I’ve had quite a few people tell me how they like the idea of taxing the top 5% heavier in order to lower taxes on the bottom 95%. On the surface, that seems like a great idea to most people. However, there are a few problems with that idea.
First of all, it’s not fair. I’ve heard people say that it makes sense for those who can afford it to pay more. I can understand that, but let’s look at the whole fairness argument. Let’s say you’re in school and they grade on a normal scale (90-100 = A, 80-90 = B, etc.). You study hard and get 100% on a test. The teacher comes to you and tells you that he’s decided to take 10% off your score giving you a 90% (still an A) in order to give it to somebody who got 60% in order to raise it to 70% so that student will get a C instead of a D. Using the “tax the rich” argument, that would be okay because you can afford to give up that 10% and still get an A. However, was it fair to you to study hard and lose that 10% to somebody who didn’t put in the work? Also, are you going to study as hard next time knowing you’re going to lose anything above 90% anyway? Probably not.
Second, it doesn’t affect the people you think it does. Let me tell you how rich people handle their money. They setup a corporation. Any income goes to the corporation. The corporation pays for just about everything for them. In the end, the “top 5%” make very little income. As a result, the people in the huge houses with 12 cars don’t end up being the “top 5%”. Instead, the upper middle class do. They don’t have all that extra money that we think is being taxed.
Third is the same as second. In the end, it affects you. If we tax big business (which, I believe, is also part of the plan), do you think they pay more taxes? If we raise Nike’s taxes, does Nike pay more taxes? Nope. Nike raises the cost of their shoes and you and I pay for their taxes. If we raise Dodge’s taxes, they simply shut down their St. Louis plant and move it to Mexico (for example) and thousands lose their jobs. Do either of those scenarios help our economy? Nope. In the end, people have less money to spend (because the price goes up) and unemployment goes up (because jobs are moved overseas to lower expenses).
I’m no economist, but I really don’t like this idea. I know many people think it’s great. I really hope I’m wrong as I think it can have a tragic effect on our ecomony. We’ve been complaining about jobs moving overseas for years. How about we give them a reason to stay rather than raising their expenses? Just my two cents. Laterz!