Does Taxing the Wealthy Hurt the Lower Class ?

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Does Taxing the Wealthy Hurt the Lower Class ?

Taxes and Spending - Government Should Consume Only a Very Small Slice of a Large Economic Pie

Low taxes allow for greater economic growth and lead to higher tax revenues.

Taxing profits inhibits job growth and prosperity.

Every tax on business or investors is passed on to the consumer in higher prices or to the employee in lower wages. It is impossible to tax the wealthy without hurting the poor and middle class.

It is the nature of a government program to take wealth from the private sector, waste most of it within its bureaucracy, and trickle loose change back to the people.


Taxing Wealthy Hurts Lower Class

Taxing the wealthy makes it harder for the lower class to find a job and earn a raise. Moreover, it may lead to a higher cost of living. There are two types of "wealthy":

Sitters - Those who inherit wealth (Mark Dayton, Ted Kennedy), marry into wealth (John Kerry), or live off wealth previously earned (Barbra Streisand).

Producers - Those who earn and create wealth by offering a product or service that others want or need (Bill Gates).


Why does this matter? It is the second type, the Producers, who are most directly responsible for the creation of jobs. Unfortunately, with an income-based tax code, the Producers are typically the first to be targeted with higher taxes.

Does taxing the wealthy help the lower class? No! It may feel good to "punish" those who have more than you do. But, when you tax those who create jobs, they stop creating jobs and cut back on increasing the pay of current employees. It is human nature to protect what you have. When you raise taxes on one who pays your salary (either directly or indirectly as with major corporate shareholders), they find ways to protect their profits. Raising their taxes encourages them to cut back on job creation, on pay increases, and even on existing jobs. Further, it encourages raising prices for the products or services that they produce, thus raising the cost of living.

What about taxing the Sitters? Taxing anyone who has wealth has negative impacts on the lower class. This wealth is not hidden under mattresses or in the backyard. It is kept in the market. Those who have accumulated any degree of wealth, invest it in businesses that create jobs. Taking more of their money, discourages this investment. When less money is invested, businesses are less likely to hire new employees or increase pay. People who have money tend to spend it. Every time they spend it, they keep more people employed. When they build bigger homes, they employ construction workers. When they buy more cars, they keep the auto plants in business. These spenders keep people employed.

In 1991, Congress imposed a luxury tax on expensive goods. They thought that those who buy expensive toys can "afford" the higher taxes. But, Congress neglected to realize that such taxation changes spending habits. For example, the wealthy stopped buying expensive yachts. Unfortunately, this put many yacht builders out of business. Those in the lower and middle class who built the yachts were suddenly without a job thanks to a tax hike on the wealthy.

Does it really make sense to ask government to take more money from those who sign your paycheck and those who set prices for the products you buy? Do Senators raise their own taxes? Generally, no. While the U.S. Senate is filled with many multi-millionaires and at least one billionaire (John Kerry), their average annual income is about $150,000. Rules of the Senate limit external income. When they raise income taxes on "the wealthy", they are often not affected. While Ted Kennedy, Hillary Clinton, and John Kerry are wealthy, they are NOT the "wealthy" whom they target for higher taxes. They target the Producers who are still creating their own wealth and paying your salaries.

http://hd50bgop.digitalforcemultiplier.com/issues.html


Who Is Really Hurt When We Tax the “Rich”

June 8, 2008 Posted in: Other with 21 comments
Written by: Casey

Yah, But Only the Rich Pay That Much, and They Can Afford It
Please, don’t ever say that in my presence. There are too many things to say about this to fit in this entry. Let me put it to you this way: How on earth do you think the not-so-rich get their money? See if you can follow this logic:

Tom is a wealthy man who owns a successful business. He wants it to grow. He also needs to support his family. He needs to take home a certain amount of money to do that. Beyond that, the money that he earns will be invested back into the business so that he can make even more money. He knows that as his business grows to certain points he will need to hire more help because he just can’t do it all himself. That is okay with Tom because he plans to make more money by growing the business than it costs him to hire someone (otherwise he wouldn’t do it). Now, with more help Tom is able to make even more money. He takes some of the extra home, but also reinvests the rest of it into the business in order to grow even more. In the process he is providing more jobs.

Next comes along a new President and Congress. They increase Tom’s taxes by 15% (because he’s “rich”). Now Tom has a choice. He can do the same amount of work and watch his income decrease by 15%, or maintain his lifestyle and lay off some of his employees? Remember – Tom’s a selfish rich guy. So, he fires some people.

Who got hurt by the increase in taxes? Who can afford a tax increase, or more importantly, who can’t afford one?

http://www.youneedabudget.com/2008/w...-tax-the-rich/


Why do conservatives always seem to favor tax-cuts for the wealthy?: Most people on the right are against a graduated income tax. Put another way, conservatives favor things like flat taxes or national sales taxes over our current tax system because they believe a "rising tide lifts all boats". A flat tax or sales tax would encourage everyone to make as much money as possible, which would help grow the economy, whereas a graduated tax punishes high achievers for their success, and lessens economic growth overall.

Moreover, if everyone pays the same percentage of tax, that would provide a strong check on the growth of the Federal government. On the other hand, if the large majority of the taxes are foisted on the rich and ordinary people don't feel any pain if there's a tax increase, the government will grow larger than it should on the backs of the entrepreneurs who are helping to drive the economy. Eventually you get to a point, as we did in the seventies, where this strangles economic growth.

To sum it up, long term, the flatter the tax system is, the more the economy will grow, and the better off ALL AMERICANS, not just the rich, will be.

Why do Conservatives favor the rich so much? See the answer given above. Furthermore, instead of saying that, "Conservatives favor the rich," I think it would be more accurate to say that conservatives, unlike liberals, are not hostile to the rich. Conservatives don't begrudge the wealthy the money they make, think the affluent must have cheated somebody to get rich, or believe that society should "punish" people for success.

http://www.rightwingnews.com/special/conservafaq.php

Tax Cuts and Class Wars

by Rep. Ron Paul, MD


I'm in favor of cutting everybody's taxes — rich, poor, and otherwise. Whether a tax cut reduces a single mother's payroll taxes by forty dollars a month, or allows a wealthy business owner to save millions in capital gains, the net effect is beneficial. Both either spend, save, or invest the extra dollars, which helps all of us infinitely more than if those dollars were sent to the black hole known as the federal Treasury. The single mother desperately needs those extra dollars, and that's why we should reduce or eliminate her payroll taxes. As for the wealthy business owner and whether he “needs” the extra dollars, I'll simply relate the old adage of the man who said “I've never had my paycheck signed by a poor man.”

January 22, 2003

Dr. Ron Paul is a Republican member of Congress from Texas.

Ron Paul Archives

http://www.lewrockwell.com/paul/paul74.html

10. Trickle down economics does not work- Money in the hands of people stimulates the economy, whether they are rich or poor. The problem- how to you put money in the hands of the poor? Transfer of more wealth from the rich to the poor each year? This would only create greater dependency on entitlements and give lessen the incentive to achieve. Give the poor greater tax cuts? You can only cut the taxes for the poor by so much, because they don't pay much in taxes. When Tom Daschle said that the result of a proposed Bush tax cut would mean that a rich person would be able to buy a new car, without realizing it, he proved the theory of Trickle Down Economics. The person selling that car would generate income that he would otherwise not have had. Please note that if that person sells enough cars, he will gain wealth. If tax rates in this county were at 75% what would happen to the economy? The answer is that no one would have money to spend on anything except housing and food. The result would be that businesses everywhere would fail, because no one would have money to buy clothes, electronics, entertainment, repairs for their homes or cars, go on vacation..... If they did buy such things, they would have to go in to debt to do so. How would this help the working class or the poor? Please note the average taxpayer, pays roughly 50% of their income in taxes. After the attack on September 11th, Hillary Clinton said, "come to New York and spend money." She knew if people stopped coming to New York and spending money, businesses would fail and the economy in New York would suffer a great downturn, which would hurt the average working family. This is interesting considering that liberals are for tax hikes and against tax cuts. The only thing that helps the working class is a strong economy. It gives the average worker more freedom and more bargaining power. When the financial sector was booming from 1987 through 1989, workers were getting bonuses, overtime and stock options. When the financial sector suffered a downturn in 1990, it trickled down. There were no more bonuses, overtime, stock options and their were layoffs.

http://www.boycottliberalism.com/Toptenlies.htm



http://en.wikipedia.org/wiki/Supply-side_economics

http://en.wikipedia.org/wiki/A_rising_t ... _all_boats

bull

denmark has a high income tax and lower ammount of unemployed compared to the us.

so at least we can be sure its not inherently so or the most realistic option, there are thousands of variables independant of tax that help decide how people behave.

why we even entyertain these absolutist notions in either direction is far beyond me.

You can argue the rich create jobs and/ or you can argue that the middle-class and poor spend a larger percentage of their income. So giving those with lower incomes spending money through targeted tax cuts is also a form of economic stimulus. They'll have a few hundred to several thousand dollars extra to spend. This is a consumer economy.

Either way, supply side fantasy or stimulus talk is nice but at some point real bills come due. The CBO says the 10 year cost of a Bush tax cut extenstion will be $3.3 trillion added to the debt. I think it's over 4 with the financing costs.

The current discussion is whether to extend cuts for just those who make under $250,000 for one year, or whether to extend it for the wealthy as well. But the wealthy benefit either way. It's the first $250,000 of income so they get that too. 98% of people and 97% of small businesses fall under the first category but those above that level will still benefit.

Whatever happens, the tax cuts need to die. They were never offset with spending cuts. We've borrowed from the chinese to finance them and now there is interest on that.

Meh same old anti-tax rhetoric that already goes on here and in society in general.

Until someone comes up with a better idea than taxes I am all for taxation in general........I disagree with too high of taxes, taxation without representation and using tax money for stupid things that don't actually help the citizens.

I don't think taxing multi-million dollar businesses or individuals directly hurts anything, besides I have yet to see anyone describe a good alternative to taxation.

What's needed is a tax system that supports investment in the country where taxes are due. Part of the problem for the US at the moment are the tax loopholes for multi-nationals.

Of course I don't believe in boiler plate supply side rhetoric. That's why I called it a fantasy. The laffer curve was not meant to create a cult. My point was that obscure theories dont matter when the real world bills need paying. We've had these things for 10 years. They blew a huge hole in the debt and in the end, where are the jobs? Or is this the, "it would have been worse" argument that is disparaged by conservatives when Obama talks about stimulus?

Anyway. Both Bush tax cuts were passed by Republicans using reconciliation and given a 10 year sunset because it was clear that they increased the deficit and they couldnt inflict them on the budget past a 10 year window, per the Byrd rule. Time to let them die their long deserved death. I understand that Congress will not act to stimulate the economy so they are really all Obama has but.... they still need to go soon.

ruveyn -- I find myself agreeing with you. Now will you agree that a company/factory operating at 65% capacity does not need a tax cut, but rather needs to see demand increase. Keynes was correct about this.

I would appreciate it more if wealthy people would issue a statement like, "we do not want tax increases because we want to continue spending money on the things we like to spend money on. We want that extra money for ourselves and feel like the government has no right to take it," instead of coming up with bs like, "we can't create jobs with a tax increase," or, "this is class warfare," or "it will harm the economy."