But Now You Know

The search for truth in human action

Should You “Give Back” to Your Employer?


When you buy bread for a dollar, the seller is "giving back to the community" for the dollar, by feeding you a dollar's worth of food. He is literally "feeding the hungry".

Each year, a generous social organization probably gives you tens of thousands of dollars, through your job.

You are very fortunate to be given this plentiful benefit, and should give back to the society of your bosses. Perhaps by giving them money, or volunteering to help them prosper.

“But wait” you say, “they didn’t pay me that money as charity…it wasn’t fortune! It wasn’t a windfall or luck! I earned that money! They were paying me for services I rendered to them! I owe them nothing, because it was a fair exchange!”

And you’re right, of course.

This is so obvious that my statements above were patently absurd. I couldn’t easily find a way to make them convincing, lest I drive you away by sounding like a nutcase.

And yet that’s just the sort of insanity that “progressives” advocate, these days.

That’s How They Got Rich

Certain class hate types are saying we should take even more money from the wealthy (families who make over $250K and already shoulder 90% of the Federal income tax), because “those who have benefitted most from our way of life can afford to give a bit more back“.

But most people who get rich earn their money, just like you d0. Their customers, like your employer, trade with them voluntarily, and (hopefully like your employer) believe they are getting as much or more as they are paying for. They “benefit” only exactly in proportion to how much they “give back”, already. If you earn a billion dollars in the marketplace, it means you have already given over a billion dollars in value to the people who (therefore) paid you for it.

Now it’s true that some wealthy people don’t get their money consensually. It amounts to ill-gotten loot they secured because they are the crony of some corrupt politician who hands them fat taxpayer money as pork — for example, Dick Cheney and Haliburton, or Democratic Senator Claire McCaskill’s husband. And I’m all for a special surtax on government officials, employees, and contractors and their cronies, who profit on the taxpayers’ backs instead of by contributing to society.

But if we want to attach being wealthy more with contributing to society, we need to reduce government’s influence, instead of expanding it. When government oversteps its legitimate boundaries, it ends up voilating our choices, making people rich whom we would not have chosen to pay, who did not to society for the money.

Whether with needless government contracts, bailouts, pork, or forcing you to buy from someone like a monopoly (cable and power companies) or mandate (health insurance under Obamacare, mercury-laden lightbulbs and inferior toilets), this does create wealthy people who’ve given nothing…and we need to stop it from happening.

People who earn their money have already “given back”, and don’t need to make some extra sacrifice as punishment for their success. That success shows how much they’ve already given. We need to stop the class envy greed, and focus on cutting the spending that is done on the backs of all productive Americans, freeing ourselves to succeed again.

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April 16, 2011 Posted by | Economy, Philosophy, Politics | , , , , , , , , , , , , , | 1 Comment

Trickle-Down Taxation


2. A heavy progressive or graduated income tax.

Item #2 of the Communist Manifesto: "A heavy progressive or graduated income tax". What isn't mentioned is that this was a way Marx could make the poor even poorer and weaker, not the rich. Marx gained power from the strife caused by poverty.

One of the best-sounding of the freebies that Obama is offering to hand out (if it’s not just another politician’s empty campaign promise) is exempting everyone who makes under $200K from the income tax. This one even tempts me. Lower taxes are good for the economy, for economic freedom, and of course for everyone who earns less than that amount of money.

But there’s a serious down-side to this. How do we fund all of the other freebies he is giving out, if we are going to cut government tax revenue with this one?

Of course the answer is simple: We are going to tax the people who make OVER $200K so much more that it makes up for the loss. Obama says it’s only fair, to “spread the wealth around”.

Now this may not be quite as bad as it sounds:

  • First, people who make over $100K or so pay most of the taxes, already. Unfortunately, Bush’s tax cuts were not really all that “for the rich”, and “wealthy” people already pay almost all of the taxes. It was pointed out today that there are some companies, in fact, that are forced to pay more taxes per year, individually, than 66% of all families. It’s famous that the top two percent of earners pay something like 60% of the taxes.
  • Second, tax cuts boost the economy, which increases tax revenue. Both Reagan and Kennedy both demonstrated this, cutting and simplifying taxes, and having tax revenue increase.

Unfortunately, those two things aren’t enough. The billions paid by people who earn less than $200K still adds up…and tax cuts don’t all work equally well.

For example, tax cuts that favor one group over another help the economy less, while ones that spread the burden evenly help everyone more. In fact, simply spreading the burden evenly, with NO tax cut, would boost the economy more than cutting taxes for some people, while raising it for others.

Especially when the taxes (as they already, are, and will now be more) are designed to punish hard work, success, and contribution to society.

Just as a slight increase in interest rates, so small it certainly doesn’t change any one person’s mind, has a large nation-wide impact on how much people borrow, so a tax that increases as you earn more money has a nation-wide impact on how much people earn, depressing income growth.

But there’s something involved, that’s more important than ALL of that:

WHEN Barak Obama raises taxes on people who earn more money, the wealthy will not pay a penny of it.

You will.

The counterpart to trickle-down economics (which points out that wealthy people who earn more money spend and invest more, allowing all of society to become more wealthy) is…

Trickle Down Taxes

When you raise taxes on the rich, they ALWAYS respond to defend their wealth. The more money and power they have, the better they can do this. They can give themselves raises, pay accountants to shelter their income, or otherwise make up for the new tax.

But where do they get the new money, to pay themselves enough to make up for the taxes?

From you.

Wealthy people and companies can, for example, raise prices to pay themselves enough extra to make up for the taxes. Guess who pays the higher prices.

They can also cut jobs or pay among their employees, in order to make enough to pay themselves more. Guess who the employees are.

Along with those two tools of passing along higher taxes, the rich and powerful can cut quality of products, again to save for themselves. Ice cream that was once two quarts is now 1.5 quarts, and the same price. Check Edy’s and Breyer’s, next time you’re shopping. Guess who ends up paying for all the reduced-quality/quantity food. Not the rich guys…the can afford to pay a premium for consistent quality.

Ultimately, ALL costs the government imposes on the wealthy, they pass down to you.

Oh, but the tax trickling isn’t done, yet.

If They Lose, You Lose More

Let’s say you, somehow, manage to force the wealthy and powerful to pay for their own taxes.

You are now shutting thousands of people out of jobs, and, causing more hunger and poverty.

Why?

Because the wealthy don’t put their money in giant Scrooge McDuck vaults, to play in while they cackle wickedly. Instead, they either spend or invest it. Spending it creates jobs directly. If they buy a car, someone built it, someone shipped it, someone sold it, people repair it, people clean it…maybe someone even drives it as their job. The less money ANYONE spends, the less work there is. But, let’s face is, the wealthy have more money, per person, than other people, and therefore supply more jobs with money.

Poor people have to mow their own lawns (if they have them). Middle class people may be able to pay someone to mow their lawn for them. A few dozen families might, between them, manage to keep one lawncare guy employed. But one wealthy dude may employ a half dozen lawn guys, all by himself. 

Take away his money, and the rich guy may have to lay off his lawn people…perhaps one hundred times the job impact of a middle class person having to stop hiring a lawn guy.

But most of a wealthy guy’s money is not spent, so it doesn’t make jobs.

Well, not directly.

Investment Creates Jobs

Instead, it gets invested. Invested money, of course, goes directly to creating wealth. That’s the whole function of investment…the reason that the investor gets more money back. The creation of wealth actually creates MORE jobs than spending money directly. This, in fact, is what actually drives employment, in general. Without investment, we really would “run out of jobs”. The economy would stagnate, and we’d end up like Communist China was, before they went “capitalist”.

The “capital” in capitalism is investment.

Rich people and companies are the reason most new jobs ever get created at all, because it requires investment to build the factory, or store, or restaurant, whatever it is. Even when poorer people start their own successful business out of pocket (something pretty rare, because of government regulation and taxes), they only create large numbers of jobs as they become successful and rich.

One of the many reasons the economy is so weak, now, is because investment is so rare, thanks to punishment of investment through taxes, regulation, deflation, and the preference for stagnating money shelters like bonds and treasury notes, over the stocks to which government has proven to be so hostile.

If we are to get back on the road to economic growth, we must first get on the road to economic freedom for all, including the wealthy, who just happen to pass on ALL effects we try to have on them, good or bad.

December 3, 2008 Posted by | Economy, Politics | , , , , , , , , , , | Leave a comment

   

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