| Taxland is a bizarre world where the few most productive are taxed to play for the benefits of the many. Shhhh... Don't tell anyone, but a lot of the problems that are seen in our economy and society are directly related to such tax systems. The reality is the soak the rich scheme is little more than a way for the tax and spend politician to raise taxes by turning the productive into the tax collectors of the middle class, while the politicians retain the power and credit for tax and spend programs. Take a quick tour of Fairland, where there is a 'fair flat tax' instead of a progressive tax. |
| Assume you have two companies each with five workers -- Steve's Widgets in FairLand and Bubba's Widgets in Taxland. Each has 100 dollars in net profits from selling widgets. Assume all net profits go to pay wages. |
| Let's first look at Steve's Widgets in FairLand. Steve pays himself $30, $20 goes to Sally (the shop manager), and $10 for each of five workers. With a flat 20% income tax rate, the workers each pay $2 of taxes to Uncle Fair, the manager pays $4, and owner pays $6 for a total of $20 in tax revenue. The workers net $8, Sally nets $16, and Steve takes home $24. No one is unemployed, everyone is doing just fine, everyone can fend for themselves. The economy takes care of itself, almost everyone prospers and feels secure. There is little need for big government programs to help these working families fend for themselves. |
| Now, let us jump over to Bubba's Widgets in progressive Taxland. Back a decade ago, Bubba paid the same wages as Steve's. Back a decade ago there was a reasonably flat tax code with most paying about 20% of their income in taxes. Bubba's was competitive with Steve's and everyone was prosperous. In steps some "progressive" thinking politicians who see a future with big government programs to help people fend for themselves. President HilBil, never at loss for something to tax, comes up with a plan to "tax the rich" until they pay their "fair share". Bubba's tax rate jumps to 33% ($10), Manager Bob's taxes go up to 25% ($5) and the workers' rates (HilBil supporters) hold at 20% ($2). HilBil is happy and the workers are happy they really socked it to Bubba, their employer. Life couldn't get any better for the politicians with expected tax revenue to jump to $25 or a 25% increase. |
| One problem... Bubba isn't one to take a pay cut because of some silly tax code. He increases his pay to $36 (to net the same old $24), and he increases Bob's pay to $22 so Bob takes home pretty near his old $16. Problem is, what happens when it comes time to pay the workers? Bubba's Widgets can't pay everyone -- Bubba is $8 short, only enough for 4 workers. Time to "downsize" -- Bubba lets Bobo go. Bubba gets a stock bonus for streamlining operations, using the extra two bucks left over from laying off Bobo for his bonus. |
| This goes on nationwide. CEO stock bonuses become a big deal. This creates an artificial scarcity of stocks, helping to drive the stock market higher to the delight of anyone with a pension. Even HilBil likes it as a sign of prosperity. |
| However, what happened to employment in Taxland, land of compassion for the everyday worker? It is a total mystery to President HilBil why unemployment has gone up -- somehow HilBil is sure it must be Bubba's fault. 'This is a highly complex problem' comments HilBil. What is the solution? HilBil checks into the Book of Reich. According to Reich, the solution is increased unemployment benefits. |
| Of course! Economics isn't so complicated after all. HilBil takes two bucks taxed from Bubba and hands it to Bobo (Bubba's laid off employee). Of course this is done with appropriate PRESSidential fanfare about HilBil's compassion. No one seems to ask how this is supposed to help Bobo get a job? Bubba still has no money to hire anyone. |
| How about Job training! Oh yes! That's the ticket! HilBil waves his magic wand and, using Bubba's taxes, opens a new school for Bobo. A few weeks later, Bobo proudly walks out of school with a diploma in Advanced Widgets. Where does Bobo get a job? Bubba's Widgets still has no money to hire anyone. Of course Bubba could hire Bobo and let someone else go and the charade would continue on. |
| --------------- |
| Is this scenario sounding familiar to anyone out there? Downsizing, stagnant wages, low job security, lots of government programs popping up? What is the problem? Is this happening because the rich Bubbas and Bubba's Widgets aren't paying their fair share? No. |
| The problem is the progressive punitive tax code and HilBIl's Mandated Employer Subsidised Socialism (MESS) mentality. Workers can't fend for themselves simply because government has been doing too much fending for itself via punishing progressive tax schemes in support of 'compassionate' programs to keep 'compassionate' politicians in power running the MESS. It's progressive tax schemes caused the problem for workers and society in the first place! But don't tell anyone... That would be PRESSidential sacrilege. |
| Remember Steve and his workers in Fairland? Do they have any of these problems? Not really. Do they have job security? Yes. Do they need government to fend for them? No. In fact, Steve and workers are putting in overtime to produce more widgets to out produce Bubba's Widgets. Meanwhile Bubba talks to HilBil about protection against Steve's Widget taking his business away. HilBil says maybe the government can arrange to invest in Bubba's to help them compete on the global market. "Buy a ticket on my campaign plane and we can talk about it". Still not sound familiar? |
| One thing for sure, there is plenty of mud in the MESS to keep Taxland Politicians busy entertaining Taxland Bobos with more and more progressive government "solutions" to Taxland follies. Is it any wonder that people can't hardly fend for themselves with so much 'help' from HilBil's invocation of the Bill of Lefts. |
| Now you know what I think, what do you think? |