10.22.2008

Don't Punish the Desire for Wealth?

There has been a lot of conversation lately about Obama's tax plan that has inspired the battle cry of "punishing the people who are successful". Now, it's been argued that a tax break for those who earn less than $250,000 per household, or $200,000 per unmarried individual per year is in some way telling people not to be successful, and not to earn a lot of money. By "punishing" those who do earn that much money per year or more, the de facto result is a push for mediocrity in the other income brackets.

This is a silly notion, for a few reasons.

First of all, very few US households bring in $250,000 per year or more, according to Factcheck those households account for about 2 - 3.1 percent of the population.

For simplicity, we'll just focus on the over-$250,000 group. Those reporting adjusted gross income of more than $250,000 to the IRS are projected to make up 2 percent of households next year, when the new president will take office.[...]Joint returns with more than $250,000 adjusted gross income and single returns with more than $125,000 adjusted gross income together are estimated to make up 3.1 percent of households next year.


In a capitalist economy such as the US, the economic hierarchy is set up in "classes" , or income brackets. In order for a capitalist economy to work properly, all of the economic brackets must be filled by the appropriate ratio of people.

If everyone earned what the top earners did, who would be left to man the factories, clean the schools, and sweep the streets? Not everyone can earn top dollar, and, if companies opted to pay out top dollar for even the most rudimentary jobs, than the prices of products, and cost of living expenses would rise accordingly, and those earning $250,000 per year would then remain in the same economic bracket as they had been in previously, because the top earners would be paid proportionately more than them.

Now, this doesn't mean that some people can't move up the economic ladder, but it does mean that very few can move up that ladder without toppling the entire economic structure. As soon as one class emerges into a new class, another group immediately takes their old position. So, it would stand to reason that the only thing that is actually standing in the way of people trying to be successful, is the economic structure of capitalism.

Reason number two, who says that bringing in under $250,000 per year isn't successful? A household with a $200,000 per year income is living a pretty gosh darn comfy life.

So too, are those bringing in $100,000 per year. or even less, if the family isn't struggling to get by, and have little desire to make more money.

Are people trying to insinuate that those who are living comfortably at their current incomes are lazy? Are they trying to say they aren't successful? Has it ever occurred to anyone that making boat loads of money isn't the be-all, end-all goal of many people?

If a family is comfortable at their current income, and considers their life to be a success, and have no need to make $250,000 per year or more, what negative influence will a tax break have on them? They are already uninspired by the glorious pursuit of enormous wealth. They don't need it, they don't want it, and not taxing those who do make that much more than them will not inspire them to go out and try it.

Let's face it, a very small percentage of Americans actually make that much money. A quarter of a million dollars a year is a lot of money, much more than most realize. It's much more than most of actually need - no matter what lottery winning fantasies we may have.

The argument that this tax plan will somehow reduce aspirations and goals is a fallacy. Those who want to make that much money will make it and more, no matter what tax plan is thrown their way. They aren't going to throw away the lavish lifestyle they have become accustomed to just to avoid taxes. And those who don't earn it aren't going to try and earn less, either. Nor will they be any more uninspired to earn more than they already are.

It's just the silliest idea I've seen in a while.

But what about the tax plan? Why does this Anarchist support it? Quite frankly, taxes run this country. It funds the government, the programs, the schools, roads, and military. So we do need taxes, however, the economy is lagging and so we need an infusion of purchase power.

Who purchases more products, the upper 3 percent, or the rest of the country? Well, it's those earning under $250,000 and more than the poverty threshold that purchase enough goods, over the span of about 200 million people, that make the economic gears grind. 200 million multiple purchases beats 10 million purchases every time. The upper class elites can only purchase so many goods, and often times are not making purchases in plain Jane retail stores and franchise chains. The upper echelon are not making daily stops to the local McDonald's and Walmart. They aren't shopping at Macy's, Target, and JC Penny. They may be helping the Audi and BMW sales go up, but they aren't buying used cars at the local car dealership.

It's those of use who need to purchase things regularly, at lower prices, from chain stores that actually help keep businesses afloat, not the wealthy. SO if they can't help keep the economy up by purchasing things, they can certainly help by paying a bit more into the tax system.

That way, we're all helping by playing to our strengths. The lower 95 percentile will help keep the economy up by purchasing things with the money they will have left over from the tax break, and the wealthy can add a bit to the pot by way of taxes, since they can't purchase enough to do it on their own. We can't simply give everyone a break, because that money needs to come from somewhere. And we can't raise everyone's taxes because taxes aren't the only part of the solution that needs to be addressed. And we can't keep it the same as it is because someone, somewhere, needs to have enough expendable income to make the purchases that will help out the economy.

This is the only logical solution. And the argument that it punishes people, or inspires other to be lazy is ludicrous.

11 comments:

Monkey Suit said...

While I would agree with most its such a blanket statement to say nobdy would. I agree the majority won't be affected by it. But you will have some not wanting to advance because of it and others who want to earn less.

Anok said...

Right, but you'll always have that. The point I was making was that anyone on the cusp of that income bracket is already successful, saying that this will force them to not be successful is a bit of a red herring.

And anyone who isn't near that bracket isn't likely to jump up to that bracket any time soon anyway, and if, by chance, they had the opportunity and really wanted to make that much more money than they are already making - the difference between what they'll have left over after their taxes in that bracket will still probably be a heck of a lot more than what they have to work with currently, and thus not be an actual deterrent.

It's not like they will be losing money.

Even if we had a flat tax percentage - people could argue that the rich are being "punished" for their success. Because 20% of a million is still a lot more than 20% of $50k, know what I mean? You can't win fer losin' with that, because when taxes are involved, the wealthy will always pay proportionately more in real dollars than anyone who isn't wealthy.

Hasn't deterred anyone yet :D

There are other, more valid arguments that can be made against the tax plan - such as questioning how much of a contribution is enough with regards to individual households, What's a "fair share" and how is that determined. I can see those arguments, but this is one is just silly to me :P

Midwest Mom said...

My brother used to be a CPA. He quit because he realized that he was just helping rich people avoid taxes. That was his *entire* job, and he felt it was hypocritical. I give him a lot of credit for that. Now, he teaches high school.

I have learned a lot from my brother. And I think this country could use a healthy dose of tax justice, where businesses and the wealthy pay their fair share, because the system as it stands right now works for *them*, not the construction worker or the garbage truck driver or the daycare worker. Regular people can't afford to have a staff of 10 prepare their taxes so that they can write off 90% of their income.

So, do I think the hooey we're hearing about "spreading the wealth around" is worthy of my attention?

Nope.

As far as I'm concerned, there are plenty of people who've lived the high life for about 8 years now, and there's nothing wrong with them starting to pull their weight.

Bird said...

I have to admit I'm left gaping at the idea that anyone should have to explain why taxing the rich more and the poor less is appropriate, or that tax breaks to the poor make perfect sense. But I'm glad that you have, on the offchance that there is anyone out there who has difficulty with the notion :)

Anok said...

MM - you have a point there - the upper, upper portion of the wealthy do have a lot of legal loopholes, and on paper look like they're paying a lot of taxes but are not in actuality.

Even still, the real dollar amount is still higher - but of course, they control most of the wealth, so it' sonly logical.

Bird - thanks for stopping by - yeah, sometimes I'm left wondering about it myself. I mean, it' snot rocket science as far as I'm concerned - but there is a big amount of history and negative connotations to taxation that leave people to want little to no taxes without much thought as to how that would actually affect the world they - and their children - will live in.

I had to really change my opinion about taxes after some careful consideration. Does it suck to pay them? Yup. Does paying help the country, and thus the citizens? For the most part. It wasn't until after a bought with cancer, and denial of medical coverage and insurance that I realized what we pay taxes for. Income, payroll, and otherwise.

I wouldn't have any health care whatsoever if we didn't have a government based insurance system funded partially with tax dollars.

But a lot of people don't see that.

JD from Hoeno said...

This makes me just think about Bill Maher's show last week where he's talking about this subject and how average income people are conned into this defensive, paranoid political stance about their ''fantasy life''. It's a shame that people vote based on fantasy.

Fran said...

Speaking of paying for things, let's not forget about the tax cut for the rich & buying a war program has effected the debt. $10.5 trillion right now, my friends & since the Wall Street bailout, the numbers on that debt chart are whizzing so fast, it makes my head spin.
Someone, somehow has to pay down the fricking debt.
The question is, how many generations will it take?

Pedestrian Observer GB said...

It is just so amazing how some people fell for this "socialist" distribution of wealth but not see the bigger distribution of profit by the culprits of the wall street collapse and demanding taxpayers to pay for their greedy debacle.

Dreaming indeed and the Republicans faulty vetting process or if ever they even conduct such that someone like Joe the unlicensed Plumber being thrust on the center stage based on what appears to be an unreachable dream is just pathetic as their counter "socialist" battle cry is truly a joke.

Chris said...

Anok,

I happened upon your site while searching on a completely unrelated topic. However it is food for thought. I appreciate that you are taking the time to express your views, but I don't know how you've come to all these conclusions.

You say you are poor.

Perhaps you fall into that over 40% of the US that pays no income tax? Are you ticked off that the top 1% pays over 33% of all income tax in the US? The rich need to stop whining and pay their fair share while the bottom 40 don't pay any share at all.

When considering fairness I think it is appropriate to consider the above.

Have you ever been hired by a poor person? If you start a business, where do you think your loan money comes from? Who do you think has the most amount of money to invest with, to supply banks with loan money?

If you thought through your own logic when it comes to this idea of every class needing to be filled with the appropriate ratio or else the capitalist system will fall apart, you would see that your question has no meaning. You phrase it as though there is no external logic to how the system works. Everyone must fill the appropriate place or else it collapses, you seem to say. It's this bizarre deductive reasoning that is guiding you off into the world of ivory tower speculation. The real world is not built on theory.

Government is a necessary evil. We all need to pay some come of federal tax to ensure our security and support basic infrastructure, but that is no reason to fund the pet projects of inefficient bureaucrats hundreds if not thousands of miles away, who can always find a way to spend our money for popularity. Politicians don't work on the profit motive, they work on the political motive. I only assume you support that.

Respectfully yours,
Chris

Anok said...

I happened upon your site while searching on a completely unrelated topic. However it is food for thought. I appreciate that you are taking the time to express your views, but I don't know how you've come to all these conclusions.Through research, reading, and observation.

You say you are poor.

Perhaps you fall into that over 40% of the US that pays no income tax?
If you are employed, you pay an income tax. You may get some of it back at the end of the year, if you overpaid, but what you pay in payroll taxes won't come back to you at all. The idea that 40% of the US population not paying any taxes at all is a myth, it's propaganda.

Are you ticked off that the top 1% pays over 33% of all income tax in the US?No, even if the top 1% did pay that much of it (loopholes and hidden money - the top 1% does not actually pay what everyone thinks they pay), or even if the tax code called for a flat percentage - proportionately they will always pay more because they control 90% of the wealth in the country. That's basic math.

The rich need to stop whining and pay their fair share while the bottom 40 don't pay any share at all.Myths, propaganda - the poor pay their taxes too. And what they give up is a far more drastic and damaging chunk of their pay than the wealthy. $20 to a poor person is a great deal more important than $2000 of the wealthiest person. The small amount of taxes paid in by our poorest citizens is being taken out of the money they need to pay rent, buy food, or pay for medical services.

When considering fairness I think it is appropriate to consider the above.I think it's appropriate to get the facts straight, first.

Have you ever been hired by a poor person?Irrelevant.

If you start a business, where do you think your loan money comes from?Banks who make solid (or not-so solid) investments. (Or loan sharks - depends on where you're at)

Who do you think has the most amount of money to invest with, to supply banks with loan money?Investors do not supply banks with loan money. Banks acquire loan money through investing the money in savings accounts, bonds, and financial portfolio's as well as by collecting fees from customers, and credit cards. They are also granted capital and insurance through semi-private banking industries such as Fannie Mae and Freddie Mac - who purchase the mortgages and lines of credit from banks.

If you thought through your own logic when it comes to this idea of every class needing to be filled with the appropriate ratio or else the capitalist system will fall apart, you would see that your question has no meaning.I didn't ask a question. There is no question whatsoever about the class system created by capitalism.

You phrase it as though there is no external logic to how the system works.No, I phrase it as the reality it is - external logic or not. Capitalism requires economic classes.

Everyone must fill the appropriate place or else it collapses, you seem to say. It's this bizarre deductive reasoning that is guiding you off into the world of ivory tower speculation.So everyone is a millionaire? Do you think scrubbing toilets will pay millions? Do you think a millionaire would scrub toilets for a living?

Of course not. Capitalism requires a hierarchy of labor - and a hierarchy of labor requires that labor come cheaply, or else the company makes no profit, and thus, no capital. That means companies must pay workers minimal salaries, and those positions must be filled in order for the company to exist.

Ergo - the system perpetuates economic classes - and if one economic class changes drastically, the system collapses. Or have you not been paying attention to what has been happening to the middle class in the US, and what the end repercussions have been?

The real world is not built on theory.It's good thing I'm not theorizing then.

Government is a necessary evil.Only while capitalism, and it's poisonous effects still have a hold on people. After that's gone, we can get rid of the government.

We all need to pay some come of federal tax to ensure our security and support basic infrastructure, but that is no reason to fund the pet projects of inefficient bureaucrats hundreds if not thousands of miles away, who can always find a way to spend our money for popularity.If your gripe is with the programs then take that up with your representatives. How the money is spent is irrelevant in the debate of who the money is obtained.


Politicians don't work on the profit motive, they work on the political motive.And what do you think the political motive is, exactly? Politics in and of itself is not a reward. Power, money, prestige - that's the end game. Take a look at most politician's fiscal records, and you'll notice that the pet projects happen to be the companies they own stock in or are/were the CEO of.


I only assume you support that.Why would you assume that?

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