Monday, August 29, 2011

Why should the rich pay more taxes? Because they get more from government

This chart shows where our money goes:

The breakdown for the purple wedge at the top left (discretionary spending) is as follows:

Now, who gets the greatest benefit from all this spending? The rich, no question about it.

Let's go through the categories one by one and I'll explain why:

Social Security: This is one of only two spending categories that provide greater benefits to the poor, but the rich still benefit greatly and in two important ways. First the more you pay in, the more you receive later in the form of benefits. Second, the rich know that poor, unhappy people are dangerous to their safety and well being. Poor people riot. They loot. To keep them under control, you need a more expensive police force, and the damage caused by their riots and looting are also expensive. Throwing them some crumbs in the form of a social program is less expensive in the long run. If you disagree, look what happened to the mega-wealthy in places like France and Russia when the desperate, despondent poor finally got their acts together.

Medicare, Medicaid and other forms of Social Spending: This is the other category that arguably helps poor people more than wealthy people, but those who make that claim aren't thinking like business people. Social spending, to put it simply,  protects capitalism. Without public health programs, we'd have epidemics (which shut down businesses and put the wealthy at risk, too) higher morality rates (fewer workers = higher salaries) and more missed work due to illness. Without programs like food stamps, we'd have angry, poor people with nothing to lose putting the system at risk and raising sickly children who, as adults, will be of less benefit to their employers. Anyone that owns or has a stake in a business that depends on low wage workers benefits directly from these types of programs because they help to ensure a constant supply of healthy employees, while the rest of us benefit indirectly: When you give the underclass a stake in the system, they're less likely to overthrow it. Again, I remind you of France and Russia. Think of social spending programs as a form of insurance, and as with any insurance, the person who benefits the most is the person who has the most to lose.

Military, Defense, FBI, Police etc.: Rich people have more to protect, so they benefit more from the military. Consider the example of a shared apartment building. Who benefits more from the shared security system - the guy with the rare art collection or the guy with no furniture? And who should pay more to maintain that system? Rich people are also likely to have indirect or direct business interests that are affected by what happens in far flung places. A poor guy isn't. Get rid of the navy, and the poor guy is unlikely to notice until a foreign power comes marching through his town, but the rich guy will feel real financial pain long in advance of that.

Likewise police are more valuable to people who have more to protect (in places like South Africa, rich people have private security forces; here our government cheerfully provides it for free) and how could rich people collect on their contracts, or rely on their mega-million deals without the protections provided by the courts? No poor person gets a benefit like that from the civil court system.

Transportation Infrastructure: If there were no roads, how could you keep a company open? No one could get to work, and deliveries would be impossible. Companies like Fed Ex and therefore benefit much more from highways. And even an ordinary company in an ordinary city depends heavily on the roads, buses and trains that carry employees, customers, supplies, and the rest. Shouldn't those companies pay more to maintain them? Airports and shipping ports, likewise, mostly benefit people who need to travel or ship things for business or wish to travel for pleasure, not poor people.

Energy: Used disproportionately by corporations and the wealthy.

Public education: Companies (and their stakeholders) benefit greatly from the government supplied hordes of educated workers. What would the typical US company do if no one had a basic education? Who would do the work? The research and development carried out by government subsidized Ph.d students is also a huge benefit to industry. (The original Google algorithm, for example, was written by two Ph.d students who likely would never have made it to Stanford were it not for public education, government subsidized loans, and the rest (assuming their university would even exist without the financial help government provided) And where would Google find qualified engineers if government student loans weren't available and the public schools that provided basic educations didn't exist?)

By the way, if you don't believe that the  transportation infrastructure and the subsidized energy and education our government provides is essential to the development of industry, ask yourself why businesses don't flourish in places where such services are not provided by the government. There's a reason why no one tries to start a factory or engineering firm in Nairobi or Sudan. Garnel, can you work out what it might be?

Beyond all this, we have all sorts of corporate welfare, including subsidies to agribusiness  to export companies, to maritime shippers, and to various industries-- airlines, nuclear power companies, timber companies, mining companies, automakers, drug companies. All of them get a piece of the pie.

Exercises for the Republican reader: (taken from here)
  1. Write a rebuttal justifying the corporate subsidy of your choice, respecting the conservative principle that the tax system cannot be used for social engineering.
  2. Write a homily, suitable for use in Sunday school, explaining why Jesus should have condemned the sheep who demeaned the poor by feeding and clothing them, and blessed the rich man for living in splendor while Lazarus suffered.
  3. Take your favorite flat tax proposal and your last 1040, and have your accountant calculate how much money it will save you. Find the names of the five or six middle-class people who will have to make up that shortfall, and write them a nice thank-you note.
  4. Compare the GNP with the rate of taxation over the last fifty years-- e.g. the boom years of the '50s with their 90% marginal tax rate-- and practice explaining that high tax rates discourage investment until you can do it with a straight face.

Search for more information about the extra benefits the rich receive  at


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