A left-wing economist, who writes for the New York Times, recently faulted America’s corporations for a low rate of capital investment. A similar period of low capital investment occurred during the 1930s. It was the reason that recovery from the Great Depression took so long. Both then and today great hostility existed towards business. In the 1930s regulators and unions harassed business, and tax authorities pushed for rate hikes. Bad publicity was merciless. Business was well capitalized back then but pulled in its horns and invested very little in expansion. It was too risky to do otherwise.
We have much the same going on today. Various state attorneys general are on the warpath against business in hopes of furthering their political careers. Government threats and lawsuits are daily fare in the media. Unions and activist groups vilify successful companies like Wal-Mart. Capitalist villains get far more ink in the press than innovators and entrepreneurs. Fairness doesn’t exist. An Enron chief gets 21 years, while a drunk driver who kills two people gets nine months. New government regulations inhibit raising capital and stifle expansion, while mealy-mouthed politicians push to raise taxes. In other parts of the world, government keeps out of your hair. They don’t load you down with regulations, pension costs, health care expense, legal costs, exorbitant insurance requirements, permits, licensing and every kind of tax under the sun. What business wouldn’t think twice about building a new factory in the US?
One of the biggest lies heard from the many leftists in America is that wealthy people don’t pay their fair share of taxes. The media constantly reports this lie as if it were gospel. In reality, the wealthiest 10% pay 71% of the taxes. The richest 1% pay 37% and the top 40% of earners pay 99% of the taxes. Sixty percent essentially pay nothing. Sounds like any unfairness comes from the wealthy paying more than their share. State and federal income taxes take about 40% of the earnings of the affluent, and there’s no way around it that I’m aware of.
The falsehood that people with high incomes don’t pay enough tax gets repeated over and over again as if through repetition, it becomes a fact. This lie is rooted in envy and a bankrupt social sympathy where the leftist gets to feel good, not from giving his or her own money to the subsidized, but from seeing that someone else gets squeezed.
It’s particularly galling to see government employees, teachers unions, retirees and welfare recipients lined up to pressure state legislators to take more of the money we work hard to earn. They have soft jobs, fat pensions and some of them do little or nothing to get the tax money that the productive people earn. Do they ever ask themselves what moral right they have to the earnings of others? Nothing creative can ever occur among those who live off the labor of others.
Our state legislature here in Minnesota has given us a look into the future. Liberals introduced a proposal to increase the state tax to 11% on incomes over $166,000. That would be the highest state income tax in the country. We have a budget crisis in Minnesota because of runaway healthcare costs. A family with less than $43,000 income (after taxes) gets health and dental care for only a few bucks for a small amount each month.
Welfare beneficiaries call my city “Moneyapolis.” They’ve moved here from all over America to get more subsidies than they were getting back home. Along with them came big increases in crime, drugs, alcoholism and dysfunctional family behavior. In Minnesota, we devote more time to worrying about our fishing limits than whether little kids should stay with parents who are prostitutes or drug dealers. This year we’re concerned if someone catches more than ten crappies or sunfish, but not at all concerned about parents who aren’t fit to raise a stray cat.
In our state you get free healthcare, free housing, food stamps, paid heating bills, aid to dependent children, welfare benefits, unemployment, and if you want to claim your nerves are bad, a thousand bucks a month from social security. It’s an attractive package that acts as a reverse incentive for those who may not want to work. After a few generations a degree of helplessness sets in that makes these poor souls unable to work or hold a job, even if they wanted to.
In our high-inflation country, where currency debasement effectively lowers wages, over time it becomes harder and harder for people to make it financially. Recessions that follow credit-driven booms raise unemployment. Nimble speculators prosper during inflation and its aftermath, while most people find they are worse off. More and more people turn to social programs and subsidies. Meanwhile, new benefits are legislated into existence. This gradual process raises public spending to the point where government deficits become unmanageable. Rather than cut benefits, the liberals prefer to raise taxes.
Should my state embrace new tax proposals, it will likely result in less tax revenue. Most wealthy people have secondary residences in states like Florida, which has no income tax. Many will become residents of those states to avoid the tax. Some corporations will move out of state and it will be difficult to hire top executives into a high tax environment. Most importantly, high incomes provide the seed money for new enterprises that create jobs and prosperity. High taxes are a penalty on progress. The final outcome of the liberal agenda is poverty for all.
Finally, there is this question raised by the philosopher Ayn Rand. What is the moral right you have to someone else’s earnings? She and many others have suggested it’s an unethical process for the state to take one person’s money and give it to someone who didn’t earn it. Philosopher Frederic Bastiat wrote that a government’s morality could be judged by the answer to this question. “See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong.”