Taxing The Wealthy (or "Who Really Pays Taxes Anyway?")

The messiah wants us to believe that we can have "free" health care, painless pork and massive bankster bailouts simply by turning him loose to tax the wealthy. This pitch only works on the economically illiterate, who I don't really expect to be reading this. I'm preaching to the choir, I know, but if you've never crunched them, the hard numbers are fascinating. I hope they make good ammunition for you.

The rich don't have anywhere near enough money to feed our ravenous leviathan government. If you confiscated Bill Gates' entire net worth (I'm using the $58 billion figure from Forbes last year) it would pay for just six days of federal government under Benito's 2010 budget. Six days! In fact, if the government took every last penny from the Forbes 400 wealthiest individuals (2008 figures) there would not be enough money to eliminate next year's proposed deficit!

That's right - one year's federal deficit is now more than enough to wipe out the 400 wealthiest people in America! If anyone was destructive enough to actually do this to the wealthy, the immediate impact on employment would be devastating. I believe it would usher in a much deeper depression than we suffered in the 1930's.

Fact is, everyone's income is down - even the wealthy. Everyone's net worth is shrinking. If you raise taxes on the wealthy at a time like this, you are not just keeping new jobs from opening up - you are destroying existing jobs that would otherwise be perfectly stable. Private sector jobs only exist (and new ones are only created) because there's a demand for the goods produced or the services rendered - in other words, there's money to be made providing for the needs and wants of others. Those demands tend to be ongoing, so a private sector job created is usually a permanent addition to the economy. (At least that's how it works if you're smart enough to not screw up the economy!)

On the other hand, new government jobs tend to be the result of an added imposition on society - a additional and often perpetual burden. The money to pay these workers isn't earned in a win-win voluntary exchange - it has to be forcibly taken from the people who actually produce! This extraction must recur year after year if that government worker is to remain employed. Thus it is that economically literate people cringe at the claim that government creates jobs.

Deficit spending increases the national debt, which increases the interest payment on that debt, which is paid with your income taxes. Last year, interest on government debt was enough to eat up all the income tax we paid! Then there's inflation - the cruelest tax of all. Inflation is what you get when you print up more fake dollars and add them to the existing supply of fake dollars, and it's how you get away with taxing the daylights out of the middle class without them catching on to who's robbing them.

As the burden of government grows, we pay a lot more than just taxes for the show. Every job not created is a cost borne by the middle class. Every regulatory expense imposed on business must be passed on to consumers or that business won't survive. Larger deficits are a given as government grows, meaning higher taxes and soaring inflation. Those taxes crush the economy, and rampant inflation robs entire generations of their efforts, investments and retirement.

One way or another, these costs are passed along to the consumer - in the form of higher prices paid, opportunities lost and Liberty extinguished. It's a mathematical fact that one way or another the consumer pays for everything. No exceptions. Everything.

If only the populace would figure this out - we could solve our problems at the ballot box!


MALTHUS said...

"[E]conomically literate people cringe at the claim that government creates jobs.

But wait, the government does create jobs. Tax lawyers, divorce lawyers, drug dealers, undertakers and construction workers who erect prisons and gallows are among the many professionals who directly benefit from government activity.

fireplaceguy said...

Heh! A thought provoking post...

Never thought of drug dealers as government workers, but you're right!

And, come to think of it, building enough prisons to house all the tax and divorce lawyers might be the best economic stimulus yet!