Actually the poor and middle class pay the most tax but, it is hidden in prices. The more you raise tax on the wealthy, the more that is passed on to the working men and women as they change how they get their money.
It is like when John Kerry was running for President and somebody asked him how he only had to pay 12% tax. He simply reminded them that he has most of his income come from tax free investments.
When you tax the wealthy, you hurt job creation and that hurts the working class too. Now, the wealthy will pay taxes and pay more than most to a certain point and then they will change how they invest or they will move their wealth into trusts and foundations that are tax exempt or overseas or they will move themselves as we have seen some doing.
According to the Census Bureau, we now have 10 million expatriates that have moved to other nations. We just saw what happen in Maryland.
Maryland couldn’t balance its budget last year, so the state tried to close the shortfall by fleecing the wealthy. Politicians in Annapolis created a millionaire tax bracket, raising the top marginal income-tax rate to 6.25%. And because cities such as Baltimore and Bethesda also impose income taxes, the state-local tax rate can go as high as 9.45%. Governor Martin O’Malley, a dedicated class warrior, declared that these richest 0.3% of filers were “willing and able to pay their fair share.” The Baltimore Sun predicted the rich would “grin and bear it.”
One year later, nobody’s grinning. One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April. This year there were 2,000, which the state comptroller’s office concedes is a “substantial decline.” On those missing returns, the government collects 6.25% of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year — even at higher rates.
Congress has many wealthy people in it and they protect their wealth in the 17,000 tax code we have. When they protect their own wealth, they protect the wealth of all wealthy people. From the very creation of the IRS and our Tax Code in 1913, there have been provisions in the tax code the wealthy could use to protect their wealth.
What we are talking about when you raise taxes on the wealthy is on their income and that is one of the simplest things to change so that you drop to a lower tax bracket. But, in doing so, you end up hurting investing in business and the creation of jobs. Poor people don’t hire people, the wealthy do in the companies they create and if you take away the reason to create and take the risks associated with those companies, the American worker and our economy suffers.
What we have a problem with is how the wealth in many cases was created. It wasn’t by creating jobs with new businesses. It was through the financial system where we gave out million dollar bonuses (or billions over time). However, when you go after those wealthy people who may have got their money unethically, you also penalize the people who do operate ethically and make the economy stronger.
Remember this from history?
The Kennedy tax cuts
President Hoover dramatically increased tax rates in the 1930s and President Roosevelt compounded the damage by pushing marginal tax rates to more than 90 percent. Recognizing that high tax rates were hindering the economy, President Kennedy proposed across-the-board tax rate reductions that reduced the top tax rate from more than 90 percent down to 70 percent. What happened? Tax revenues climbed from $94 billion in 1961 to $153 billion in 1968, an increase of 62 percent (33 percent after adjusting for inflation).
According to President John F. Kennedy:
Our true choice is not between tax reduction, on the one hand, and the avoidance of large Federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget just as it will never produce enough jobs or enough profitsÃ¢â‚¬Â¦ In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.
I use to have a job where I came in contact with millionaires. I often would talk to them about their companies or success. I was amazed at how many became millionaires by starting a business, did something wrong, went broke, started over having learned from their mistakes and made a million again, only this time, held on to it.
Take away the incentive to take risks like that and you get fewer new businesses, few employees entering the economy, and fewer tax dollars.
Don’t get me wrong. There are huge problems with many wealthy people and how they got their wealth and the harm they have done to the nation but, in “killing” them, you may also kill the “goose that lays the golden egg.” Congress has to be very careful in how they go about eliminating the bad without destroying the good.
Remember this too. Go to any third world nation and there are wealthy people there stifling the economy. Go to any growing nation and their are wealthy people there growing the economy. Wealthy people are like any other income level. Just as you have millions abusing the welfare and disability system, you have some wealthy abusing the freedoms that come with wealth. That is why regulation is absolutely a must but, using tax rates to control an economy or an income level makes no sense.
You need to make the poor and middle class better off. You don’t make them better off by bringing the people who create jobs down to their level.
You cannot help the poor by destroying the rich.
You cannot strengthen the weak by weakening the strong.
You cannot bring about prosperity by discouraging thrift.
You cannot lift the wage earner up by pulling the wage payer down.
You cannot further the brotherhood of man by inciting class hatred.
You cannot build character and courage by taking away peopleÃ¢â‚¬â„¢s initiative and independence.
You cannot help people permanently by doing for them,
what they could and should do for themselves.
- Abraham Lincoln
also attributed to Reverend William John Henry Boetcke
I don’t know who the quotes are really from but, I have heard them all my life from very wise people who weren’t rich, just middle class and seeking to have a better life.
This one is very true as well.
Margaret Thatcher, in a television interview for Thames TV This Week on February 5, 1976. Prime Minister Thatcher said, “…and Socialist governments traditionally do make a financial mess. They [socialists] always run out of other people’s money. It’s quite a characteristic of them.”
It has been popularly paraphrased in various forms:
* “The problem with socialism is that eventually you run out of other people’s money [to spend].”
* “The trouble with socialism is that eventually you run out of other people’s money.”
* “Eventually, socialists run out of other peoples’ money [to spend].”
This is very true in our nation’s case. We have never funded our social programs in a way that is sustainable. 11 times Social Security had short falls and the “fix” was higher taxes instead of reform in how it was funded. Instead of personal accounts with annuities for Social Security like FDR called for, Congress gave us the mess we have now where we have to borrow from China, Russia, OPEC, etc to pay the checks to the retirees in Social Security.
Same with Medicare, welfare, unemployment, food programs. We are borrowing because we have destroyed the will to create business and jobs here and they are leaving for growth nations and better business environments. In the Economic Freedom Index, we have now slipped to 9th.
Some say our marginal tax rate is low and that is true but, the cost of complying with our 17,000 page tax code is often 400% higher than the tax finally sent in. Think of that. Without that cost, business …