about ourselves when our representative pulls that “aye” lever, but at the end of the day no one will be helped by it.  Warren Buffet’s secretary doesn’t have more opportunities opened up to her when Warren’s capital gains taxes are raised to 35%.  We’re talking about fairness, you say.  It’s unfair that Warren Buffet gets taxed at 17% while his secretary gets taxed on a 32% rate.  It’s just that, you say, a question of fairness.  Fair enough, but it won’t help anyone.  Most liberals, who know a little about economics, would concede that it won’t do anything to solve the debt or the deficit, and they know that taking more money out of the private sector will do more harm than good, so what’s the end game here?

The end game is getting President Barack Obama re-elected.  Pure and simple.  It’s about diverting the issue away from the fact that he has no accomplishments to point to.  Okay, he single-handedly master-minded the ten-year action of killing Osama bin Laden.  Ten years?  Okay, he gave the thumbs up on the killing of Osama bin Laden, and that took courage.  So let’s rephrasethis: he has no economic accomplishments that he can point to in his bid for re-election, so expect five more months of deliberations on how much more to tax the rich to make things fairer, to give other people a chance somehow that’s never explained, and to get more people turning out to vote if he gives them the illusion that he’s fighting for them.  He may not tax the rich more.  He may just allow the Bush tax cuts to expire on December 31, 2012.  That will be an absolute disaster by most bipartisan accounts, but if he promises to do it people will vote for him.  Great!  Then what?  There’s no point to it.  If you think that Congress, and the President, will have more money to spend, you’re right.  They will have more money to waste it in the same manner they wasted the first 5 trillion the past three years.

So, if there is so much disagreement about levels of taxation, what is the answer?  We don’t know, that’s what plagues us.  We do know that the President is not responsible for creating more or less jobs in America today.  That’s the job of the private sector, and depending on the day you’ll hear Obama and Jay Carney admit as much…unless that president initiates record high corporate taxes and regulations that impede private sector progress.  We also know that every president receives all of the blame and all of the credit for something like the unemployment rate, and some of us think this is unfair…unless that president issues threats (and perceived threats) against corporate America that causes corporate America to begin stockpiling their money.

This stockpiling of money is one of the primary reasons for the high levels of unemployment we face today.  You’ll hear liberal talking heads decry this record level of stockpiling, but they will not acknowledge why they’re doing it.  They won’t tell you that it has everything to do with Washington and the anti-business incumbent that sits in office.  They won’t tell you that no one knows what Obama is going to do next, so that corporations are afraid to hire and spend money on expenditures.  They won’t tell you that corporate America fears the instability in Washington that affects them in the near-term and in the long-term.  At this point in America, we have the highest corporate tax in the world, we have millionaires and billionaires running from state to state to avoid increased state income taxes, and the only question we want to ask is how much more should we tax them to create a sense of fairness?

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