Posted by
Mick O. on Wednesday, July 25, 2007 6:10:13 PM
Back in 2003 I was sitting in my mother's living room with an old high school friend watching the presidential debates. Mom had just passed away and I was back for the funeral. Guess she couldn't stand the thought that, as a staunch Democrat she would have to vote for Kerry! But let's move on.
Let's call my friend Jon... because that's his name. Anyway Jon and I argued into the night about the tax cuts and how they had affected the economy and the deficit. His position as a liberal was that George Bush's tax cuts had hurt the economy (as we were in the midst of a recession he had inherited from the Clinton administration), creating a national debt as far as the eye could see. Not a word, mind you, about the outrageous spending both liberal and conservative politicians were doing and how that affected the budget. No, no. As far as liberals are concerned government can never spend too much money as long as their intentions are good! (How much is enough though?)
What I tried to explain was that the economy (like the weather and evolution) takes a long time to move around. Like trying to steer the Titanic away from the iceberg with its little rudders, the small tax cuts would take time to turn this big ship of the economy around... which it has.
Now as the stock market continues to break record highs and with the economy booming in most areas, Democrats want to change all that with higher taxes. Why do you suppose that is? Aren't they supposed to be for the little guys? Well, they are only going to tax the rich, you might argue. Not so. Read any of Thomas Sowell's books on economics and you will see that it is not a 1-1 cause and effect.
Like raising the minimum wage, which makes politicians feel good because they think they've helped the little guy, it acutally kills the budget of small businesses who employ most of these people and cause them to fire or lay off unskilled workers whose work is not worth the cost of the new minimum wage.
You see, along with the minimum wage going up, so do deductions including state and federal taxes, medicare, disability, overtime, paid vacations and so on. And so American small business owners are very good at adapting to the crazy new laws. They have to be. The very lives of their businesses depend on it.
For example, they might only hire part time people (taking a lesson from the bigger Wal-Mart) so they don't have to pay medical benefits. They will figure out other ways to cut the cost of employees (the biggest expense a business has) at the expense of hiring new workers and creating new job opportunities.
Likewise, raising taxes on "the wealthy" has hidden effects. Because who are the wealthy in the government's eyes? I believe I heard the number $100,000 of combined income for 2 people is considered wealthy. That's only $50,000 a year each. Of that, they are already losing almost 50% to the above mentioned deductions. (Most wealth building gurus refer to working for a paycheck as 50% money... $1 for you, $1 for the government!)
Unless you have taken math in a California school, you can see that the wealthy now take home only $50,000. That's $25,000 a year EACH (less than $25 an hour, 40 hours a week, 52 weeks a year).
My point is that, who is the government to decide at what number is someone rich and then gives them the right to give that money to someone else whom they think deserves it through government programs? And how do those programs work? Let's look at that.
First of all, that $1 goes into the bureaucracy which has its own staff to administrate the program. These employees (most of them union... for a reason!) have wages, benefits, vacations and the like to take plus all the non-personnel costs of office space, computers, desks, fax machines, printers, paper, pens, paper clips and so on. HOW MUCH OF THAT $1 can be left to give to the people they are proposing to help? The sheer economics of a program like this make it a loser from day one! And it is only because the government can borrow without end that these programs even exist at all! Try and run a small business like that and it wouldn't even open!
I've gone on too long and may have lost a few of you. But I would rather take the whole $2 and give it to someone I think needs it. I have and I will continue to do so. If the government would get out of my pocket I could afford to give even more. Let's vote for people who suppor the Fair Tax!
Mick O.