Letters by a modern St. Ferdinand III about cults

 Voters are usually pretty good at voting themselves other people's money under the rubric of love, compassion and fairness. Hence the never-ending spread of socialism and statism where Orwellian rhetoric meets with other people's bank accounts. The only 'fair' thing about half the population taking from the other half; is that those who vote for higher taxes and more programs receive a fairly larger fraction of the largesse at the expense of someone else. All in the name of love [and commitment].

Such is the new definition of 'fairness'. Create an unfair tax system, in which the top 5% of income earners pay 40% or more of all taxes, and then militantly demand that they hand over more. This seems rather unfair, especially if you add in the charity, jobs created, payroll, dividend and other sundry taxes paid by the so-called 'rich', who might indeed not be that rich, but are classified as such [try living as a family of 4 on $250K a year in New York City].

Raising taxes is usually counterproductive. Better is to close all tax loopholes and write-offs, and reduce spending and government [one-third reduction would be a good start]. A flatter income tax, paid by all is more sensible than a graduated system. A flatter tax in which even the poor must pay into, is more equal and fair than the opposite system in which now 50% pay no income tax, yet consume much of the welfare and state services made available by the tax system.

The current system is not only financially unsustainable, it is immoral. A flatter income tax of 10-15 %, maybe composed of at most 2 levels, one for those earning under $500 K and a higher rate for those earning more, would actually increase government tax revenues, and be a lot simpler and less costly than the current system. The same structure would be true for corporate taxes. The only other taxes would be dividends, capital gains [10% rates]; and a sales tax [no more than 10%].

Raising taxes historically has lowered tax revenues and restricted economic growth. It is not hard to see why. If more of the Leftist-Marxist jet set would open up their 'tolerant' minds to listen to logic they would recognize the facts that punishing income earners is counterproductive. A simple example proves the point.

In the US there is John who is a millionaire. His taxes under the love and compassion act in early 2013, are going up.

-Top Federal Income Tax rate is 35 %

-John also pays: Medicare taxes, property taxes, sales taxes, state and local taxes, school board taxes etc.

-If John owns his own S Corp business he might have to pay the other side of the Medicare [socialized health care] tax

-John's total taxes paid, are most likely 45 % of his income, or even 50 %

-Assume the taxes paid are 45 % or $450.000

John's remaining income is $550.000 after government takes its 'fair share]. Yes it is a lot of money. Now comes the love and compassion ministry who decide that John's taxes are going up 5 % or a 'mere' $50.000. The statist rhetoric is that John never built his business or his income by himself, and 'owes' society, and that $50.000 is a paltry amount in order to 'give back' for the children's future and to the earth mother via governmental subsidy-programs in solar and wind power. John says okay, take the money. So now he is left with $500.000 from which to save, invest, give to charity, fund his progeny's education, and to live his lifestyle of his choice. John is still doing okay, he won't die or starve to death.

But the consequences of taking the $50.000 and giving it to government, which will extend benefits, procure more votes through more dependency programs, waste it on building monuments to itself, or fund globlaoney-warming scams in solar and wind 'power', goes beyond both John and the $50.000. John is probably a lot smarter than the bureaucrats – hence his life-style. John could have invested the $50.000 into a firm through an angel investment, creating a capital base for new jobs. John, could have expanded his own business by hiring people. Or maybe, he would have bought assets for his business from local suppliers, or donated the $50.000 to a local hospital desperately in need of money for new MRI machines. In any even it is moot. Government has the loot and will now dispense it, as government usually does, to those actors, groups, supporters and financiers it selects and whose support it covets. It might spend the money on helping the poor [less the 60% cost of the bureaucracy]; or it might just grant a contract to a local developer who generously supported the local winner in a local election.

$50.000 more in taxes for the 'rich' might not sound like much. But when you add it up across the economy and multiple it across the 1 % of the John population, it will restrict private capital investment which is the only way to create jobs, which is the only true way to help the poor [5-8% of the population]. Further, by restraining the endless appetite of government for money, you will limit the damage in deficits, debts, and corruption, enacted by government as a mere consequence of its own existence. Never in the history of government has corruption, fraud, and graft, along with massive wastage of money, never been an issue.

The other sad facts of raising taxes on the 'rich' is this: first the definition of 'rich' keeps changing to include those who are not rich, and second, pilfering the rich is counter-productive, meaning that they will take their money elsewhere and invest it in friendlier climes. There is the other obvious point as well regarding the inutility of class warfare aka intolerance of those who are productive. You can tax the top 5 % of earners in the US and only raise $80 billion for a few years. That would keep the US government afloat for 2 weeks......Maybe spending and government are the issues, not the 'rich'.