If Republicans Are the Party of the Middle, They Should Block the Billionaire's Tax
Mike Valeri/Standard-Times via AP
If Republicans Are the Party of the Middle, They Should Block the Billionaire's Tax
Mike Valeri/Standard-Times via AP
Story Stream
recent articles

Political discourse would be much less nauseating if politicians weren’t so obnoxious as to talk incessantly about “creating jobs.” They can do no such thing.

On the other hand, it’s not wrong if politicians talk about how jobs are created. Particularly if they know how. If they do, they’ll say that business formation is always and everywhere a consequence of saving, as are the jobs provided by those businesses. No doubt some readers will respond that “economists say” consumption is the fuel for economic growth (and subsequent job creation), but the actual truth is that it’s a lack of consumption that leads to work opportunities.

The simple truth is that without savings, all progress would stop. Entrepreneurs eager to rush a much better future into the present cannot do as they wish absent savings. And no economic School can evade this statement of the obvious.

The problem now is that what’s obvious requires stating yet again given the desire among Democrats to institute a “Billionaire’s Tax.” Can they really be serious?

Really, who would even posture about something so economically harmful? When it comes to jobs and progress, the superrich are the most crucial individuals of all. And they are for precisely the reasons that most slow-witted economists (including Jason Furman – here he is auditioning for Treasury secretary in the Biden administration) recommend against reducing the tax burden for the rich: they can’t spend it all.

You see, economists once again believe that consumption is the source of advance. No, it’s not. Consumption is the easy part. It’s what we all want to do. And it’s only possible after we produce. The more productive we are, the more we can consume. And our productivity is a consequence of – yes – savings. Please think about this truth with billionaires in mind.

Wealth of that kind is realistically very difficult to spend. At the very least it’s very difficult to spend quickly. After which those of immense means generally didn’t get that way by stuffing their wealth under the mattress, or in the proverbial coffee can. The rich get that way by putting their substantial excess to work. In other words, the rich thankfully get richer by investing their excess. Which means because the rich can't spend it all, they are prolific creators of businesses and jobs.

It’s all a reminder that when President Biden rambles about taxing billionaires at 20% rates, and Furman laughably writes of the benefits of relieving the rich of substantial wealth, both are wearing their ignorance, dirty political posturing, or both on their sleeves. It cannot be stressed enough that the most crucial wealth of all is that which is in the hands of those with the most. Once again, since they can’t spend it all they quite literally have to redistribute it to us all through investment in all manner of existing businesses and entrepreneurial concepts that will greatly enhance our living standards, employ us, and expand our own savings. About our savings, let’s not forget that in owning small portions of the companies in the S&P and NASDAQ, we have a piece of what past savings made possible.

Sadly, the arguments from Biden and Furman become more ridiculous the more one looks beyond the headlines of a “billionaire’s tax.” On its face, such a tax would remove from circulation the most crucial wealth. But there’s more.

Furman writes in glowing fashion about how wise and essential it is to tax away unrealized gains from billionaires. Allowing yet again for the likely possibility that his opinion piece was an audition for the Biden Treasury, Furman can’t be serious. That’s the case because billionaires, and the investors whose capital commitments lead to billionaire fortunes, are by the very descriptor taking the biggest and riskiest commercial leaps of all. Think about it. When someone (either investor or entrepreneur) achieves a billion-plus fortune, that’s a certain sign that they discovered a wildly unmet market need; a need seen by existing commercial giants as either unnecessary to meet, or delusional in trying to meet it. Yet Furman wants to penalize this intrepid, frequently against-all-odds form of investing? Why? 

Billionaires yet again get that way by improving our lives (and work prospects) in stupendous fashion. Think Fred Smith discovering massive demand for overnight delivery via FedEx, Jeff Bezos and Amazon inventing an all new way for us to shop for market goods, but also for us to sell our production, or Steve Jobs placing supercomputers in our pockets. Billionaires become billionaires because they make living better and better.

Yet President Biden and those who seek his favor want to penalize them? This shouldn’t happen, and it won’t happen if Republicans act like Republicans.

While their populist, Party-of-the-People act is increasingly odious, hopefully it causes them to do the right thing vis-à-vis Biden’s proposal. The President quite simply cannot get this hideous, progress-and-opportunity sapping legislation passed without their votes. Which means they need to be united against what vandalizes reason.

The superrich create all the progress and opportunity, including opportunity for those who aren’t rich. Sorry, but it’s true. If Republicans are really and truly the Party of the “Middle,” then Biden will never get his “Billionaire’s Tax” passed.

John Tamny is editor of RealClearMarkets, Vice President at FreedomWorks, a senior fellow at the Market Institute, and a senior economic adviser to Applied Finance Advisors (www.appliedfinance.com). His most recent book is When Politicians Panicked: The New Coronavirus, Expert Opinion, and a Tragic Lapse of Reason. 

Show comments Hide Comments