When dividends are taxed only once, as corporate income, investment is
encouraged and shareholder demand for dividends increases. This in turn
encourages companies to increase profits, because it’s hard to pay dividends
if you’re not making any money. But these arguments require some analysis,
and the left would rather appeal to base emotions and attempt to paint
the wealthy as sinister tax dodgers.
As with so many things in politics, the truth is exactly opposite. The
so-called rich pay almost all of the income taxes in this country. In fact,
the top 1% highest-earning Americans pay a whopping 37% of all individual
income taxes collected. The top 10% pay 67%. In other words, 10% of Americans
pay two-thirds of the taxes. Half of all taxpayers – those in the bottom
50% of earnings – account for less than 4% of income tax revenues.
This means no matter how taxes are cut, it’s nearly impossible for those
cuts to primarily benefit lower-earning taxpayers. Tax cuts necessarily
benefit those who pay the overwhelming bulk of the taxes. This simple truth
allows the left to attack each and every tax cut proposal on the grounds
that it disproportionately benefits the rich.
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« The so-called rich pay almost all of the income taxes in this country.
In fact, the top 1% highest-earning Americans pay a whopping 37% of all
individual income taxes collected. The top 10% pay 67%. » |
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Yet we have exactly the kind of steeply progressive tax system championed
by Karl Marx. One might expect the left to be happy with such an arrangement.
At its core, however, the collectivist left in this country simply doesn’t
believe in tax cuts. Deep down, they believe all wealth belongs to the
state, which should redistribute it via tax and welfare policies to achieve
some mythical “social justice.” When people complain about having thirty
to fifty percent of everything they earn devoured by taxes, the collectivists
just shrug. They honestly believe it should be more, much more.
Taxation
as a zero-sum game
The class war tactic highlights what the left does best: divide Americans
into groups. Collectivists see all issues of wealth and taxation as a zero-sum
game played between competing groups. If one group gets a tax break, other
groups must be rallied against it – even if such a cut would ultimately
benefit them. Yet the class warriors forget that American wealth is not
static, but rather very dynamic. Poor people become rich, and rich people
lose all of their money.
In fact, at no time in American history have more of the nation’s wealthy
earned rather than inherited their money. Rich family dynasties are increasingly
rare, and are quickly destroyed by unproductive spendthrift generations.
So when the left attacks the rich, they’re attacking a fluid group that
many poor Americans hope to join someday by moving up in life. Upward mobility
is possible only in a free-market capitalist system, whereas collectivism
dooms the poor to remain exactly where they are.
I’m in favor of cutting everybody’s taxes – rich, poor, and otherwise.
Whether a tax cut reduces a single mother’s payroll taxes by forty dollars
a month, or allows a wealthy business owner to save millions in capital
gains, the net effect is beneficial. Both either spend, save, or invest
the extra dollars, which helps all of us infinitely more than if those
dollars were sent to the black hole known as the federal Treasury. The
single mother desperately needs those extra dollars, and that’s why we
should reduce or eliminate her payroll taxes. As for the wealthy business
owner and whether he “needs” the extra dollars, I’ll simply relate the
old adage of the man who said “I’ve never had my paycheck signed by a poor
man.”
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