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Don Roach: 5 Reasons Taxing the Rich is Stupid

Wednesday, May 09, 2012

 

All over the place, people are writing about how we need to tax the rich. A few months ago I wrote about how the Buffett rule was a bad idea. Now, I’d like to give you five reasons why taxing the rich doesn’t solve our economic problems.

1. The concept of ‘taxing the rich’ creates class warfare

What’s the difference between me and Warren Buffett? We’re both Americans, both have one vote, but the amount in his bank account dwarfs mine. That’s a real difference but I’m also black and he’s not. That too is a real difference. But these are only differences that impact lives if we make them so. If I am not protected under the law in the same way Buffett is because of his race or money then I have an issue. Government should not protect one class of people more or less than another class or race of people.

The problem with the theory behind ‘taxing the rich’ is that it penalizes rich people for having money and it creates a class distinction between those that are and those that are not described as ‘rich’. This distinction allows politicians, especially those on the left, to say “this class of people isn’t paying their fair share. They need to pay more.” Out of one side of their mouth they are asking one class of people to take on more of the burden while excusing another class of people of the burden. In other words, it’s the rich people who are responsible for getting us out of this mess. What liberals miss, in my opinion, is that they are giving rich people more power by proposing to tax them more. It’s as if their tax dollars are more important than the rank and file. Yes, rich people pay more but they have a larger denominator.

What’s unfair and unsustainable is taxing rich people more simply because they have more. We’re all responsible for the economic well being and I don’t want rich people to have a greater say simply because they have more money. Tax them more and that’s where we’re headed.

2. Spending, spending, spending

Taxing the rich more than they are today will provide increased revenue for the government. Unfortunately taxing them more ignores our spending problems. As I explained in the Buffett article:

[…]any good businessman knows that you need to address expenditures or your revenue increased will be offset by increased spending. Obama and Bush before him haven’t demonstrated an ability to reduce government spending and that is the KEY issue facing our government.

If our economic dialogue continues down the road of taxing the rich then one day we will wake up and not have enough money to pay for the services that government provides. The money train will come to a halt and further taxing the rich will not help us at all. Therefore, before we talk about increasing revenue streams let’s talk about reducing spending, let’s talk about what we’re doing with the revenues we do receive, and let’s talk about reason number three.

3. Government is NOT the answer to all of our problems.

Ronald Reagan famously said “government is not the solution to our problem; government is the problem.” Too many of us believe that the problems within the market are for the government to solve and/or regulate. If we continue to rely upon government to solve our problems then our government will continue to bloat. That will lead to more revenue stream needs (e.g. taxes) and when does the cycle end? At some point the people need to say that enough’s enough and we need to decide what government should and should not provide. Taxing the rich puts a bandaid on the problem – if we say the problem is the government’s budget. It doesn’t solve the spending problem and more importantly it doesn’t answer the question of what government is responsible for and what we, the people, are.

4. Taxing the rich doesn’t reduce the power of lobbyists.

Huh? One of the major issues facing our government is the influence of lobbyists on both sides of the aisle on government. Be it the healthcare industry, the NRA, and countless others corporations spend millions and millions of dollars to influence legislators. How does taxing the rich impede their influence and enable our Congress to focus on the spending issues? It doesn’t. What it will do is create a new lobby, call it HTRP or Highly Taxed Rich People, who will exert their influence through lobbying efforts eventually. They will have just cause as they will be paying for a number of programs and government agencies. Think it isn’t possible? These rich folks want you to tax them more. What’s to stop them tomorrow from lobbying for something else? Tax them more equals more power for the rich. Not a good thing in my opinion.

5. Taxing the rich does not stimulate the economy.

What else can I say but taxing the rich doesn’t create a new job, open a new business, or add a cent into your paycheck. That’s one thing that Obama and others who want to increase taxes on the rich seem to be forgetting. The ultimate goal is to stimulate the economy so that unemployment rates decline and that average Americans are able to make a living sans government assistance. Taxing the rich doesn’t accomplish this goal and only serves to increase the size and scope of government. What we should be focusing on is stimulating the economy not worrying about if we have enough money to provide government services. A novel concept, I know.

Taxing the rich does not create long term solutions for our economy or our government. It’s a bad idea and we need to ask our political leaders for more innovative solutions.

Don Roach is a member of the RI Young Republicans. He can be reached at don@donroach.org.


 

 

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