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Taxpayers and Employers Shrug

Written on Sunday, December 2, 2012 by

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The main reason Governor Romney lost the election is that he was too honest.  He told voters that  if they want “free stuff then vote for the other guy”.

He clearly underestimated how so many in the country have become “takers” addicted to their freebies.  After the election, Romney rightly said that it was hard to compete with the “gifts” that Obama promised to people, such as “free” healthcare (and “free phones”).  Many Republicans were afraid to agree publicly and jumped on the common “shoot our own” bandwagon.

It didn’t take long for leftists to spout demagoguery of their own.  For example, they claimed that the Romney “campaign offered ‘gifts’ of its own. The 20 percent across-the-board cut in tax rates would have benefited people in the upper brackets the most.” So apparently, allowing people to keep more of their own money is a “gift”?  This reflects the statolatrous leftist religion that liberals hold by blind faith—they believe that the State owns everything, and we sheeple should be grateful if it lets us keep anything.

This contrasts with Obama’s gifts: they are not “free” at all; the recipient doesn’t pay the cost.  But other people are paying the cost because the government forces them to.  But there is a limit to what government force can achieve.  Because of the totalitarian IRS, once people have earned money, the government can grab what it decrees to be a “fair” amount.  But it can’t force people to earn this money in the first place.

“Going Galt”

Ayn Rand tried to illustrate this in her pro-capitalism anti-socialism novel Atlas Shrugged (now showing).   (NB: I don’t agree with everything she taught.  She was wrong that greed is a virtue.  Classical free market proponents like Adam Smith and Milton Friedman said rather that greed was a flaw universal to humanity. The free market system was unique in history since it means that greedy people could satisfy their greed by serving lots of their fellow people.  See this classic clip from Friedman:
)

The good guys in Atlas Shrugged are the “producers”, including innovators and businessmen who produce goods and services.  “Looters” are the politicians and bureaucrats who confiscate their earnings with taxes, backed up by the implicit threat of force.  “Moochers” just want the goods of the producers for themselves and other appointed victim groups as of right, and vote for the looters to achieve this.  Both moochers and looters demonize the producers for being too wealthy.

The main character, John Galt, persuades all the leading producers to go into hiding, so there would no longer be anything produced for the looters and moochers.  Without anything to loot or mooch from, the society collapses.

Indeed, as I’ve said before, the moochers want more of the “economic pie”, and vote for looters to distribute the pie more evenly, but show no interest in how the pie is baked. Indeed, they want to punish the bakers!  But punish them too much, and there will no longer be any pie at all. This was summed up very nicely by the UK’s greatest Prime Minister since the half-American Winston Churchill, Margaret Thatcher:

“Socialist governments traditionally do make a financial mess. They always run out of other people’s money. It’s quite a characteristic of them. They then start to nationalise everything, and people just do not like more and more nationalisation, and they’re now trying to control everything by other means. They’re progressively reducing the choice available to ordinary people.”  (This is popularly paraphrased as: “The problem with socialism is that eventually you run out of other people’s money.”)

Taxpayers shrug

Obama is again shrieking with his (unfortunately all-too-successful) call to “tax the rich.”  Of course it’s pure envy-mongering, not economics.  It’s not hard to calculate:

“If the top 400 wealthiest people in the country had every penny of their net worth taken away, it would only amount to $1.7 Trillion. That’s about 9% of our total national debt; that’s it.”

But leaving that aside, leftists assume that if the “rich” are paying $20 million at 20%, then the revenue will automatically be $50 million at 50%. But in the real world, there is a limit to what taxpayers will tolerate before they “Go Galt”.

This was recently shown in the UK. They hiked the top rate to 50%.  But two-thirds of Britain’s millionaires left their country to avoid this, and their Treasury received £509 million less from this group.

Closer to home, Governor Martin O’Malley of the deep blue state of Maryland supported gouging the “rich” because they were “willing and able” to pay it.  But once again, the number of millionaires filing tax return dropped by two-thirds as well!   As economic historian Burt Folsom points out in The Case of the Missing Millionaires:

“The number of tax returns from millionaires in Maryland dropped from about 3,000 in 2008 to 2,000 in 2009. … We first saw this disappearing act at the federal level after the first large tax hike in U.S. history during World War I. In 1916, with the highest tax rate set at 15 percent, the U.S. had 1,296 tax returns from people with incomes over $300,000 (over $5,000,000 in today’s dollars). By 1921, with the top marginal rate jacked up to 73 percent, the number of tax filers with incomes over $300,000 had plummeted to 246, an 80 percent drop.”

Also, American corporations have $1.5 trillion in cash sitting overseas, rather than have the government gouge over a third of it.  So this helps other countries’ economies rather than ours.  So high tax rates are nothing less than treasonous.

Note that even the rich calling for higher tax rates for the “rich” avoid them themselves if they can.  The soi-disant Patriotic Millionaires all refused to pay more taxes online when challenged to:

And Obama’s shill Warren Buffett is very good at minimizing his own tax bill, and his company Berkshire Hathaway is fighting the IRS over $1 billion dollars owed (see also previous Patriot column Taxing the rich?).

Decades earlier, the future President Ronald Reagan was working as an actor and was then a Democrat.  But since the top tax rate was 90%, he worked only half a year. So he gained personal experience that high tax rates were anti-productive.  Leftists have to be brain-addled to think otherwise.  After all, they love taxing tobacco, alcohol, and gasoline precisely to discourage these things—so what do they expect taxes on work and investment to do?

Employers “Go Galt” too

Just after Obama won the election, the moochers rejoiced at their free healthcare.  But the producers were the ones stuck with the bill.  So the news was full of headlines of companies laying off huge numbers of staff, and reducing the hours of many more, to avoid the huge extra costs of Obamacare.  This includes Darden Restaurants, which owns many popular chains.

Of course, leftists demagogued them as evil businessmen, again showing how economically clueless liberals are.  A business can’t pay out more than it earns minus its costs. And it is not just these “evil” businessmen.  The reliable liberal bastion, Pennsylvania’s Community College of Allegheny County (CCAC), is likewise not immune from the laws of economics.  They are slashing the hours of 400 adjunct instructors, support staff, and part-time instructors to dodge paying for Obamacare.

Obamacare is not the only cause of job losses.  Obama’s union buddies are sucking the life out of businesses.  Some of these parasites have killed the host, whereupon the parasite also dies.  A good example is the classic company Hostess, the maker of Twinkies.  Economist Dr Thomas Sowell writes:

“The work rules imposed in union contracts required the company that makes Twinkies, which also makes Wonder Bread, to deliver these two products to stores in separate trucks. Moreover, truck drivers were not allowed to load either of these products into their trucks. And the people who did load Twinkies into trucks were not allowed to load Wonder Bread, and vice versa.

“All of this was obviously intended to create more jobs for the unions’ members. But the needless additional costs that these make-work rules created ended up driving the company into bankruptcy, which can cost 18,500 jobs. The union is killing the goose that laid the golden egg.”

Indeed, now those jobs are lost, but the company might be revitalized without them, possibly in Mexico.

Lessons from Galt

There is a limit to what the producers will tolerate.   And many of Obama’s supporters will be the worst hurt by this.   Unfortunately, if the history of Obama’s hero FDR is anything to go by, they won’t blame Obama for their extra hardships, but will allow themselves to be bought by more “freebies.”

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