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Tim Nerenz wrote this piece. He is a businessman, libertarian writer and speaker, published academic, and former LP candidate for U.S. House of Representatives. His “Moment Of Clarity” is a weekly commentary that is always worth a read. Visit Tim’s website www.timnerenz.com to find your moment and order Tim’s new book, “BRING IT!”.
It's Raining Coin
Like most other “rich” people, I slept in this morning; rolled out from under the spun-gold sheets at the crack of noon, showered in Evian and went outside to fill up my humungous money bucket with the golden coins that fall out of the sky on people like me.
No, no really – that’s where it comes from, don’t you know. The raining of the coin doesn’t happen everywhere, as it would be silly of us who already got ours let the middle class siphon off any of the loot. You have to watch Fox News and know the secret code words to learn where and when the Koch brothers are going to make the next drop. There’s an app for that, too.
They teach us all about this stuff in that secret rich white boy’s school – how to steal the poor people’s buckets and rig the game so we are always first in line when prosperity rains. That way there is nothing left for the working class and they all have to go on food stamps so we can belittle them, just like Juan Williams said…
Sadly, it is necessary to tell some people now that this is satire. For the record, there is no secret rich boy’s school and wealth doesn’t really fall out of the sky - you have to earn it. Sorry to burst your bubble, lefties.
Actually, I don’t even know if I am rich or not – certainly better off than I ever dreamed possible growing up in my little mining town, and super-rich in all the really important ways that don’t involve counting up money. When the Democrats start the drumbeat for more taxes on the rich, sometimes the line is as low as $106,000 and sometimes it is $250,000 and sometimes you have to be a millionaire or billionaire.
I guess it doesn’t really matter; it is one of those questions of which came first - the chicken or the chicken-tax.
The President just gave his State of the Labor Unions address (yawn) and announced that taxing the rich (yawn) will be the backbone of his new plan (yawn) to build the economy. Funny, since he just decided we wouldn’t be building pipelines, power plants, drill rigs, Gibson guitars, planes in South Carolina, or cars that people actually want to buy. I guess the economy is something else.
And incidentally, I think that Republican congressman who boycotted the President’s speech was as wrong as the Wisconsin state senators that fled to Illinois. Until the day the next President is inaugurated, President Obama is everyone’s President, and we all have jobs with stuff we don’t like to do. But I digress…
Just in case there is one liberal somewhere whose brain is not bolted down to the deck of the U.S.S. Economic Suicide, let me try one more time to explain why increasing tax rates on the rich is a really bad idea, even though it might feel good to think they won’t miss a couple scoops out of their rain-money buckets.
The Wall Street Journal did a recent piece on a 2007 Congressional Budget Office analysis of tax burdens – a CBO which was under the control of Nancy Pelosi’s Democrats at the time. Nancy doesn’t bring up this particular tax study very often.
CBO found that the average total tax rate of the top 1% was slightly less than 30% of their income, while the middle class paid an average tax rate of 15%, and poor people (bottom 20%) paid just under 5%. It turns out that the rich indeed do not pay their fair share of taxes; they pay nearly twicetheir fair share.
And if we raise the top marginal tax rates on the rich – as Democrats like Mr. Obama and Ms. Pelosi propose - it will increase the tax burden on the middle class. That is not economic theory, it is economic history.
In the 1970’s, when the top marginal tax rate on individuals was 70%, the top 1% paid 19% of all taxes collected, while the rest of us paid 81%. Today, with the top marginal rate reduced to 35%, the wealthiest 1% pay 40% of all taxes and the rest of us now pay only 60%. Trickle up economics.
Imagine if it were the middle class who earned 28% of all the income and paid 40% of all the taxes – would Krugman and Reich be clamoring for tax increases on teachers and firefighters? Would Buffet’s secretary come forward and volunteer to pay more? What would the protesters occupy, an Applebee’s?
The liberals tell us we must increase tax rates on the rich – they say to put them back up to the pre-Reagan rates that were “fair”. Ok, but if we do, taxes on the rest of us will go back up by 35% to make up for the shortfall in tax revenues. Been there, done that.
Why do higher tax rates produce less tax revenue? Because the rich quit earning taxable income when we take away more of what they earn – guys like Michael Moore make less movies (ok, wishful thinking, but you get the drift). Investment also dries up because half of the reward is no longer worth all of the risk. Investment is what creates jobs; we do not need less of it.
And for those who enjoy only a casual acquaintance with the obvious, this is not the only country where it rains money. The very rich can take their buckets to the Caymans, or Ireland, or Singapore or a dozen other places who would be thrilled to tax them at lower rates than we do. And 70% of zero is zero, whether you are a Keynesian, an Austrian, or Chicago School economist. Or just from Chicago.
Last year the state of Illinois slapped a 67% increase on tax rates for wealthy individuals – the Obama/Pelosi magic pill to cure budget deficits. But taxing the rich did not reduce their deficit; it made things predictably worse. Much worse.
$4.5 billion of unpaid bills sit past due, with another $4 billion coming due that can’t be paid – tax refunds, employee health insurance, invoices for road repair, things like that. The state is losing residents at a rate of one every 10 minutes. Hint: the poor and unemployed are not chief among them.
The President apparently doesn’t get back home much; or he is too busy blaming everyone else for his failures to bother about economics and home-state reality. “Tax the rich” is good chanting material, and that is what passes for deep thoughts these days.
If you want to bet your prosperity on Tooth Fairy Government doing any of that stuff the President promised you tonight, then put out your bucket and wait for it to start raining coin. As for me, I’m getting up early tomorrow and going to work.
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