Making The Wealthy Pay!
Jul 10th, 2008 by FrankKnotts
The Democratic candidate for president , Sen. Obama has said many times that he is in favor of taxing the profits of ”BIG OIL “ to somehow solve our energy problems. I’ll leave the lunacy of that alone today. What I will point out is that any tax on a business or industry will be paid by the individual consumer , the same people that Sen. Obama claims to care so deeply about.
No matter if it is a corner store or a large industry such as “BIG OIL “, taxes are a part of doing business and are figured into the cost of the products being manufactured or sold. There for we all pay the tax increase as consumers.
If you take a product like ice cream and factor in all of the steps from the farmer who pays property tax on his land and income tax on his profit from the milk his cows produce. Then the taxes paid on the fuel to get the milk to a processing plant to turn it into ice cream, and the property tax the ice cream maker pays on his property, more fuel taxes to get the ice cream to the store for sale, more property tax for the store, and don’t forget all of the licenses and permits that are needed by everyone involved in the process.
Now out of the four to five dollars you pay for your half gallon of rocky road about three to four dollars go to the government for regulations and taxes.
And that is for ice cream , imagine oil production , which is far more complicated and regulated.
So remember that when someone says that they are going to make “BIG ANYTHING” pay their share , what they really mean is , is that government is going to make “BIG ANYTHING” help government collect more taxes from you and me.
Another proposal of Sen. Obama’s is to raise the capital gains tax. This is sold as a tax that will only affect millionaires . A capital gains tax is what you pay for selling for profit something you own. Even though it does mostly affect those with savings to invest in stocks, land or some other investment, what is lost on most people is that capital investment is the engine that drives our economy and creates jobs.
So any tax that punishes this investment will only cause there to be less investment. Any tax on any product or industry will cause there to be fewer products at higher cost.
This is inflation and government benefits from inflation. As government raises taxes on industries the industries raise the price of their products , which increases their gross profit, which is the part that government taxes. Also as cost of living raises go into effect this moves workers into higher tax brackets , which means the government will take that much more ill gotten gain from the working class Americans.
This is also why minimum wage increases are so popular with big government politicians. By raising minimum wage levels they increase the amount of taxes they collect. This sort of mandated wage increase is nothing more than a tax increase, and when you factor in that organized labor will demand the same rate of increase in their contracts we are right back to the cost of ice cream.
This is why when you impose these sort of mandated increases as opposed to merit raises and market driven cost adjustments , you hurt not the intended target “BIG ANYTHING” , but you hurt your average working citizen, including those union rank and file who think their union leadership got them such a sweet deal. Because just like everyone else , they too must pay more for those products manufactured at a higher cost do to government intervention.
So anyone who thinks we can somehow punish (i.e. tax) just “BIG ANYTHING” without affecting every consumer in America is either blind or intentionally attempting to destroy our economy and our freedom . Because it is our power to buy what we want from who we want that we derive our freedom from. It defines our very freedom of choice.
Frank…with all due respect: Are you posting this from some kind of institution?
noman, I’m not sure what part of my post you are disputing since what I have described is exatly the behavoir that Bolsheviks such as yourself hate so much about the free market, that the industries still have the right to set their own prices for the most part, though big government proponents are attempting to take that right away also.
As for the economic chain of events that I desribe, well just look at the Carter administration and you’ll see a clear example of what I described. Sen. Obama is proposing many of the same policies that Pres. Carter imposed which led to an economic down turn that took the policies of Pres. Reagan nearly twelve years to turn around and which Pres. Clinton took credit for.
The modern Socialist-Democrat is a Marxist (albiet sometimes unwittingly)……’from each according to his ability, to each according to his needs.’ As the Wall Street Journal reported recently, citing the latest IRS statistics, the top 50% of tax-filers (those making slightly over $30K per-year), payed 97% of all income taxes collected. Yet, the Socialist-Democrat mantra is ‘fairness.’ What could be more ‘fair’ than the bottom 50% of tax-filers paying only 3% of the taxes? Again. they are Marxists, and there is no limit to their need for income confiscation.
As I have always suggested, try reading ‘Atlas Shrugged,’ by Ayn Rand, one of the most politically prescient books ever written- and see what happens when government is hell-bent on ‘equal-outcome’ wealth re-distribution. Corporations and the wealthy are already being taxed at levels much higher than serfs of the Middle Ages. The left, including lifetime Marxists like Obama, can never seem to comprehend the simple fact that without profit motivation, the well-off and major corporations simply cut-back or withdraw from further investment. The American economy is fueled by a very few major achievers. This has always been the case. Force them out of the loop at your own peril, Socialist Democrats.
“I will stop the motor of the world!”
The American economy is fueled by a very few major achievers.
Bull. The economy is fueled by the bottom 50%. Two-thirds of GDP is consumer spending.
That is why when we are feeling uneasy and cut back our spending, the “achievers” leave a couple hundred bucks stimulus check on the nightstand and tell us to go out and buy ourselves a pretty dress. They don’t want us to run off and leave them.
“Bull. The economy is fueled by the bottom 50%.”
Yeah? Try running your welfare state with the tax revenues they generate.
Try running your corporate state without the purchases they make.
Odyssieus,
You are correct in that the US economy is driven primarily by consumer spending; however, the “bottom 50%” as you alude to are not the ones that do the lion’s share of the spending.
Frank and Rick need to note where we are right now, economically, having lived the past seven years with the Bush monetary and fiscal policies favoring wealthy elites, and with more resources than ever devoted to the military industrial complex.
Frank and Rick, like McCain’s economic adviser Phil Gramm, speak as though we middle and poor are suffering a mental recession. I, like Noman, say BULL!!!
The result: The wealthy are wealthier than ever, the middle and poor are struggling with a housing meltdown, soaring energy and food prices, and stagnant wages. So Frank worries about lowering the tax burden on the wealthy, and Rick promotes the Ayn Rand version of individualism, every man for himself, otherwise known as extreme greed.
Therefore I ask: Is Frank’s and Rick’s ideal what we really want? To anyone not consumed by ideology, instead practicality and balance, the answer is obvious!
Christian said: “You are correct in that the US economy is driven primarily by consumer spending; however, the “bottom 50%” as you alude [sic] to are not the ones that do the lion’s share of the spending.”
Right, it goes to show how skewed toward the already wealthy our compensation has become. Moreover, the bottom 50% have practically no discretionary spending since all they earn goes to necessities. These days even necessities are being sacrificed. These are not good times, and will get worse before getting better, if ever, unless we get more enlightened leadership in office, like Obama and Markell.
Christian, somehow I get the impression that you are insensitive to these problems, or in denial, one of the two or both. You talk as though you have no worries about the basic necessities. You are an ideologue first! Am I correct?
however, the “bottom 50%” as you alude to are not the ones that do the lion’s share of the spending.
So we could improve our economy by deporting them?
Frank you are just wrong about capital gains tax and investment.
Peak investment activity occurred in the 1990s, when the capital gains rate was 28%. In 1997 Clinton unwisely agreed to cut it to 20%, which was followed shortly by an equities crash.
Next Bush cut capital gains tax to 15%, which was followed by an ongoing equities flatline that has left the DJIA just about where it was when he took office. No doubt Bush’s deficit spending is the only thing keeping the flatline from being a nosedive.
There is more to the story than capital gains. Bush also cut tax on dividents to 15%, which were previously taxed as regular income (39% top rate IIRC).
Frank, if your theory about taxes on investments was correct we should be in the middle of the greatest investment boom in history. But we aren’t.
The greatest boom actually occurred in the 1990s when capital gains tax was 28% and dividend were taxed at 39%. The investment boom didn’t end until capital gains were cut to 20%.
Nooman, don’t confuse these folks with facts. They have a zillion arguments about why current day America is a lousy rotten socialist infested disaster. Frank hates America. The schools stink, the government steals money from everybody, God and Christmas are being wiped out, Obama is a Marxist, nobody understands freedom and free markets except them, Social Security and Medicare are bankrupt, the government is out to destroy us, environmentalists are ruining the country.
How can you talk policy with people that don’t like anything about America or our Government? People so fanatical that anybody who proposes any new tax is a Marxist? I used to think the far Left was mean and stupid. But these far Right folks are now the new mean and stupid.
Noman said, “Frank…with all due respect: Are you posting this from some kind of institution?”
I know I read this relatively quickly, but what is Noman talking about? The only institution it would seem Frank was in is an economics department. It seemed like basic economics applied to policy. The more you tax something, the less you get of it. Even Noman should be able to see that through his liberal colored glasses.
The more you tax something, the less you get of it.
Then maybe Professor Frank can explain why we are not having an investment boom?
QOD:
Which president signed the biggest capital gains tax cut?
“Bull. The economy is fueled by the bottom 50%. Two-thirds of GDP is consumer spending.”
Yes, but they’re buying Japanese cars and running them on Saudi oil, and wearing clothes made in China.
From reading this thread, I think it is safe to say, that whereas Phil Gramm does not speak for John McCain,…… John McCain speaks for John McCain,……..
Frank Knotts does not speak for DelawarePolitics.Net…… when it comes to such posts bordering on severe economic delusions……
#9 Perry:
I was correcting Odyssieus when he was talking about the economy and how the bottom 50% of income earners drive the economy through consumer spending. Although his premise about the economy being driven by consumer spending was correct, he was saying that the spending was being done by the bottom 50% of income earners.
I disagree with your statement about Obama and Markell actually being able to help this economy, I think their philosophies are part of the problem.
I don’t know how you think I am, or any conservative for that matter is, insensitive to this. Too much of our incomes are being siphoned away from us in the form of taxes, and by and large they are just wasted on earmarks, pork, and needless projects/institutions/programs. There are some necessities that are paid for obviously, but by and large if the government would learn to do with less of our tax dollars we would have more in our pockets and our economy would be much better off.
#12 Don,
America is the greatest nation on earth, period. If the government would get out of our way our individuals and their creativity have the power to create an efficient solution to almost any problem.
I will agree with you for the most part when you say:
Not everyone who proposes a new tax is a Marxist, but most Marxists are for new or bigger taxes.
The point was attempted to be made that the bottom 50% of income earners carry the economy due to their spending. Where do they recieve their wages from? Are they working for their fellow bottom 50 %ers or are they working for the top 50% who are also the investers? If you cripple the top 50 through confiscatory tax laws , then who will the bottom 50 work for ? The government maybe? But where will the government get the money to pay them if there is no one left to tax? Oh I know they will just print more money, which leads to inflation, which leads to everything costing more because the dollar is devalued. This is why right now our dollar is down due to the FED lowering interest rates, putting more money on the market, this is what is driving the artificialy high fuel prices, and the reason the FED had to lower rates is because they forced lenders into lending to high risk barrowers , another case of why government should have stayed out of the market place.
It is the age old question , who knows better how to spend your money , you or the government? Government will tell you that they have the best interest of the “ALL”, but really all that government really cares about is government.
The points I made in my original post are clear and easy to follow , and they have been proven by history. Unless you believe in bigger government and are against capitalism and freedom. Don’t blame the successful for the failure of the failures. This is the greatest country , with the most oppurtunities in the world .
The reason investment is down right now may be due to the fact that investers are waiting to see who wins the election , and how hard they will be beat about the head and shoulders in the name of global warming and fairness. I don’t think I would be spending my capital right now with the chance that a socialist such as Sen. Obama or a socialist butt kisser such as Sen. Mc Cain might take office. I would be converting to gold and oil, not risking it on building something that the government might decide to nationalize.
Christian, every fanatical group, be it Marxists, Jihadists, or American NeoConservatives, have certain things in common.
1)They think they know it all
2)They wish to eliminate their political opposition
3)They create imaginary (strawman) enemies
4)They exaggerate the negative elements of the existing order
5)They ignore facts and are willing to lie
Ironically, the fact that you are willing to tell whoever will listen that Democrats (50%+) of your fellow citizens are Marxist sympathizers, that our public schools are rotten, etc. etc, puts you in league with the very extreme forces you claim to be against. Put a little love in your heart. America is a great country. Great schools. Caring Government. Good social safety net. Great world leader in all things from medicine to movies and space exploration. We have from the beginning had a hybrid system part capitalist part socialist. Don’t be afraid of a system that is not “pure” something. Communism was pure. The Nazis were pure. The Jihadist want pure. We are a happy mishmash, the product of the brilliant set of Constitutional law bestowed on us by our ancestors. If you don’t like the mess that is this great country, well you just don’t like freedom.
The voice of reason, moderation and appreciation has just been expressed. Will we listen and take heed, or go on with our extremism anyway?
Frank, the age old question “who know better how to spend you money, you or the Government” is one of those juvenile stupid sayings that really has no meaning except if you like sounding well . . .dumb.
When you think about it what does it really mean. Now suppose we taxpayers were asked whether or not we should spend tax money on retrofitting Navy destroyers with GPS7 positioning systems - who would know better you or the Government? Suppose Medicare decided to add an exotic new drug to the benefits, who would know best you or the government? When Delaware decides to replace the Indian River Bridge with tax dollars, who know best if the bridge needs to be replaced you or the government?
The problem is, you don’t see yourself as part of a whole. You don’t see our local, state, federal government for what it is, and this is “us”. You see the Government as some kind of enemy, rather than an extension of the community. Perhaps the concept of community seems threatening to you. Working together as a community is not something to be afraid of. It is a good thing. We elect leaders and pay taxes to manage things that cannot be managed on an individual level. Taxation only seems like confiscation if you do not feel you are a part of something more important that yourself. If that is the case, spiritual guidance, and understanding of Christian principles can help explain why we share money and power with others to benefit the community good.
It is ridiculous to suggest “the Government should stay out of the market”. The truth is there is no free market. The modern “free market” is ruled by national and global governments. The free market is defined and maintained by governments. It always has been it always will be. The concern then becomes not getting the government to stay out, but getting the government to regulate smart.
You would better advance your “conservative” argument if you stopped with the taxation=bad and government should stay out of the free market. Both are anti-fact, anti-social. Try some reality based arguments like “here’s how we can do X, or here’s a regulation we can make better”. The conservative low IQ rant against Government is way stale.
QOD:
Which president signed the biggest capital gains tax cut?
Jimmy Carter, 1978.
I knew you guys wouldn’t know. I bet you also don’t know which president signed the biggest tax increase.
“Try running your corporate state without the purchases they make…..norman
Without the producers and investors, the’ll be no purchases. Just ask Cubans, N. Koreans and Zimbabweans.
So your theory is that money belongs a priori to the wealthy, and the little people are lucky to get some crumbs of it. That is your basic economic royalism.
But I think value is created by labor, and the wealthy find ways to extract it from the people who created it.
Obviously capital should be get some reward for investment risk. But money has value only because people work.
“Obviously capital should be get some reward for investment risk.”
Do you realize how much a dry well costs an oil company?
Say a group of workers starts a business making body boards, and say that they guessed wrong and their style and colors were unpopular, and thus, didn’t sell. Could they absorb the hit? When workers for a body-board company like Morey produce a loser, during the whole process they are being paid a wage; they absorb no risk whatsoever. The risk investors take is worth more than ’some’ reward, and usually those who place monetary and material rewards over security are the one’s who go into business, big or small. The great innovators, creative and inventive, make the world go ’round……Edison, Colt, Ford, Howe, Gates…..and so on.
Compare East and West Germany, North and South Korea or the old Soviet Union with the U.S. The answer is obvious.