The 1%, Inequality, & Taxes: There is a racket here
By: Stephen Carter
There’s been a lot of talk about taxes, the 1%, greed, paying your fair share, inequality, etc here lately. It sounds like a bitter struggle among factions that are more intent on talking at one another rather than with one another. People aren’t understanding one another, and to be fair, most aren’t making much effort to be understood. It’s easier to just keep it simple and keep shouting, but people are deluding themselves if they think this is effective by any means.
One thing I can assure you is that there is no such thing as being taxed into prosperity. We are not going to help those who are in poverty or those anywhere below the 1% of the richest in the US for that matter by raising taxes. The problem is fundamentally deeper than collecting and spending taxes. Sure it may make some people feel good that those who are obscenely rich lose some of that money, but it won’t fix anything.
A grand majority of those who are well off, those who make millions upon millions of dollars each year, made that money through ill-gotten gains. Yes, you heard that right, ill-gotten gains, for lack of a better term, or these people unknowingly benefited, either knowingly or unknowingly, through collusion with government power. Sometimes it’s through fraud and outright theft, but the worst offenders are those who make it all look legit. They do it in such a way that those who do little more than glance at things will defend them, that “they made their money fair and square by providing a legitimate service or product.”
That is partially true, they did provide a legitimate service or product, and they might have even treated many of their customers pretty decently, may have treated their employees decently as well. It’s hard to argue against that, unless you’ve got the time and dedication to figure out what the scheme was, and most people aren’t interested in taking the time to do that. Many constructs in life are complicated by design. It keeps many people at bay because most would rather do something with their free time that is easily enjoyable. Who wants to spend their time being frustrated? This is our political system in a nutshell.
So how about that other part that isn’t true? Well this is where it gets really difficult because many people, even those who are so adamantly opposed to the “1%” will defend the actions. Simply put, most government action is the problem. I’m not talking about just the federal government here either. The problems stem all the way from the federal government down to state, county, and city.
Whether it be through subsidies that give a particular business or group of businesses an unfair edge over others and makes it very tough to start a business and keep it going. Patents and copyrights that constrain upstarts, costing them immense amounts of legal debt and making technological advances harder and more costly, preferential tax breaks that favor well connected businesses that small businesses just don’t get, zoning laws that favor large businesses and give monopoly rights to a given area “think internet and cable companies,” government contracts that give the well connected easy access to funding that otherwise would not exist for things that are not economically viable, also licensing and regulations that are designed to give the perception of a myriad of things, including safety and quality, but really are designed to impose costs on businesses and individuals that only those who are already well off can handle, which pushes their competitors out of business, sending their customers to the ones that can handle the increased expenses, more than making up for the losses incurred by the regulation.
These practices are producing revenue for these business that otherwise would not exist, and would instead be going to others.
Whether they know or don’t know, and I figure that they do, take for example cable company executives. They make millions per year while rates are through the roof. The only reason the businesses have been able to pay these salaries is because a government came in somewhere and either subsidized them, gave them a monopoly through the use of zoning laws, or made it very costly for start-ups to compete against them.
This did three things, it produced an un-even economic playing field giving unnatural advantage to select players and making it hard for their competitors, it increased costs on consumers and is keeping the quality of the product low, and it is causing wealth to pool at one end and ensuring that most of it stays there.
The economy is like a pie, an ever growing pie, but these interventions are causing some people to receive shares larger than what they have earned.
Certainly this is not a proposal to end all regulations, but we should be honest and realistic with ourselves about what is going on here. Our legal system is designed to keep the hierarchy as is. Those who are on top don’t want company, and there is a reason why most politicians are millionaires. This doesn’t even scratch the issue with our banking and monetary system. Most notably how the federal reserve conjures up new money that previously didn’t exist, and then loans it out to well-connected people at little to no interest. Just imagine how much money you could make if you had access to interest-free loans.
Getting back to the subject of taxes and the 1%, as I stated earlier, we’re not going to solve the problem by taxing people. Considering that the government wastes so much money, and how permanent tax increases are, I’m always leery of increasing taxes on anyone. In fact, I would advocate cutting almost everyone’s taxes, and I’m not just talking about income taxes either. It’s definitely not greedy to want to keep what you truly earn, however it would be nice to see more generosity, and that comes in many ways, including people needing money in order to spend it and put people back to work; and having the government spend that money is no substitute. Remember how we talked about the well-connected getting all of that government contract money two paragraphs ago?
Besides, the current income for many governments, especially the federal government, is very much sufficient for the things we actually need. Aside from all of the wasteful spending on many things that governments shouldn’t be doing in the first place, I don’t know if you’ve noticed, but we’ve been throwing immense amounts of money into a black hole known as defense spending for a good while now. We spend more than the next 26 countries combined when it comes to defense, with 25 of those countries being “allies.” I think we have some room for cuts there, and in several other places in the budget as well, including reforms to Social Security and Medicaid, but that is not what this article is about.
We do have a bit of a debt problem though, to the tune of $16 trillion and rising every day. At last check we’re paying $450 billion a year in interest alone. That’s a lot of damn money to be paying in interest. Obviously running up the credit even further is not a good idea, and getting rid of the debt, along with that insane amount of interest, should be a priority. Well for those advocating the 1% pay more in taxes, you get your wish here. Considering that much of the wealth obtained by the 1% is through ill-gotten gains, no matter how legit it may look, I believe it’s fair to say we should take some more of that and work on getting the debt paid off. Of course none of this works if we just raise taxes and keep spending the same.
I want to stress that I do not believe that everyone who makes a large income are crooks. Not everyone who makes millions of dollars did so largely by some form of theft. There are people who genuinely earn that money. They are not who this article is directed at. Let’s keep that in mind, it is entirely possible to earn millions very legitimately, and I don’t mind that in the least bit.
This is a very tough subject to discuss. Many will feel that these people that are being talked about are being attacked individually is dishonest when that isn’t the case. Many people are simply benefiting from businesses that got to where they’re at through an unfair advantage given by government legislation. It’s a very complicated matter.
We need more economic equality in this country, I have no doubt about that. We need to see more people given the chance to succeed, and less people struggling just for the essentials. However, the only way we’re going to see this is if the government stops protecting the well-off and giving them an unfair advantage. The government can’t make us all equal, that is impossible, however it can level the playing field by stopping a lot of its intervention through subsidy, taxation, zoning laws, contracts, interest free loans, and regulation.
Once this happens, the market will begin to sort itself out, because once those who are looting everyone else under the protection of the government loses that protection, they will be unable to adapt and that wealth will begin to come rushing back to those who are honest and provide others with genuine economic production. If this weren’t the case, they wouldn’t have needed the government for protection in the first place. Of course, this all requires political action from people, putting people in government who will overturn all of this mess, and that requires voting, and doing it right.
I agree with most all of your points here, and I come from a liberal perspective, maybe even left of liberal. I believe that most thinking people do not believe that we can be “taxed into prosperity”. However, we can be taxed out of deficit.
As a liberal, I find it upsetting to a degree that we have so much in common, we should be able to find a way to work together. I think that you would find that most of us on the left do not think of stealing from the rich to give to the poor, nor do most of us begrudge the success of someone who creates wealth fairly and honestly. That said, those wealthy people should not be rewarded for their cleverness by paying a lower tax percentage than the rest of us. It makes me furious that companies that make huge profits not only don’t pay any taxes, but in addition receive taxpayer monies in subsidies.
I like what you have written, and I look forward to coming back to read more about Progressive Libertarianism.