SOAK THE RICH!

How many times have you heard a liberal (Democrat) make that silly comment, “Soak the Rich”? They say that anyone making over a certain amount ($250,000 for example) should be able to afford an increase in his/her marginal rate to help reduce the deficit. Are they kidding? If everything remained the same (a zero sum) the increase in revenue would be a fraction of what is needed to reduce the debt. From past experience, every time you “punish” successful people by “soaking the rich”, you wind up with much less revenue than what you had projected. Rich people (by the way, what is the definition of rich?) have the means to avoid, through loopholes, the extra taxes they are assessed, or by moving to a better tax environment, either a no-income tax state or to a foreign country. In other words they will vote with their feet. Only a fool, which the liberals seem to be so designated, will think that it is a good idea to take all that money out of circulation in the private sector and give it to the government by increasing the taxes on the “rich”. Is $250,000 really considered “rich”?

The typical liberal says that an increase in the present top income tax rate of 35% to 39.6% is insignificant, only 4.6%. Is it? Let's take a single person with a taxable income of $300,000. It would cost him $4,600 extra in taxes (4.6% of 100,000 over the threshold of $200,000). That means that $4,600 will not be spent in the private sector of our economy thereby helping other businesses who might have otherwise gotten part of that money, money that was paid instead to the government by the taxpayer in the form of higher taxes. Multiply that over the many thousands of taxpayers expected to fall into that category and you'll wind up with quite a few billions of dollars taken out of circulation. A married couple with a taxable income of $300,000 would pay an additional tax of $2,300, (4.6% of $50,000 over the threshold of $250,000). Is that “fair” ( that's the word liberals love to throw around to justify their faulty economic thinking and to tug on the heart strings by demonizing the so-called “rich”) to “punish” a successful person or entrepreneur by raising his/her taxes arbitrarily? Who is better able to spend his/her own money, the taxpayer or the government? The liberal always seems to choose the government.

Let's take a look at who pays income taxes in our country. The top 1% of earners (making over $380,000) pay 40% of all income taxes. The top 5% (making over $160,000) pay 60% of all income taxes. The top 10% (making over $113,800) pay 70% of all income taxes. The top 25% (making over $67,000) pay 86% of all income taxes. The top 50% (making over $33,000) pay 97% of all income taxes. The bottom 50% (making under $33,000) pay approximately 3% of all income taxes. That means that approximately 47% of income earners don't pay any income taxes ( of course they pay payroll taxes, sales taxes, excise taxes etc.) That is totally out of whack, and it means that America is now about evenly split between those who pay income taxes and those who consume them.

Even socialist, George Bernard Shaw, demonstrated good sense when he said, “The government who robs Peter to pay Paul can always depend on the support of Paul”. So as Shaw suggested, people who pay no tax will not hesitate to vote for politicians who promise big spending. Why not? They will get stuff without having to pay for it. Another prescient view was stated by Frederic Bastiat, the great 19th century French economist, who defined that state of affairs as “that great fiction by which everyone tries to live at the expense of everyone else”. That's the situation we find ourselves today in the U.S.A., where one half of the population is living off the other half.

So when the Democrats play their “class warfare” game, they are really undermining our free enterprise system and leading us toward a Socialist society like what's in play in Europe, which shows the fallacy of “soaking the rich” as a viable economic policy. That's exactly what Obama and his Administration are trying to do. He is a president who would rather re-distribute income than create wealth. We must rise up and give him an emphatic NO to his destructive “class warfare” re-distributionist policies by using the failed Karl Marx playbook!

Conservative commentary by Chuck Lehmann