In the wake of President Obama’s recent address to a joint session of Congress (Pass the bill now!) the Ruling Class and their shills in the Drive-By media have taken up a new cudgel: “millionaires and billionaires must pay their fair share.”
There is a fundamental fact of economic life that this administration and its flunkies blithely ignore to the detriment of our nation: the poor do not generate wealth, create jobs, produce goods and services, or fuel the engine of economic growth. Rich people do that. While this fact of life may be galling to redistributionists, it is as inexorable as the law of gravity.
It therefore comes as no surprise that the Drive-By media and their Ruling Class masters dutifully ignore what the late Paul Harvey would call the rest of the story: first, tax cuts do not create deficits – spending more money than is received creates deficits. Cutting spending reduces deficits while raising taxes has the net effect of reducing revenue. We know this because it is a fundamental rule of economics that the more you tax a certain activity the less you will have of it. Cutting tax rates leaves more people – and businesses – with more disposable income. Businesses will invest that income in expansion; individuals will be inclined to spend more money on services like construction and stuff like cars, houses and durable goods. All that spending will necessarily generate greater demand for services and stuff, thereby triggering a need for more workers – each one of whom becomes a taxpayer.
This is borne out not by theory but by history: every time taxes were slashed, the economy boomed. Thus the Roaring Twenties in the wake of the Coolidge tax reductions; the Booming Sixties in the wake of Kennedy’s tax cuts; the Magnificent Eighties in the wake of the Reagan tax cuts and the post-911 recovery after the Bush tax cuts.
The argument that enacting tax increases on households making $250,000 or more will generate hundreds of billions of dollars in guaranteed income fails to account for the drop in productivity that inexorably follows every tax increase which, in turn, will numerically reduce the tax base from which revenues are derived. We see this at work already on a statewide level: in the past couple of years New Jersey lost $7 billion in taxable wealth as the result of businesses and families moving to other states.
This leads us directly to the second point: so-called “wealthier Americans” are paying too much already. American households with an annual income of $250,000 or greater pay fully HALF of all the income taxes collected by the IRS. Households with an annual income of $200,000 or more account for about 3% of the population but shoulder close over 60% of the tax burden.
Don’t believe me? Then take it up with the IRS:
Keep this in mind the next time some Obamabot idiot whines about the rich paying their “fair share.” Remind them that the “rich” are the ones starting businesses, expanding businesses and investing in businesses. The “rich” are the ones who employ people. The “rich” are the ones paying half of all the income taxes collected by the government. If it weren’t for the rich, we’d have nothing but a lot of poor people and a privileged elite in charge of a totalitarian government – you know…sort of like Zimbabwe and North Korea.
Ever wonder what would happen if America’s producers suddenly went “Galt” – like the lead character in Ayn Rand’s Atlas Shrugged – and stopped producing? They and their defunct businesses would consequently pay no more taxes. The unemployed workers would pay no income taxes. Commerce would grind to a halt and this nation would collapse in a matter of weeks or months.
It’s unfortunate the President and his supporters are too arrogantly ideological to admit you cannot offer the public golden omelets after you’ve strangled the goose that lays the golden eggs.