Taxes

Money is a divisive, corrosive power. It breaks up relationships, starts wars; it has the power to seduce and to destroy. It has stirred innovation. It is only natural that someone would want to keep their money; one feels as if they earned it because of their hard work. But everyone works hard. Did the janitor who cleaned that public building today not deserve his salary as much as the lawyer who defended the white collar criminal? When anyone is able to accumulate any amount of wealth they are doing it at the behest of society. They are, inevitably, the product of the populous as a whole, helping to push some of those people justly or unjustly to the top. No matter if one person went to private school or public school, used their city’s public or private power company, the people that have accumulated great wealth inevitably have benefitted from all of society’s contribution and it is their job to give back.
Taxes, yes, that oh-so-evil word is that which leads to one’s being able to give back. Taxes are what pay for those roads they drove on every day on the way to school, paid for those poor children to attend preschool through senior year of high school, taxes are what created this country’s great public university system that taught the teachers that then went and taught more students, taxes are what pay for that army that defends us in our time of need, and it is what creates the entire social structure in this country. You have to have all of these pieces of infrastructure in order to function as a society. Without a leveled society, done so by taxes, you inevitably end up with a third-world like structure where the poor are large in number, un-educated, and with no chance of ascending the social ladder while the rich maintain their wealth and continue to harness control of society.
Countries with low tax rates on the wealthiest have greater inequality. For instance: Brazil’s top tax bracket is 27.5%, Mexico is 28%, Peru with 27%, Russia at 13%, and the list goes on. One need only look at these countries to see the inequality between classes. While at the same time countries with less inequality between economic classes have high tax rates on the wealthy. These are places like Sweden at 59.09%, Denmark with 59%, or Japan with 40%. The United States is now experiencing the greatest income difference since the gilded age, and strangely enough the upper tax bracket is now at its lowest levels as well. Income tax helps to redistribute wealth and create a more equal society.
Government is not perfect, but the private sector is no better at taking people’s money and spending it. It is stupid and idealistic to not be incredibly suspicious of both the public and private sector, putting blind faith in either one is just as naïve, all institutions are inevitably flawed. People do not vote with their dollars, as so many conservatives will tell you. Rather, people are compelled to spend money, vote with their dollars, for their very survival. Free market capitalism, that unregulated, “magic hand” of the market, is a bullshit notion.
To look at how deeply flawed the notion of “voting with one’s dollar” is, one need only look at how food consumption works in this country. People spend money on food because they need to eat. They do not spend that dollar at McDonald’s because they enjoy eating it; they spend that dollar at McDonald’s because they cannot afford $100 to buy decent groceries to feed their family for a few days. When one creates a situation like that, the notion that somehow the market will regulate itself flies out the window.
The idea that people’s voting with their dollar also flies out the window because of the nature of free market capitalism. A corporation is only accountable to its bottom line, its profit margin. It is not accountable to the common good. We can look at many practices to see this.
When a company outsources a job to India, it is because of two things: low cost and high profits. This deals with two great flaws in our society, a sense of entitlement to have cheap products, and being accountable to a bottom line. When a company sends a job out of the country it puts another person out of work. This forces that person (if they can afford it) to become skilled in another job through education. It removes that taxpayer from society until they can become employed again, degrading the revenue for various projects the state could fund for the benefit of society. It creates a higher revenue for the boss of the company, which is fine, but it also removes accountability from the scheme. The country that the job is transported to could be and often is a place like China, where there are different laws on what can be put into a product. When this happens, yes, the price of a product goes down. But this practice has become universal, thus driving down the quality of a product. When this happens, people are forced to pick a lesser of evils as opposed to a superior product. When this occurs lead paint is used in children’s’ toys, you reach a help center operator that can barely speak English, or have a car that is known to be defective for nearly fifteen years. All of these practices may be good for one country’s economy, but they destroy the fabric of another society as well as not contributing in the least to the common good.
The notion that people will “donate” money to the poor to help solve our social ills and help with the gradual redistribution of wealth in this country is also simply untrue. They do not inherently know better where to put their money to solve said ills. After all, the United States government (which has some very smart people working for it in some cases) has entire administrations to do such things. One need only look at the data to see how incorrect this notion is. According to the US Bureau of Labor, the poorest 5th of the country’s households contributed 4.3% of their income to charitable organizations in 2007. The richest 5th gave less than half of that, at 2.1%. That means those who made between $10,000-$20,000 dollars were giving away between $430-$860 or the equivalent of two weeks pay. The wealthiest 5th, who make more than $100,000, or ten times as much are giving away $2,100 or less than a week’s worth off their salary. Shouldn’t they be donating ten times as much of their money since their income is ten times higher?
It is clear that the rich do not give back to society, and why should they? Money is unchecked power. Money is what allows them to buy elections and change the structure of society so as to meet their needs. The poor man on the street can vote in the Presidential election, but the rich man can pick the candidate that will be one of the two options on the ballot.
A woman at a dinner once told me a story about why she became a Conservative. She told me about how she saw a woman in the projects using a mobile phone back in the mid 1980’s, when cell phones were very expensive. She became convinced that her taxes had been used to pay for said cell phone because of welfare. Now, this woman did not stop her car as she was passing, walk up to the woman who was holding the enormous grey plastic behemoth and then inquire “excuse me, ma’am, did you use welfare money to purchase that device?” Which leads me to think two things: 1) I doubt everyone in public housing who happens to be black is on welfare 2) Furthermore, assuming that a black woman who is on a cell phone is on welfare is simple racism through and through. This woman claimed she gave back to the community by donating money to charity. The facts and figures stated previously dispute that statement. People on welfare, on unemployment benefits, are not running about town spending the money on frivolous items, as she was so sure of.
There are certainly people that take advantage of the system, that is the nature of humanity. There will and has always been a group of people attempting to game the system. The wealthy have been gaming the system as long as people have been able to walk. People who are receiving those social benefits are by and large hard-working people who have fallen on bad times. A woman like the one who told me that story has clearly never spent a day working in a soup kitchen or a homeless shelter. And if she has, then she never bothered to take the time out of her day to actually converse with the people who were living or eating there. People should help each other out, they should donate money to charity, but there should also be programs set up to help this process along.
Economic growth is another factor that people cite as a reason not to raise taxes, that somehow having a higher tax rate will decrease the economy’s growth. Well, for one, most economists no longer look at GDP growth as a measure of a country’s well-being, so much as per capita income and unemployment. Secondly, the United States’ periods of greatest economic growth were when the upper tax bracket was between 92%-72%. Eliot Spitzer wrote a simple piece about this on Slate a few days ago, which should make the argument for higher tax rates when it comes to economic growth. http://www.slate.com/id/2245781/ . Growth is not everything. A country should be measured by the well being of its people, the employment rate, the size of the middle class, as opposed to the simplistic growth rate of a country. Growth does not equal common good.
Somewhere along the line Ronald Reagan convinced the country that government was not the solution, it was the problem. This was also the man that told the American public that when he found out he would reach the top income bracket and have to pay 90% of his income; he stopped working as a B-movie actor in Hollywood. That does not strike me as a motivated, hard-working American. That sounds like an unmotivated lazy person with little interest in what he is doing. People constantly give me that argument: “if you cut my taxes, I work harder because I will get more money?” Well, why wouldn’t you work harder if your taxes were higher. The more you work, the more money you are going to make. It is not as if we have installed a ceiling as to how much people should be paid, you just have to have a higher salary to make more of it. It works the same as if taxes were lower; only, the person is benefitting the common good and being given more incentive to work harder. It seems to me that higher taxes are a better incentive.
Yet, Reagan convinced everyone that they could have everything for free. He cut taxes and did not cut services, creating the beginning of the enormous national debt we are facing. He convinced everyone that they were part of the extreme upper class, and in turn, should be treated as such. He removed the notion of hard work from the American psyche. It created this idea that greed is good. No, greed is not good. It does not drive our society. Greed is what got us to the present situation in the first place. When Oliver Stone wrote that line for Wall Street back in 1988, he was writing it as a warning not as a mantra. Gordon Gekko was a villain, not a hero. Greed is one of the seven deadly sins for a reason. When people tell me I will not feel this way once I am truly being taxed, all that I can think of is slugging that person in the head. That part that the government taxes from your salary is what pays for the road you are driving on, the clean water you drink, the education that allows all of those people around you to read, those taxes make it so our country does not resemble Somalia. If people were less greedy and had not decided they were “entitled” to everything, the world would be a much better place. I do not think our grandparents’ generation felt this great sense of entitlement when they made it through the Great Depression or the Second World War.
So, what is the point of what I am getting at? Taxes are a necessary evil. Does this mean that the man who makes $50,000/year should lose half of that to the government? Absolutely not. But should the man that makes $40,000,000/year lose 50% to the government? Absolutely. The top earners in the United States averaged $400,000,000/year in income and were taxed less than 20% of it in income tax. Yes, I do know that there are other taxes they inevitably pay, but ostensibly they will pay very little because of the majority of their income being invested and thus taxed through capital gains. This maintains power and money concentrated in the hands of the very few, something that America has never been about. I was always under the impression that America was about fighting for the underdog, the little man, and creating a fair situation where the cream of the crop can rise to the top.
What will that extra money give the man that earns $400,000,000? A fifth house? A $10,000 umbrella rack? Half of that money could pay for health insurance for children, pay a teacher in a public school, build a road, build a bridge, it could contribute to society in so many ways that his spending on the luxury or service sector does not. Taxes are necessary; they are necessary to help build a better society.