Joe Biden's Tax Proposal Is Wasteful Narcissism On Steroids
(AP Photo/Patrick Semansky)
Joe Biden's Tax Proposal Is Wasteful Narcissism On Steroids
(AP Photo/Patrick Semansky)
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My first job out of law school was for Joe Stettinius. If you recognize that name, his father was Secretary of State under FDR.  Joe gave me authority over a line of credit and a check book and told me to develop the last section of a residential subdivision. I had no clue how to do this, but I learned. One thing that surprised me, and likely will surprise most folks is that pretty much all infrastructure comes from the private sector. I learned how to build roads, a sanitary sewer system, storm water and drainage systems, sidewalks, water lines, etc. Not a dime of these costs came from the government. The expenses to maintain this infrastructure also comes from the private sector in the form of connection fees and various utility and excise fees. All the engineering is also borne by the private sector. Only after all these things are in place, engineered and inspected to exacting standards (almost always over engineered to meet government standards) are these assets turned over to a government entity to maintain.

One must always be on the lookout for false assumptions masquerading as accepted truths behind public policy. The false assumption in Joe Biden’s $3.5 trillion infrastructure bill, besides the fact that it is not really an infrastructure bill, is that we need the federal government to fund infrastructure initiatives. We don’t.  It is a waste of money. In fact, it is a complete ruse to “snow” the public into thinking the bill is for something “good,” when in reality it is a bill of extraordinary waste and graft.  There are a myriad of ways to fund infrastructure needs using private capital without the fraud, waste, nepotism and graft that this bill will generate.

I have always felt that a good tool of a skilled rhetorician is to reduce a seemingly complex argument to simple terms and principles and then extrapolate those principles to fit the current discussion. Are not utilities, roads and storm water management systems good things? As such things are almost always paid for with private capital, wouldn’t a reduction in private capital mean less of these good things?

Drive down any street in your city, look at the buildings and businesses. There are pretty houses, investment properties and apartments for renters, offices and retail establishments. You will drive by every business imaginable from bakeries to ball bearing factories, art studios to asphalt plants. High tech to low tech and everything in between. No house, no building, no business would be there without private capital and some fellow with a dream. Every advancement of humankind stems from private capital:  medicine, farming, hygiene, technology, transportation, energy, space exploration and more.  Without private capital, there would be no leisure time, no art, no time for the study of humanities, nothing. Today as you go through your daily routine, as you see, touch and use things, ask yourself where did these things come from? From the moment you get up, you are surrounded by various goods literally at your fingertips. Toothpaste, dental floss, mouthwash, cereal, milk, cell phones, a car to get to work, gas to fuel it,  donut shops, parking lots, office buildings,  software systems, satellites to distribute data, paper products, office equipment, HVAC systems, electricity, an incredible array of food from all over the world for lunch, news and financial information services, and the list goes on until you roll into bed on those soft sheets made out of Giza cotton transported from Egypt to the US on privately owned ocean vessels. While you sleep, the hum of commerce goes on, factories are processing your needs for tomorrow and distributors are bringing it to within easy reach of you.

We live in an absolutely amazing world. I marvel at it. We should not take how lucky we are for granted. It is not just amazing, but it is extraordinarily amazing on the grandest scale of amazing. Every day, we should wake up and thank the good Lord for our capitalist system that has advanced humankind in a way beyond the wildest dreams of any optimist living 100 years ago. You and I are the beneficiaries of this system. However, it is not enough to appreciate it; to preserve it, we must understand how it works.

Let’s say you want to live at 121 Elm Street. Someone had to build that house for you to want to live there. All economic activity, i.e., all things we deem as good and necessary start from supply. All the wonderful conveniences of modern life (mentioned above) exist solely because of supply. There is no supply without capital.

Except for a few nutcases who think they are Druids, living in trees in national forests, no one wants to live in a world without all the riches and benefits we enjoy. Our body politic ought to be solely focused on nurturing this system. An apt analogy to the benefits of capital is to think of the benefits of water. Water is necessary for life, it is nurturing, it allows for plants to grow. If there is a reduction in the water supply, everything turns brown and dormant; the landscape withers and we all suffer. With plenty of water, the landscape is green, beautiful gardens flourish and harvests are bountiful. The same is true with capital. When the supply of capital withers away, our landscape looks like Stalingrad 1955. Yet, if we protect property rights and allow for the creation and nourishment of capital, civilization continues to prosper and advance to unimaginable zeniths.

All of this brings me to Joe Biden’s proposed tax increases currently before Congress. No sane person could possibly believe that these tax increases benefit anyone other than the hogs feeding at the trough of the Leviathan state.  It is narcissism on steroids. A few no-count sycophants who have never produced anything of value benefit at the expense of not only 330 million Americans, but the whole world. The whole world you say? Yes, because American productivity and invention lifts the lives of people all over the world.

Let’s examine. As famously stated by John Marshall in 1819, the power to tax is the power to destroy. And that’s what the Biden tax plan does. The plan raises the top corporate tax rate from 21 to 26.5%. That’s not a 5.5% increase, that’s a 26% increase! By the way, corporations are not evil Behemoths, they are 100% owned by people. Moreover, many corporations are already taxed twice. Does it help these entities grow and create newer and better products to have an additional 26% of their profits taxed? Isn’t it better for these entities to put this capital to work? This capital can be used to create new technologies within the company, or it can be lent out or invested in other dynamic enterprises outside the company. Even if these profits are placed in deposit accounts with banks, you the average Joe wins because capital does not sit idle, it flows to wear it can be the most effective.

The Biden plan increases the top income tax on individuals from 37 to 39.6%, a 7% increase. Mmm, who can do the most good with that 7%, the taxpayer or the government?  Slow Joe wants to raise the capital gains rate from 20 to 25%, a 25% increase. In a vibrant economy shouldn’t capital be able to move quickly and freely to better and more efficient investments?  Won’t this policy keep capital locked up in mediocrity?  Funny how our society goes gaga to Free Willy, albeit a nice enough whale, but doesn’t seem to recognize the much more important task of FREEING CAPITAL!

Every dollar the federal government spends is a tax on productivity. In 2019, the federal government spent $ 4.4 trillion. In 2021, it spent $6.8 trillion, a 55% increase, which was only made possible by borrowing $3 trillion. Now, the same people who have illustrated mind blowing incompetency in managing the affairs of our national interests want to spend an additional $3.5 trillion of your money. Think of the hubris of this endeavor. This elite crowd of brain-dead know-nothings, many of whom proclaim that men can menstruate and that cow farts cause hurricanes, think that they are better stewards of your money than you are! Washington DC is an utterly corrupt, incompetent clown show full of circus barkers, evil witch doctors and ego-terrorists.

The problem with the invisible hand of the marketplace is it is invisible. Therefore, political charlatans can hood-wink you by telling you that all economic progress is a result of them wisely investing the money they extract from your wallet. Never mind that economic growth and advancement exists on its own, and that the nit-wit politicians only retard this phenomena from being even greater with their meddling.

You also can’t see the wind, but the wind blows seedlings over the fields, and flowers and lilies grow.  Solomon in all his glory cannot create anything more beautiful. Neither can Washington DC. The wind that blows the seeds of prosperity over our fruited plain is capitalism. The less capital is taxed, the more beautiful the scenery.  

Robert C. Smith is Managing Partner of Chartwell Capital Advisors

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