While the Robin Hood idea of wealth dispersal appeals to many, I would like to say that it would have an absolutely horrible effect on real society. It’s great for a cartoon or film, but in reality would have dire consequences.
The “hate the rich” attitude seems to be deeply rooted in American society today. Everyone wants to “get” the rich. Let’s tax them more. Let’s take part of their wealth and hand it out to the poverty stricken. Let’s lower the income gap.
Why? Why the hate?
First, let’s examine taxes. Most people want progressive taxation. However, doesn’t a flat tax still tax the rich more? Yes, because a percentage of a larger income results in more tax dollars than the same percentage of a lower income. Now, let’s talk about tax cuts. The Bush tax cuts a few years ago lit a fire under many pundits — “It’s just a tax cut for the rich,” “The rich get the most refund.” Hello?! They paid in more to begin with. Once again, if everyone is paid back the same percentage, it would naturally follow that since the rich paid in more money that they would get more money back than someone who paid in less.
Additionally, many people in their arguments for wealth distribution fail to take into account the economics of wealth and wealth creation. At the root of wealth is the incentive or ambition to be wealthy. We are a society that greatly rewards innovation, creativity, and ambition. That’s a good thing. It drives people to create the life saving drugs we depend on. It drove someone to invent all the everyday appliances, materials, and objects we take for granted — plastic, TV, the freakin’ computer. And, eventually we’ll have a cure for cancer and diabetes because we have a great reward system. We create a larger and larger (and efficient, I might add) wealth “pie,” so to speak, as we richly reward those whose work and innovations are of high value to us.
Let’s imagine a world that redistributes wealth. Why would I strive to become rich (or earn a high income), if I knew that every year at tax time I would pay in handsomely and end up with the same take home pay as everyone else? The answer is — I wouldn’t. (Don’t say that people would do it out of the goodness of their hearts because humans are, by nature, greedy and self-serving. We just are.). Such a world would destroy any and all incentives to innovate or become rich. Thus, we’ve effectively lessened the wealth “pie” significantly. We’ve made it worse for everyone.
I’m not denying that there’s a growing income gap in the U.S., but wealth redistribution is not the answer. Well, I guess if you call eliminating the income gap by us all becoming poor, then, yes, I suppose it is an answer.
Everything in this world has a cause and effect relationship — especially the economy. One can never stick their grubby hand into an economy with out causing unintended side effects. We need to think long term, because, in my opinion, that’s what matters.
4 responses so far ↓
1 someone // Jun 11, 2004 at 10:08 am
I don´t think you would support such views like no government at all and no progressive taxation if they were really applied.
As for government intervention, I suppose you know very well that Republicans(including sacrosaint Reagan), who say they believe in the “invisible hand”, have many and many times used taxpayers´ money to save companies like Chrysler, GM and Boeing, sometimes securing loans, sometimes buying shares or simply through purchases (i.e, buying their products).
Progressive taxation is not solely based on hating the rich. It´s based on the fact that to the one who earns US$ 20.000,00 a month a 30% tax is much less painfull than to the person that gets only US$ 1.000,00.
Assuming that the government has to have a minimum revenue, progressive taxation is better than flat taxation, because the guy that gets only US$ 1.000,00 has much less opportunities than the one that earns US$ 20.000,00.
With US$ 20.000,00 a month it´s much easier to pay a College tuition, run a business, buy books, have time to spend studying , etc.
Government can use the money it gets from the rich to increase education standards, for example, or to provide a less costly health care, so that poor people can be nearer the rich as far as opportunities are concerned.
I have to add that your model of flat taxes and no government intervention at all would simply mean complete chaos, if not a true genocide…
2 Nicole // Jun 11, 2004 at 12:40 pm
Republicans(including sacrosaint Reagan), who say they believe in the “invisible hand”, have many and many times used taxpayers´ money to save companies like Chrysler, GM and Boeing, sometimes securing loans, sometimes buying shares or simply through purchases (i.e, buying their products).
I thought I should point out that I never mentioned anything related to politcal parties. I don’t support government intervention from either party, and definitely don’t agree with goverment bailing out private companies. But that’s a whole different topic for discussion.
You assert that flat taxation would cause genocide as though it were a fact. How? What are your sources? What is the evidence that backs your claim?
Progressive taxation is not solely based on hating the rich. It´s based on the fact that to the one who earns US$ 20.000,00 a month a 30% tax is much less painfull than to the person that gets only US$ 1.000,00.
I wanted to note that I don’t believe in income tax at all. I believe consumption taxes are a much better way of distributing the tax load. Consumption taxes don’t hurt incentive structures.
3 someone // Jun 12, 2004 at 10:57 am
Well,
You think you ask me how flat taxation could cause genocide.
First,
I didn’t say that flat taxation alone would cause genocide. I said that flat taxation along with a government model like the one you stand for would be potentially genocidal.
You are against public funding for health. You are against public funding for education.
So I suppose that, to you, government should be that minimum one advocated by some 18th and 19th century scholars
Let’s go to the facts.
If you advocate a consumption tax, I suppose you advocate a flat one too. Well, it’s already proven that, for rich people, spending on consumption as a proportion of income and assets is smaller than the one of the poor or middle class people.
Billionaires like Bill Gates or Warren Buffet don’t spend on consumption more than 40% of their yearly revenues and not more than 5% of their assets each year. It’s certain.
However, guys with US$ 3.000,00 monthly probably spend more than 60%, 70% of their income and more than 20% of their assets each year. So, proportionally to their income, they will pay more taxes.
Minimum government, something you clearly defend, is designed mostly to protect private property, national defense and fullfilment of contracts. Health care and Education are not part of a minimum government scheme. Those are part of a Wellfare State structure.
I should add that You don’t want government, I suppose, to fight monopolies and arrangements that help to concentrate income. So, we would have less people getting a bigger piece of the cake.
And you intend to put the burden of healthcare and education directly on their beneficiaries and, still, you want poor people to pay more to protect private property and fullfilment of contracts than the rich.
But, if healthcare and education are supported mostly with the money from poor and middle class families doctors, drug companies and research institutions tend to get less money from their activities.
So, in the long term, those activities would not show so attractive, and we would have less doctors and less research and, therefore, We would have more deaths, something we can perfectly call a genocide.
Probably we could have more demand of casinos to the rich, more sophisticated resorts and so on, and, in the long term, as many people would be employed(would it be?) income could be redistributed so that to be a doctor and make medical research could be very attractive again.
But, until then, many people would already have starved or got illiterate (what I said about doctors applies to teachers, too)
So, when assets, income and consumption of rich people are progressively taxed, we’re just trying to preserve opportunities for those who are less affortunate.
At the same time, we preserve human resources that can be used by the rich entrepreneurs and we preserve demand from the lower classes, which is good for capitalism itself.
PS:
I don’t mind paying 50% instead of 20% if there will be more money in my pockets, anyway.
4 someone // Jun 12, 2004 at 11:06 am
Forgot to add that progressive taxation is an at least 500 years old idea (I’m not talking about Robin Hood).