How often have we heard Leftist politicians and Liberal media shout about “another tax cut for the rich!”? “Millionaire taxes” specifically targeting the rich were passed recently in liberal Maryland and New York. They re-prove the flaw in this kind of un-American class-warfare. Just like every other time the Keynesian/Socialist tax model was tried, they failed. In Maryland, rather than gaining the promised $106 million increase in revenue, the state LOST $100 million, because the millionaires cut back, reduced production or hiring, or just left the State. Now the shortages are worse. Reagan adviser Art Laffer could have told you this would happen. His graph shows how too much taxation lowers revenue just like too little does (check “Laffer curve” on-line - - and have a laugh at the lefties' panicky babble against it on some sites).
We don’t get accurate information from D.C., and even if we find facts ourselves, it’s difficult to visualize these numbers and dynamics. Perhaps the following story will help. It can NOT be attributed to a particular “university economics professor” or even a 2001 “letter to the editor”, but the percentages are about right and the math works; it is obviously from someone who knows economics. Whoever first wrote it, thank you. Here it is:
“Suppose that every day, ten men go out for dinner and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do.
The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20."
Dinner for the ten now cost just $80. The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still eat for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?' They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to eat their meal.
So, the restaurant owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33% savings).
The seventh now paid $5 instead of $7 (28% savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to eat for free.
But once outside the restaurant, the men began to compare their savings.
"I only got a dollar out of the $20," declared the sixth man. He pointed to the tenth man," but he got $10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than me!"
"That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison.
"We didn't get anything at all. The system exploits the poor!"
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!”
The Progressives just "threw the curve”: Across-the-board Bush tax cuts are due to expire 12-31-2010. If they do, all taxes will go up on everyone. Even those who pay no income tax will pay more, in other taxes and the increased costs of businesses who do pay them. Obama and the Progressives push their class warfare ideology, claiming that “giving a tax cut” to the “millionaires” (everyone over $250,001) will raise our debt by $700 billion*. This is just untrue. Keeping current tax rates will keep everything the same as it has been for years, as we try to recover, and will not increase debt unless the Leftists plan to spend (or already spent) that money. Then there’s the little item of those “rich” providing all the jobs.
Even many Democrats favor comprehensive extension (making it bi-partisan) and the resultant increase in spending and employment. Otherwise, as Laffer and the restaurant demonstrate, the bill payers will stop participating. That would hammer the recovery. It’s difficult to tell if that tax money is already spent, since the Dems refused to present a Federal Budget this year. But the Progressives just adjourned without presenting either version for a vote; extending cuts for everyone or excluding the rich. Only a few working days remain to produce the massive budget document and contentious tax cut extension.
I believe it’s not just bad economics (no one can be that incompetent), but the intent of the Socialists to extend their control over our sinking economy, rather than let free markets recover outside their grasp.
[*ED. NOTE: when published on 11-28-10 in the Inland Valley Daily Bulletin and San Bernardino Sun (heavily edited and under their title "Don't bite the high-income hand that feeds you"), this essay contained my typo of '...$700 million...'.
The Socialists' actual claim of $700 billion is comparable to the fraud/waste/debt created in each of the Progressives' Stimulus, Auto industry union bailout/takeover, Banker bailout, or "Health care" (and student loan) industry takeover bills.
Though this is an opinion piece, as a conservative I strive to be accurate and correct my mistakes. ~SophosArchaeus]
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