Taxing the Rich? Not Taxing the Rich?

I’ve been pondering all of this taxation, fiscal cliff stuff and trying my best to have an open mind to both sides of the debate.  My views have been deeply changed and the reality of some of this is kind of astonishing.

I know I am seriously oversimplifying the debate, but a key question is if raiding taxes on those with astronomical amounts of money helps the economy and job creation or if giving them greater tax breaks empowers them to do a better job of creating jobs and thus creating a better economy.

I did this and have to force myself to think of the ridiculously rich people and ridiculously rich corporations as the same since the Supreme Court has declared corporations to be people.

The trickle down theory of economics implies that if they extremely rich have a bit more money to play with they will grow their empires which will involve creating more jobs to serve in the building and sustaining of these empires as well as growing their wealth more to lead to more empire building and more jobs.  With more jobs and more money there will be more spending and the more employees with more money will be spending and the economy will have more money moving around.

I encountered a few stories about tax breaks for big oil companies and I remembered being angry a few times over the past few years at stories of these companies making record profits at the same time that the American people were paying record prices for gasoline.  Then I was miffed by public statements from these companies that the record prices and record profits were not related.

Then when all of this conversation about tax breaks started, I found out that these companies were still getting tremendously large tax breaks (AKA assistance) while making record profits.

So in trying to open my mind, I thought, “Well, maybe in all of this more jobs were created and so on as I have been being force fed as an idea.”

I found nothing but evidence to the contrary (one of the clearest and well done articles http://www.americanprogress.org/issues/green/news/2012/02/07/11145/big-oils-banner-year/)

Looking at the evidence I have found in my admittedly casual research, it seems that nothing seems to happen with more money but more greed and a lust for more power to keep the fountain of wealth flowing.

Some who are old enough might remember back in the seventies when the OPEC folks slowed production of oil to raise prices and absolutely jacked up the economy to levels where gas had to be rationed and panic was a way of life.

Well, our big oil companies were doing the same thing when we were all dying at the pumps as we still are.  Now with us numb to the inflated prices that we pay for gas the profits over the past few years have been at levels never seen before and the tax breaks still remain in place.

It’s like a person who is on welfare (or some other government program) because he/she lost his/her job, getting a job that makes him/her absolutely rich (more so with each paycheck) and being able to still collect welfare.  As a matter of fact, there are people on Capitol Hill trying to say that because the welfare worked so well in helping this person get the job, we should make that persons welfare check even larger to make that job even better.

If confronted on this logic, then the argument turns to the idea that even though this person is getting rich right now, what if this person isn’t making as much next year or the year after?  In this example, what if this person loses the job?  We need to keep this person who is getting rich on welfare because he/she might struggle again later.  WTH!!!!

It seems that once the government steps in to help you out and you become rich, it might be time for you to start carrying your weight.  You know:  Like how others pulled the weight when you were struggling which allowed you to pay less.

Let’s look at the logic and the arguments specifically the ridiculous nature of these arguments.

Over the election season I heard a few arguments and debates on the idea of how the rich pay more money in taxes than the rest of the population and that means that they should be taxed less.

So let’s imagine that all taxes were ten percent of your income for everybody (because the math is easy).  A person making ten million dollars a year would pay a whopping million dollars a year.  A person making thirty thousand dollars a year would only pay three thousand dollars a year. 

The logic is that if we give the ten million dollar a year person a massive tax break, the economy will end up better.  In my research I found a few different numbers about percentages of taxes paid but it seems to be a pretty general consensus that the rich pay taxes on about 2.7 percent of their income.

Lets round that off to three percent (the math is easier and it gives them the benefit of the doubt point three percent) and run the numbers.  That means that my ten million dollar a year person only pays taxes on three hundred thousand dollars which reduces the taxes from being a million dollars a year to thirty thousand dollars.

So, the idea that the rich already pay considerably more than the rest of the population is absolutely true.  In fact, in this example the rich person pays exactly what the other person makes in the year (Numbers I picked by accident, but it is pretty cool numerically).

The problem is that the amount of responsibility each person carries is not proportionate.  In other words I think the logic of all of this is a terribly flawed system.

Picture our economy as a tug-of-war with the rest of the world.  On our side there are small, incredibly weak people, weak people, normal people, slightly strong people and a few massively strong giants that could probably do the tug-of-war match all by themselves.

What would happen if the massively strong giants decide that they do too much of the pulling and decided they should not have to pull so hard.  This few decide to pull using slightly more pulling power than the incredibly weak people are puling with when pulling with all of their might. 

Can you honestly say that the massively strong giants are doing their part?  If the team starts to lose the tug-of-war terribly and the massively strong giants refuse to pull any harder and as a matter of fact complain that they should be pulling less, are they really pulling their weight on the team?

The tug-of-war only works if every person involved gives their all.  If the weaker people are giving their all and the stronger people are just giving some because they are comparing themselves to the strength of the weaker people shouldn’t you look at the stronger people when you are losing?

The few, massively strong people in our economy are not pulling their weight and are refusing to.  We are losing the tug-of-war match and are about to fall over fiscal cliffs and back into recessions and this few is talking about how they already pull more than the rest of us why should they pull as hard as they can.

Now on to the idea that at least this extra money is creating jobs and building the economy, which assumes the giving nature of these people (and corporations) who are already not pulling as hard as they could.

In the case of the big oil companies, record profits (plus 2 billion is subsidies) led to, producing less oil.  The money didn’t go into producing more oil or new jobs etc. (they did do exploration and had some jobs come and go but not substantially more then when they didn’t have record profits) the money went into buying their own stock and into buying political power.

According to the article I referenced earlier, in 2011 the big five oil companies spent $1.6 million on campaign contributions and $65.7 million on lobbying efforts.  Apparently, the only jobs created were in politics.

I am becoming more and more a fan of the idea of a flat tax.  Then everyone in the tug-of-war would pull as hard as they are able and the whole group does its best.  I do believe that there could be tax breaks for groups that are somehow in need, but that has to be a break that is only in place during the time of need.  If you are breaking world records for income, I am not sure a tax break that was to help you when you were down is still a valid use of tax breaks.  I think your need is over and it is your turn to repay those that carried the weight when you were down by taking your turn to carry the weight.

I know the wording has been tweaked a bit to describe “raising the taxes on the rich” and having the rich carry the burden of the economy etc., but I have realized that all we are talking about is bringing things back to where everybody is giving the same amount of effort.  The stronger pull as hard as they can and the weaker pull as hard as they can even though that means the stronger pull with more strength than the weaker.

So, I am starting to realize that this idea of raising the taxes on the ultra rich that the Republican Party is probably the right idea especially when the economy is bad.  I am not saying that I am buying everything the Democrats are peddling right now, but I am starting to see how this one concept is just sensible.

The Republicans’ insistence on getting as close to this “Fiscal Cliff” as possible while sticking to the idea that they will never allow anything that raises taxes on the ultra rich is an astonishing stand on foolish grounds especially since the American people have overwhelmingly voted to show that this is what they want.  If the democratic process has clearly stated that this is what a large majority of the American public wants then why are they letting the extremist arm of their party direct them in this illogical direction that threatens to ruin their party and throw us over this “Fiscal Cliff” (which will raise taxes on everybody including the rich anyhow on New Years Day).