Another Attempt to Convince Conservatives it is Safe to Increase Taxes on the Rich a Little Bit [92]

The Face of a Surcharge

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What is 5.6 Cents Between Friends?

THAT IS IT FOLKS, 5.6 CENTS ON EACH DOLLAR EARNED IN EXCESS of $1,000,000.; that is what all of the Conservative "sky-is-falling" rhetoric is about ... slightly more than a nickel, WOW!

This is the surcharge that President Obama is proposing to ask millionaires and billionaires to pay to help bring down an astronomical national debt. In defense of their position in opposing this almost 6 cent surcharge. Conservatives and Tea Party members loudly, frequently, and incorrectly claim that millionaires and billionaires will somehow end up "killing jobs" because they won't have this extra change to invest in American companies or purchasing American goods and services.

This is a viable argument IF AND ONLY IF, ALL of the millionaires and billionaires spent or invested their extra 6 cents in AMERICAN companies and on AMERICAN goods and services. The Right's position begins to crumble the moment the rich and super-rich begin to 1) pay down debt, 2) invest in foreign companies, 3) buy foreign goods, 4) simply buy stocks in an American company from someone other than the company itself, which is 99.9% of all stock transactions, 5) give to charity, 6) buy political leverage, 7) save the money, and/or a host of other things. Any of these actions reduces the amount of the 6 cents which might have been used for direct investment in American businesses.

And guess what? They do do all those other things! Millionaires and billionaires, most of them anyway, are Multinational! They invest in foreign companies as well as American companies and they buy foreign goods and services as well as American ones. They also save by buying bonds of one sort or another, which may or may not go back into a company for growth. Given this new knowledge, how much of that 6 cents do you really believe goes toward the American economy in the first place? Probably very little; clearly not 6 or 5 or even 4 cents. What the real impact of the surcharge will be is to bring back to America, money flowing overseas; isn't that what we all want?

This is why virtually every economist doesn't believe this surcharge will negatively impact the economy at all and will be of overall benefit to the Nation.

A logical question, however, would be "what is the distribution of use of each taxable dollar earned in excess of one million taxable dollars?" (remember, the first million dollars is exempt from the surcharge) It is the answer to this question that would determine when a tax on the very rich would begin to be bad for the economy. Common sense, though, is enough to tell you 6 cents is not big enough.

To be Fair, or Not to be Fair; that is the Question

JUST A FEW WORDS on this question of the "fairness" of increasing the taxes on the very rich. First, let me say that I do think the Democrats are barking up the wrong tree by saying the very wealthy need to pay "their fair share"; that sound bite is as much fluff as the Conservatives "raising taxes during a recession is a bad idea."

"Fairness" really has nothing to do with it. The nation needs revenue, so where do you get it? There are several ways to get new revenue, one is growth in the economy and the other is in taxes. The growth of the economy takes time, and the country needs new revenue now, so that leaves taxes. Who is in the best position to afford it? The very rich, of course; it is as simple as that.

Now, if Conservatives start complaining that the poor and middle-class should pay their "fair share", which they have, by the way, Democrats can quickly counter with many examples of where the millionaires and billionaires have access to money-making opportunities simply because they are very rich and for NO OTHER REASON; how is that fair?? Why shouldn't the poor and the middle-class have the same access?

I am not even a millionaire but I can afford to meet arbitrary minimum investment balances that give opportunities to certain types of stock trades not available to those who work for me; how is that fair; why should there be minimums that exclude the less wealthy? There are other investment opportunities that are not available to me because I am simply not rich enough; I don't find that fair at all!

Therefore, Conservatives and Democrats, get off your "fairness" kick; it is just smoke and mirrors and hyperbole.

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Comments 7 comments

The Rising Glory profile image

The Rising Glory 5 years ago from California

I'm nowhere close to being a billionaire, much less a millionaire but I still think that the argument of taxing the rich is beyond stupid.

1. Why penalize productive people for the irresponsibility of our politicians?

2. A penny here and five cents there, before long you are talking real money. It is all of these stupid nickle and dime taxes that are added to soda cans, phone and cable bills, that causes us to pay such exorbitant taxes so that irresponsible politicians can subsidize their pet projects that does no one any good.

3. The idea of taxing the rich is mathematical idiocy. If you take 100% of the money of the rich you will barely dent the national debt. The answer is not in taxation, but the control of spending.

The problem with this is that we have become a nation of dependents. Just look at Greece and the riots because the government is cutting their entitlements. When you have adults who operate as children they look to take something from someone else who has what they want.

I think Margaret Thatcher summed it up best. "Socialism works great until you run out of other people's money." The answers do not lie in taking more from productive people, but cutting the waste in socialized programs that steal the incentive for people to become the productive person they have within them.


My Esoteric profile image

My Esoteric 5 years ago from Keystone Heights, FL Author

Thank you very much for your comments , @Rising, they help toward everybody's understanding. So, in response:

- Taxing only the rich: The tax is to raise revenue, nothing more. You tax those who can afford it and where it won't hurt the economy; that means taxing millionaires and billionaires.

- Margret Thatcher and Greece: Nobody is talking about Socialism here, this isn't redristribution of wealth, this is collection revenue to pay down the national debt that was run up to pay for one unneeded war, one unneeded tax reduction, and one unneeded near depression left over from or because of the previous administration.

- 1: There is a definition called "economic rent". It is defined by economists as "as payment for goods and services beyond the amount needed to bring the required factors of production into a production process and sustain supply." In terms of individuals, "economic rent" is that money earned beyond that which is considered productive. In other words, pay that person one dollar less and they would not be any less productive or likely to change jobs. The question on the table then is, when we are talking about the million and first dollar, how likely are we talking about unproductive rent. As another counter-example, I earn a small part of my living by buying or selling stock options in one month and doing the opposite with them the next month; I could, if I wanted, make a living doing this; I don't because I enjoy running my company. My stock options, which a lot of the very wealthy do a lot of, is TOTALLY unproductive, economically speaking. Tax me more on this income and I simply make more trades without having to work appreciably harder make up the loss.

2: You do know most of those taxes you are talking about are State taxes, not federal and, in any case, most, but not all, of those pet projects actually do help a LOT of people; it is just the way they go about getting it into legislation that most everyone objects to.

3: The other thing that is mathematically impossible to do, in the same way you mean, is reducing spending enough to pay down the debt. As Bush I and Clinton proved, it takes a combination of the two, increased taxes and reduced spending, to be effective.


The Rising Glory profile image

The Rising Glory 5 years ago from California

A couple of points:

- The premise is wrong - raising revenue is not going to do anything significant because of the behavior of our politicians is that they spend whatever they bring in. Thus, there is a point where revenues exceed the needs of the country and moves into socialistic ideas of redistributing wealth from those who have in order to support programs that are not beneficial to individuals or the country.

- Yes, the taxes I spoke of go beyond Federal taxes, but who cares? It doesn't matter if it's a federal tax, property tax, county/city tax, gas tax, state tax, or sales tax. Tax is tax and it all adds up in the equation of taxation. Your economic rent dissertation has merit, but when you reach the point as we have in the USA where taxation has gone ballistic - we are now way beyond that point.

- Finally point three where we can agree!!!! :) - As you correctly stated this problem is not going to get fixed through one side of the equation - it will take both - the raising of revenues and the cutting of spending.

So now that we agree on that we have to look at who handles the money and their history. Over and over again we have raised taxes for the purpose of getting back on track with the promise of cuts coming. The problem is that the cuts never come and the raised revenues get spent on other unneeded projects.

Therefore, to begin this process the cut in spending MUST precede the raising of revenue. Once the cuts were in place I would be less opposed to the raising of taxes. But we both know that's not going to happen.


My Esoteric profile image

My Esoteric 5 years ago from Keystone Heights, FL Author

OK, let's move on to the Bush/Clinton tax increases. In both cases, these increases were tied to spending reductions and by 2000 we were actually running an annual budget surplus and the national debt was on the verge of getting smaller, in real terms.

There is your case history of politicians doing it right (which included the Conservatives, btw); it isn't the only one either. Why couldn't they do it again?


CMerritt profile image

CMerritt 5 years ago from Pendleton, Indiana

Just for the sake of argument, let's say the rich end up paying MORE taxes.......do you think this will help the economy? Will it help anything but further the spending of Washington?........and can you deny, that it does punish success? Has this administration done anything to make us believe they will indeed actually cut spending? They have yet to even come close.


Credence2 profile image

Credence2 5 years ago from Florida (Space Coast)

Yes, cutting spending is desirable. I am not here to punish the wealthy and their success, but in this budget crisis we are not going to balance it at the expense of the working and middle class. Esoteric, as you say, the wealthy have access and resources not available to the masses. I don't see the need for the right to get its panties in a bunch over a return to Clinton era rates of taxation for the most affluent. As cuts are necessary, so be it, but everybody has to have skin in the game, not just our poorest and most vulnerable citizens.If taxes were not raised and loopholes not closed then the burden of the cuts would be just that more draconian for those who could least afford them. The president did all he could to compromise, and in my opinion he has been far too conciliatory to a rabid right wing agenda to destroy all, save its aristocracy. This is not a oligarchy and Thurston Howell can reasonably expect to be inconvenienced, just a bit. Great Hub, Cred2


My Esoteric profile image

My Esoteric 5 years ago from Keystone Heights, FL Author

Thanks once more for adding to the debate, Chris and Credence; yes, I do think having the rich pay more will help the economy; they can afford it the rest of America can't; also, you can't solve the problem with spending cuts alone. As I said in my response to Rising Glory and as Credence pointed out, Bush I and Clinton both raised taxes only on the wealthy (while cutting spending at the same time) and it worked; in six years America had a budget surplus. Why won't it work this time too; the conditions are ripe for it?

(I must be slipping, that wasn't even 100 words, I don't believe!)

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