A high school classmate of mine recently celebrated her birthday. I used the occasion to express my gratitude to her, again, for hooking me up with her job at a local video store (remember those?) when she went off to Texas A&M after graduation.
I had been working for a rich family at McDonalds. It was nauseating watching them pull up in their high-priced luxury cars, constantly flaunting their bling. I secretly dreamt of Uncle Sam sticking it to them come April 15th.
Nah I’m just kidding. The job situation happened, but I made up the attitude. That was my literary impersonation of the cool kids in the commentariat who lost their marbles over how little President Trump paid in taxes in recent years.
Right about the time they were learning to weave yarns of utopia while earning English or journalism degrees, they apparently lost touch with the real world. In the process, they failed to develop a proper respect for those who became wealthy by creating value for the masses.
On a related note, we had the opportunity to enlighten my oldest daughters the other night that yeah, CEOs actually go the office and work, as opposed to sitting poolside counting Benjamins. The pressure on them to successfully guide their companies is more immense than it is on anyone else.
The eminent sages in the press might know this if they weren’t trying to blind them with the glare of the spotlight. Never fear though, because they have prognosticating academics with their fancy models to steer the rest of us rats around in the maze of life. How else to explain the tax code and its myriad loopholes?
To the extent that affluent individuals/families benefit from more tax breaks than the rest of us, it should surprise no one. They’re likely involved in more income-creating activities. It’s why they’re wealthy. Wasteful and nuisance though it is, filing our taxes is simple by comparison.
Consider family and friends of ours who have stuck their necks out to run their own business(es). With employees on the payroll, rent to pay, capital investments to make and maintain, multiple rules and regulations to abide by, etc., settling up with the taxman takes them a good deal more time and professional assistance.
This is where a handful of activist-government policymakers are struck by common sense.
They know that if they indulge the socialist fantasies of the Ocasio-Cortez/Sanders/Warren cabal, and yank back ways for these folks to lower their tax bill, the economy will take a hit.
Just like we laborers, entrepreneurs depend to an extent on incentives. Minimizing ways for them to maximize their reward for the risk they take would inevitably, to borrow a tired phrase, trickle down to the rest of us.
The same applies to the seizure of investment income.
In the tradition of “FDR saved us from The Great Depression,” another fiction the left and the media like to peddle is that President Clinton’s tax hikes early in his term somehow aided the boom of the 1990s.
We could debate how large is the disincentive of confiscating resources from private citizens. Denying it is tantamount to sticking one’s head in the sand. Spinning a tale that increasing taxes stimulates economic growth is the equivalent of firmly planting it somewhere else.
Regardless, a better case could be made that the supply-side and capital gains tax cuts that he and the republican-controlled Congress agreed to later in the decade actually did the trick.
This merits mention because of the regular conniption in pro-big government circles that taxes on capital gains are lower than those on wage income. On its face, that’s true, but they omit a key piece of information: the resources that became employed as capital were previously earned as wage income.
Hence, they’ve already been through the tax ringer, and quite likely at the highest marginal rate since prosperity-powering investment usually comes from the wealthier amongst us.
Alas, ignorance can be cured. Envy can be as well, but it’s trickier when emotions are stoked by guilt.
When I suggested recently that one single tax rate, with zero loopholes, would be best, a respondent felt it would be unfair. A “single mom making a pittance” shouldn’t be “penalized” for paying the same 5% as Amazon CEO Jeff Bezos. Funny; my only thought was how much less I’D be “penalized.”
Along comes the likes of Morris Pearl, a retired investor and chair of Patriotic Millionaires.
When a fellow such as he contrasts the investment tax rate of a “billionaire making millions” to the rate(s) paid by a person making $41,000 a year, in a state with the highest income tax and 13th highest overall tax burden (California), at best some guilt is on display; at worst, outright emotional manipulation.
To an extent though, I get the guilt.
In addition to the stress I’ve felt about the economic malaise brought about by government shutdowns this year, and the acute situation in my particular industry, I felt a tinge of guilt when we decided to put a pool in, even though we were far from the only ones to do so.
I found out recently however, that it might be possible to write-off that expense if the use of it served a medical purpose. Having been diagnosed with high blood pressure in February, I became intrigued.
Not even Kamala Harris could find any guilt in me for checking into that.