The Progessives and Your Money

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THIS ARTICLE FIRST APPEARED IN AMERICANTHINKER.COM, By Steve Feinstein

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First things first. They’re no longer Democrats. “Democrats” are so yesterday, so obsolete, so unrepresentative of current liberal thought. JFK was a Democrat and he believed in a strong military, cutting taxes and confronting worldwide evil from an absolutist — not relative — vantage point. That’s all so wrong. We need a more enlightened approach, one that benefits from the knowledge we’ve gained in the 60 years since JFK. We’re progressed so far. That’s it — we’ll call ourselves Progressives.

And now, just when we need it the most, the Progressive Party has several new faces poised to lead the way and show the country the path we need to take in order to fulfill our society’s promise of greatness, a greatness that can finally be shared equally by all.

There are so many inequities waiting to be solved: blatantly unfair, inconsistent access to healthcare, a college educational system that inflicts outrageously crippling, life-long financial burdens on students, employment opportunities that are still shamefully skewed towards white males of European decent, and of course, the crisis of Climate Change, which is a veritable Gordian Knot of environmentally-sinful practices and social injustices.

Thankfully, Progressive solutions for all of these societal problems exist in the form of new, innovative, effective government programs — such as the Green New Deal — policies that will reorder the most harmful structures of American society once and for all, removing underserved privilege and replacing it with fairness and social justice.

These lifesaving new policies need just one thing in order to be implemented: money.

And the required money is easy to find — it exists in the form of ill-gotten, undeserved conservative wealth. All that needs to happen is to tap that wealth in the form of long-overdue taxes, then redistribute it appropriately, and America’s problems will be permanently solved.

First-year Congresswoman Alexandria Ocasio-Cortez wants to increase the top marginal tax rate above $10 million — the “tippy-top” in her ultra-sophisticated financial-speak — to 70% from the current 37%. Not to be outdone, another first-year Congresswoman (Ilhan Omar D-MN) feels that 90% is the appropriate figure.

And the estimable Senior Senator from MA, Elizabeth Warren, is proposing a “wealth tax,” a tax that would be levied on individuals simply because they own assets in excess of $50 million. It would be like an automobile excise tax or a residential property tax, but instead, it would tax all the assets a person has in their possession. The scary thing is that some polls (like this one from the left-leaning Politico) actually show the public is not opposed to this and may actually favor it to some degree.

Progressives like Kamala Harris shroud this approach with virtuous, principled-sounding phrases like, “The wealthy need to pay their fair share,” “Everyone should play by the same rules,” and they often cite implementing something called the Buffet Rule — a minimum 30% tax on anyone earning over a million dollars, so “Warren Buffet’s secretary doesn’t pay a higher percentage in taxes than a billionaire.” (In fact, the 1%-ers pay more than their fair share — they earn only 20% of all income but pay 35% of all income tax! Fair share, indeed!)

As any first-year, peach-fuzz accounting freshman can tell you, the capital gains taxes levied on corporations and individuals like Buffet are taxes on investment profits — investment profits that come from corporations or individuals after they’ve already paid their income tax on either their salary or the ‘regular’ company operating profits. In other words, capital gains taxes are double taxes — taxes on profits made by investments from money that has already been taxed.

No amount of taxation on the “rich” is going to pay for socialized medicine (conservatively estimated at $32 trillion over 10 years) or eliminate the debt (currently $22 trillion). The “rich” currently pay about a third of all U.S. income taxes, or around $600 billion. If we doubled their taxes, it would only amount to a tick over $1 trillion a year — nowhere near enough to cover Medicare For All’s annual cost estimate of $3.2 trillion, nor be able to cover the estimated $1 trillion in additional government debt. The rich employ a huge chunk of American workers. Remove their incentive to continue working by hitting them with ultra-high taxes and you succeed in accomplishing only one thing — hurting employment. “Taxing the rich” simply won’t work.

It’s safe to assume that some Democrats know this. Nancy Pelosi quite obviously knows this, since her family has made a fortune in profits from the winery business, operated for years under the unrelentingly harsh rules of free-market competition. They know all about capital gains, finding legal tax shelters, minimizing their expenses, maximizing their revenue, etc. In other words, they know how to run a successful business.

Elizabeth Warren does not have the same first-hand business knowledge as Nancy Pelosi. Warren’s bleatings — “You didn’t build this!” “Billionaires are immoral!” — are equal parts disingenuous and ignorant, whereas Pelosi’s denunciation of high individual wealth leading to economic inequity is 100% double-standard fast-talking on her part.

Socialist heroines Ocasio-Cortez and Ilhan Omar likely have zero real-world experience in leading a private company, understanding the difficulty of making a profit, meeting a payroll or managing a company budget and making the decisions required to keep the company afloat. Progressive Socialists of their ilk have no understanding whatsoever about the nature of free-market economics, how companies actually operate, what enables a private company to be profitable, and then to expand and hire additional workers.

But what of their strategy to simply tax the rich? Why won’t that work? Apart from the inescapable factual/mathematical conclusion that no amount of taxation will eliminate — or even meaningfully close — our long-term budget debt crisis or pay for socialized medicine, what the current crop of Progressive Socialists don’t understand is the concept of economic elasticity. They obviously regard the “rich” and the “corporations” as static, immoveable, ever-constant objects, whose income and assets are permanent and there to be taxed to whatever degree the government wishes. The Progressive Socialists and their advisors apparently think the “rich’s” income is inelastic — i.e., not subject to change in changing circumstances.

It’s not inelastic.

Quite the opposite — it’s very elastic. That income will shift and move and disappear the more the Progressives try to go after it. Corporations will shift more and more of their profit-producing operations to locales beyond the reach of U.S. income tax laws. Wealthy individuals will find more and more tax havens and loopholes to avoid payment. Enterprising entrepreneurs will be disincentivized by onerous taxation and never become “wealthy” in the first place. Many individuals and companies will simply retire or close up shop, weary of the chase, and then those fat, juicy taxable assets evaporate into nothingness.

This is the folly of punitive taxation, when done primarily for vote-glomming reasons of appearing to be “fair.” It reduces the net tax take and hurts the economy, especially the middle class.

The overriding question is whether these socialist Progressives like AOC (impressive — she already has an unmistakably-recognizable three-letter nickname after just two months in Congress. Certainly a record.), Elizabeth Warren and Kamala Harris actually know how blatantly false the economic hooey is that they spout, or whether they’re so strikingly ignorant of basic economics and financial matters that they actually believe what they’re saying is accurate.

Either way, for people who want their kids to have good jobs and live a nice life, it’s both frightening and dangerous. Whether Progressives are intentionally deceiving voters about economic matters or whether they’re just stupid, Progressive economics will change this country forever. It will wreck it.

 

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