Thursday, July 19, 2012

Comment of the day: A former liberal speaks

A delicious comment, deposited on What's wrong with America? This.

DB, I used to share your leftist/progressive ideas and believe that the rich should be taxed more than they are - or at least that they should not have the numerous tax dodges available to them that lets them hide so much of their wealth.

However, after reading the comments posted by the more conservative readers in this thread, I've come around and changed my mind.

The rich really do pay a lot in taxes. So much so, that it creates too much uncertainty for them when it comes to hiring. And that's very understandable.

Look at it this way. When someone is super rich and they pay only 15% income tax, here's what happens.

If that person makes $5 million dollars, they end up paying $750,000 in taxes. That leaves them with only $4.25 million left. That might sound like a lot to you or me, but for a rich person, those are poverty wages. Those taxes leave that person nearly destitute. If they wanted to spend their entire year's pay by paying cash for a house in Key West, they'd only be able to afford two of them.

Or even worse, what about the one who only makes $1,000,000. After the 15% tax, he only has $850,000 left. So, he's not even a millionaire anymore! What a way to kick a guy when he's down. What's he supposed to do with $850,000? Say half of that has to go to a mortgage, payments on a few cars, mortgage on a vacation home, private school tuition for two kids, etc. That leaves the guy with only $425,000 in the bank for that year. All that work, and nothing to show for it but a big house, a vacation home, several cars, kids in expensive prep schools and $425,000 a year put away in the bank. The guy's next investment should be in a tin cup, because at that rate he's one step from begging on the streets.

Is it any wonder they would be reluctant to create jobs and hire Americans?

So, the conservatives are right on this. The rich are taxed way too much. So much so that they can't let any of that money go. It's killing Reagan's prophecy of trickle down economics. It WOULD work, but the taxes are too scary, and as you can see from above, it really puts severe economic strain on rich people, so the trickle just can't happen yet.

So, here's what we need to do. We need to oppose Obama's plan to force a tax increase by letting the Bush tax cuts expire. The rich shouldn't be taxed at 39%, even though they wouldn't pay anywhere near that in real life. But the rich shouldn't be taxed at 35% either. Nor should they be taxed at the 15% that they actually pay. The tax rate for the rich should be even lower.

The rich should not be taxed at all.

That's right. The rich shouldn't pay any taxes at all.

Hear me out on this one, because it will work.

The rich can't let the money trickle down because of the uncertainty and hardship caused by the current monsterous 15% actual rate that they pay, this causes them to hold on to their wealth.

"But, if you don't tax them at all, won't they end up holding on to even more money?," you might ask.

Yes! And that's the key.

If they can hold on to more and more money, eventually, given enough time, they won't be able to hold on to any more. It will be so much wealth, it will push and push and finally give way, and the wealth will start flowing down to us in a sea of jobs that they will create for us.

Think of it as a big balloon filled with money that keeps getting filled more, year after year. Eventually, the balloon will get so filled it will reach its limit and pop, and when it does all of that money starts raining down on everyone.

Reagan and Grover Norquist are two undisputed geniuses, but they overlooked this one simple key part. It's not enough to be against new taxes and to oppose tax increases. In order for the trickle down to work, there have to be no taxes on the rich at all.

Remember the balloon filling with money.
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