Taxes and the rich...

[by-tor]

Smartmoney.com
Read My Lips
http://www.smartmoney.com/tradecraft/in ... y=20041018

By Jonathan Hoenig Published: October 18, 2004

AS THE SAYING GOES, there are only two certainties in this world: death and
taxes. While our demise is usually well out of our control, taxes are a
man-made phenomenon over which we have a highly direct effect.

As I've written before, the biggest determinant of wealth creation is taxes.
It's hard to estimate how influential a role taxes play in the economy and,
indeed, in our lives. Taxes aren't just an inconvenience or expense, but a
legal obligation we are compelled to pay under threat of confiscation or
imprisonment. Lest we forget: Civil wars have been started over taxes, the
most notable example being the American Revolution.

John Kerry has made repealing the Bush tax cuts, specifically on those
making more than $200,000 a year, the centerpiece of his presidential
campaign. He mentions it repeatedly in almost every speech. "I have a
proposal for a tax cut for all people earning less than the $200,000," Kerry
said during the second presidential debate. "The only people affected by my
plan are the top income-earners of America."

John Kerry believes raising taxes on the top wage earners would be fair,
economically prudent and morally responsible. And while that sort of
populist rhetoric might score well in a focus group, the reality of his tax
philosophy is tremendously unfair, fiscally calamitous and morally
reprehensible. It's a disaster in the making.

First, about fairness. In speeches, press releases and other public forums,
John Kerry campaigns on the promise of returning "Tax Fairness" to America.
The essence of the plan is repealing the majority of the Bush tax cuts,
essentially raising taxes on the rich.

But to suggest that the rich aren't paying their "fair share" isn't just
inaccurate, but downright farcical. The rich pay the vast majority of taxes
in this country. According to data from the Congressional Budget Office, the
top 5% of wage earners pay 53% of all income taxes. It's a stunning fact:
One half of the tax burden is shouldered by a mere 5%. Is that fair? So much
for equal treatment under the law, eh?

The bottom 50% of wager earners, those one would assume Kerry hopes to
appeal to with his soak-the-rich rhetoric, pay less than 4% of all income
taxes. And 40% of all Americans pay no income taxes at all. So while John
Kerry is correct that our current tax system is unfair, the truth is that
it's not lower-income earners who are victimized, but the top wage earners
who are already footing most of the bill.

Not only is Kerry's perspective on the tax burden inaccurate, but the way in
which he has proposed to spend the taxes he does collect is economic
suicide. John Kerry has promised to use the proceeds from the tax hike to
"invest in" everything from "affordable health care" to "better schools" to
the "jobs of tomorrow." Indeed, from energy to medical research, there isn't
an element of the economy for which John Kerry doesn't anticipate government
playing a bigger role. And while it might garner political points with
liberals, one doesn't need a Harvard MBA to know that such a mentality is a
prescription for financial calamity.

Consider this: Back in the late 1980s, I bought a Macintosh Plus computer,
which featured a nine-inch black-and-white screen, no hard drive and one
megabyte of RAM. Even with an educational discount, the then high-tech
machine cost around $2,000. Fifteen years later, I purchased a drastically
superior machine < portable, ultrafast with an immense hard drive, tons of
RAM, a DVD player, a CD-ROM drive, a large bright color screen and highly
useful software < all for less than $1,500. The functionality increased
exponentially, yet over time the price came down. This is what occurs in a
competitive, free market. Quality goes up, price goes down.

By contrast, consider a government monopoly such as the U.S. Postal Service.
Back in the late 1980s, around the same time I bought the computer, a
first-class postage stamp cost 25 cents. Fifteen years later, the mail
doesn't get to its destination any faster. You aren't able to track letters
in real time or receive a confirmation of their receipt. Heck, you still
aren't even assured when a letter is going to arrive! Yet the same stamp now
costs 37 cents, an increase of some 48%.

The point is that while private, competitive free markets bring about
innovation, progress and lower expense, government programs, even the most
well-intentioned, always end up costing more and achieving far less. Yet
John Kerry repeatedly speaks out against free-market solutions such as
privatizing Social Security and eliminating Medicare. He believes
government's role is to provide education and health care, and fund
scientific research and retirement benefits < all primarily at the expense
of the wealthy few.

Finally, in repealing the Bush tax cuts on those individuals making more
than $200,000, John Kerry believes we'd "make our tax code reflect our moral
code." It's a clever phrase, and a familiar part of the stump speech he has
presented to groups all over the country. In John Kerry's view, it would
seem, raising taxes on the wealthiest Americans isn't just a convenient way
to pay for one's proposed spending programs, but also the morally right
thing to do. In fact, nothing could be further than the truth.

In America, wealth isn't plundered or extorted from one group to benefit
another; it's earned through hard work and voluntary trade. So while John
Kerry seems to suggest the rich somehow owe the poor, the fact is that those
who lawfully earn money have a moral right to keep it, no matter how much
they make or already have in the bank.

John Kerry's insistence that taxes on the wealthy be raised demonstrates his
belief that man's wealth is the property of the state, which should be
responsible for allocating it in the most "fair" and moral fashion. It's a
full-throated belief in a progressive tax system, under which those with
more income pay a higher percentage of it in taxes.

Of course, Kerry isn't the only other politician to argue in favor of a
progressive tax system. The most famous thinker on the subject was Karl
Marx, who along with Friedrich Engles wrote "The Communist Manifesto" in
1848. Listed among Marx's 10 planks for a communist state is a "heavy
progressive or graduated income tax." Kerry appears to believe that the
proper social system isn't one that protects the individual's rights to
trade and keep the results of his productive efforts, but one under which
wealth is distributed "from each according to his ability, to each according
to his need." Benevolent? Moral? Hardly. It?s a disgusting, dangerous, and
decidedly un-American philosophy that is rotting our Republic to the core.

Jonathan Hoenig is managing member at Capitalistpig Hedge Fund LLC.

[awip2062]

Thanks for that article, By-Tor. Nice to see.

[Sir Myghin]

thats rather interesting, another reason not to vote Kerry

[ElfDude]

Cool! Another thread in the Politics section started by someone other than ElfDude!

[Sir Myghin]

Cool! Another thread in the Politics section started by someone other than ElfDude!

wooo go other people!

[ElfDude]

I've long wondered why anyone would think a "progressive" tax was fair. That would be like buying a TV and being told at the checkstand that the price was $100 if you earned X per year, $125 if you earned Y per year, and $150 if you earned Z per year. That's the opposite of fair.

[awip2062]

It isn't about fair, obviously.

[Sir Myghin]

if thats fair i eat my boxers

[awip2062]

Dweeb, you are blessed that it isn't.

[Me]

Smartmoney.com
Read My Lips
http://www.smartmoney.com/tradecraft/in ... y=20041018

By Jonathan Hoenig Published: October 18, 2004

AS THE SAYING GOES, there are only two certainties in this world: death and
taxes. While our demise is usually well out of our control, taxes are a
man-made phenomenon over which we have a highly direct effect.

As I've written before, the biggest determinant of wealth creation is taxes.
It's hard to estimate how influential a role taxes play in the economy and,
indeed, in our lives. Taxes aren't just an inconvenience or expense, but a
legal obligation we are compelled to pay under threat of confiscation or
imprisonment. Lest we forget: Civil wars have been started over taxes, the
most notable example being the American Revolution.

John Kerry has made repealing the Bush tax cuts, specifically on those
making more than $200,000 a year, the centerpiece of his presidential
campaign. He mentions it repeatedly in almost every speech. "I have a
proposal for a tax cut for all people earning less than the $200,000," Kerry
said during the second presidential debate. "The only people affected by my
plan are the top income-earners of America."

John Kerry believes raising taxes on the top wage earners would be fair,
economically prudent and morally responsible. And while that sort of
populist rhetoric might score well in a focus group, the reality of his tax
philosophy is tremendously unfair, fiscally calamitous and morally
reprehensible. It's a disaster in the making.

First, about fairness. In speeches, press releases and other public forums,
John Kerry campaigns on the promise of returning "Tax Fairness" to America.
The essence of the plan is repealing the majority of the Bush tax cuts,
essentially raising taxes on the rich.

But to suggest that the rich aren't paying their "fair share" isn't just
inaccurate, but downright farcical. The rich pay the vast majority of taxes
in this country. According to data from the Congressional Budget Office, the
top 5% of wage earners pay 53% of all income taxes. It's a stunning fact:
One half of the tax burden is shouldered by a mere 5%. Is that fair? So much
for equal treatment under the law, eh?

The bottom 50% of wager earners, those one would assume Kerry hopes to
appeal to with his soak-the-rich rhetoric, pay less than 4% of all income
taxes. And 40% of all Americans pay no income taxes at all. So while John
Kerry is correct that our current tax system is unfair, the truth is that
it's not lower-income earners who are victimized, but the top wage earners
who are already footing most of the bill.

Not only is Kerry's perspective on the tax burden inaccurate, but the way in
which he has proposed to spend the taxes he does collect is economic
suicide. John Kerry has promised to use the proceeds from the tax hike to
"invest in" everything from "affordable health care" to "better schools" to
the "jobs of tomorrow." Indeed, from energy to medical research, there isn't
an element of the economy for which John Kerry doesn't anticipate government
playing a bigger role. And while it might garner political points with
liberals, one doesn't need a Harvard MBA to know that such a mentality is a
prescription for financial calamity.

Consider this: Back in the late 1980s, I bought a Macintosh Plus computer,
which featured a nine-inch black-and-white screen, no hard drive and one
megabyte of RAM. Even with an educational discount, the then high-tech
machine cost around $2,000. Fifteen years later, I purchased a drastically
superior machine < portable, ultrafast with an immense hard drive, tons of
RAM, a DVD player, a CD-ROM drive, a large bright color screen and highly
useful software < all for less than $1,500. The functionality increased
exponentially, yet over time the price came down. This is what occurs in a
competitive, free market. Quality goes up, price goes down.

By contrast, consider a government monopoly such as the U.S. Postal Service.
Back in the late 1980s, around the same time I bought the computer, a
first-class postage stamp cost 25 cents. Fifteen years later, the mail
doesn't get to its destination any faster. You aren't able to track letters
in real time or receive a confirmation of their receipt. Heck, you still
aren't even assured when a letter is going to arrive! Yet the same stamp now
costs 37 cents, an increase of some 48%.

The point is that while private, competitive free markets bring about
innovation, progress and lower expense, government programs, even the most
well-intentioned, always end up costing more and achieving far less. Yet
John Kerry repeatedly speaks out against free-market solutions such as
privatizing Social Security and eliminating Medicare. He believes
government's role is to provide education and health care, and fund
scientific research and retirement benefits < all primarily at the expense
of the wealthy few.

Finally, in repealing the Bush tax cuts on those individuals making more
than $200,000, John Kerry believes we'd "make our tax code reflect our moral
code." It's a clever phrase, and a familiar part of the stump speech he has
presented to groups all over the country. In John Kerry's view, it would
seem, raising taxes on the wealthiest Americans isn't just a convenient way
to pay for one's proposed spending programs, but also the morally right
thing to do. In fact, nothing could be further than the truth.

In America, wealth isn't plundered or extorted from one group to benefit
another; it's earned through hard work and voluntary trade. So while John
Kerry seems to suggest the rich somehow owe the poor, the fact is that those
who lawfully earn money have a moral right to keep it, no matter how much
they make or already have in the bank.

John Kerry's insistence that taxes on the wealthy be raised demonstrates his
belief that man's wealth is the property of the state, which should be
responsible for allocating it in the most "fair" and moral fashion. It's a
full-throated belief in a progressive tax system, under which those with
more income pay a higher percentage of it in taxes.

Of course, Kerry isn't the only other politician to argue in favor of a
progressive tax system. The most famous thinker on the subject was Karl
Marx, who along with Friedrich Engles wrote "The Communist Manifesto" in
1848. Listed among Marx's 10 planks for a communist state is a "heavy
progressive or graduated income tax." Kerry appears to believe that the
proper social system isn't one that protects the individual's rights to
trade and keep the results of his productive efforts, but one under which
wealth is distributed "from each according to his ability, to each according
to his need." Benevolent? Moral? Hardly. It?s a disgusting, dangerous, and
decidedly un-American philosophy that is rotting our Republic to the core.

Jonathan Hoenig is managing member at Capitalistpig Hedge Fund LLC.

What I don't quite understand is why you would post this and NOT comment on it yourself By-Tor?

[awip2062]

You know with property values going the way they are, many people who are not rich by any means will end up having their estates taxed as if they were the filthy rich simply because they once bought some land and that land has now gone up in value so much.

[ElfDude]

According to the most recent data we have from the IRS, the top 50% of earners in the U.S. pay 96.54% of all the income taxes. The top 1% pay more than a third: 34.27%.

I never want to hear another democrat use that "The rich don't pay their fair share of the taxes!" line again.

To see the whole breakdown:

http://www.irs.gov/pub/irs-soi/03in05tr.xls

[awip2062]

I never want to hear another democrat use that "The rich don't pay their fair share of the taxes!" line again.

You will though.