Here’s something counter-intuitive that’s worth thinking about: Taxes make the rich richer and the middle class poor, and the poor into serfs. Unlike in the free-market – when the rich get richer in this manner it does not help anyone but themselves because it can not directly impact anyone but themselves and the government.
Here’s how it works:
Rich people and poor people invest in the stock market, or businesses, or whatever. They have an idea of what they will make and they get to keep all of it. Even a small amount invested can create a decent return, so whether it’s some huge corp investing millions or grandma investing $100, they all make something that goes directly into their pockets minus inflation and fees.
Example for Grandma:
$100 investment + 10% return ($10) – Inflation (2.63% or $2.63) – Service fee $7 = $10 – $9.63 = $0.37.
Grandma didn’t make much, but she did make something. Repeated enough times and with increasing initial investment, grandma could end up with a nice bankroll.
Rich people and poor people look at the investment. They must take into account rate of return, income tax, capital gains tax, inflation and payment for a service to make the trade (Scottrade.com charges $7) . If a potential investor does not take all of these into account, it is entirely possible for the investor to LOSE money, even if the investment increases in value. Here’s how:
Initial investment ($100) + Investment growth (10% or $10) – Income tax (40% or $4) – Capital Gains tax (15% or $1.5) – inflation (2.63% or $2.63) – service fee (Flat $7.00) = 10 – 15.13 = $-5.13. A loss of $5.13!
Now, a rich person could invest much more than grandma, to the point that this is profitable, but grandma can not. Grandma has to hope that the rate of return is so great it overcomes all the taxes and the service fee, but it isn’t likely to do that in today’s economy. Therefore, grandma will not invest.
What we end up with is a market that only the rich can play in. This means there is less chaos because there are fewer people involved. This produces the conditions for collaboration, which are the conditions for possible monopoly. The rich have incentive to make it as hard as possible for people that are not their peers to get into the market so that they can keep things this way.
Obama and many Democrats and Republicans are rich…. why do you think they want to pass more regulations, raise taxes, and generally make the market a landmine for anyone that can’t invest a large sum of money? Sure, the rich will take a bigger ding to their income in the short run, but in the long run they fix the game so they are guaranteed to keep that income coming.
Every time a socialist is asked about what they think about Obama, they inevitibly say something like this:
“There’s a lot of stuff completely out of Obama’s control or any of the Democrats’ control,” Fairey allowed.
How does he reckon that? The Democrats have been in complete control of the house and senate for 4 years now. They passed Obamacare without voting on it. Obama is falling over himself trying to rubber stamp everything through as fast as possible.
Therefore, they are lying. I say this because they are lying. Not because of any other reason they would like to cook up, but because the truth is not held by them, either knowingly or unknowingly. Their aim is this:
There have been a lot of news stories from the USA and Europe that viciously slam the wealthy of the world, blame them for all of our current issues and demand that we soak them to pay for a slew of governmental programs. Only these governmental programs will make sure that everyone is fairly compensated – or so they say.
Redistribution is fatally flawed primarily because, by definition, the government becomes the main source of capital. It removes incentive for citizens to take a chance on starting a business or trying a new idea, and it removes incentive for businesses to do business when it is more attractive to just accept a government handout. This stifles innovation and thus growth stalls (like the stagnation we’re in now). Government can’t collect enough taxes to pay for its expenditures, so it must borrow or print more bills. The government has nothing to fear from the populace because no matter how much the populace complains they ultimately are faced with either paying their taxes or going to jail. Because of this, it has every incentive to cheat and lose lots of money in the endless miles of red tape it can generate.
A free market has no safety net and everyone enters the market with their primary resource being “human capital”. Having wealth already is nice, but it can be lost. If they take a chance on an idea, they might make it big and get wealthy (or wealthier), or they might fail and have nothing left but their human capital – which is all they need to take another chance. A government that sits back and only collects a small percentage on transactions in a free market that is processing tons and tons of transactions stands to do well. The government also has an incentive to ensure the safety of the environment of this market – to make sure no one is cheating or coercing anyone else.
Here’s a picture (Taxes on the redistribution side are income taxes):
Businesses and Citizens kind of share a tiny sliver (that has strings attached) at the end on the redistributive side. Government is fraught with corruption (always), and that is the reason for the big red chunk that disappears into special interest’s pockets.
On the Free Trade side, there certainly would be corruption as well, but it isn’t worth mentioning because whenever someone tries to cheat, they will be left in the dust as the market changes. If the cheater gets big enough to stop that change (through regulations from the government), then consumers and businesses (which are effectively the same thing since it is impossible to have one without the other) can simply stop doing business and choke the government until the government repeals those regulations.
This is why it is so important to get rid of the income tax – by doing so the government can not even begin to plan a redistributive scheme. These schemes have been proven, time and again, to always fail. The only thing they are good for is funding special interests and bureaucrats.
We need to make our representatives repeal the 16th amendment.
Whew! That’s a bold statement! Here’s the fact of the matter though:
Before the 16th amendment was passed, we consumers could limit how much money Government had to play with by how much merchandise we bought. The government had no other income streams, and so was forced into a position of fiscal responsibility by being at the mercy of the populace.
After the 16th amendment was passed, Government could determine how much money each member of the populace got to keep from his/her paycheck. With one amendment the government went from being a subject of the people to being the ruler of the people.
The bottom line is that whoever hands out the cash gets to be rule-maker and that needs to be the populace and not the Government. Government works for us – not the other way around, but until we take the credit card away from Government, we and our entire future will be subjugated into serfdom. The easiest and most sure way of being certain we are in control is to repeal the 16th Amendment.
Many Americans around the country suffer from socialitist. It’s been around for many many years and most likely those that suffer from the disease don’t even realize they have it.
One of the biggest symptoms of socialitist is the feeling of entitlement.
We all know making money is hard… you have to get up in the morning, get dressed, shower, leave your house, and all that other stuff… screw that… who wants to do all that crap!?!? You deserve life’s necessities if you work for it or not… the “man” owes you! Working to support yourself and your family is for losers.
Well, Obama and friends are hear to tell you that socialitist is not a disease, it’s a way of life and you should be proud of it!
On Wednesday nights NBC will be airing a new show called “So you think you’re successful?” 8 contestants compete to show off their new products or skills that could potentially make them RICH!… however, what the contestants don’t know is that the winner of the show will actually be thrown into a room full of SEIU members where he/she will have the “entrepreneurship” beaten out of him.
People don’t do the right things for other people without a personal motivation to do so. If people want other people to do the right things for them, then they need to incentivize other people to do so.
Heres an example:
For the first 30 seconds they just show people who donated. They donated because it made them feel good. They felt good because they feel they’re doing some good in the world. There’s nothing wrong with that – but the point is that they needed a personal incentive to donate.
Now, go out and incentivize your political leadership to free you up to do whatever you want.
There isn’t any single group of Americans that are better at annihilating a thriving economy than Californians, and Pelosi is one of their heaviest hitters. She is a master of adopting everything economists have found that destroys wealth in a nation and then lie and look confused about it when confronted. As you can see in the article, she proudly announces that: