Most Americans think of themselves as not only good people, but also think of themselves as considerate and kind to others. Well, at least outside of the northeast and California they do! And, in their daily lives and ongoing relationships they probably are good people that are kind and considerate. However, when it comes to the government, economy and taxes, the average (not in income or social status, but philosophy and thinking) American is quite evil and thoughtless.
For one thing, even though it is illegal to steal and possess stolen goods, the vast majority of Americans wouldn’t hesitate to do so: They’ll gladly take handouts from the government, regardless of the moral implications of doing so, all because it is “legal,” the “government said they could,” and “therefore, it is their right.” The reason for why taking money from the government from so called “social programs” is immoral has been spelled out clearly and irrefutably in previous posts, so I’m not going to focus on that here. The reason for this post is to express what implications such “policies” and “actions” have for the future of our country and more precisely, the future of our economy.
Let me end the suspense: We — as in the American economy — are headed for a cliff at extremely high speeds and we have no brakes. When that vehicle sees the bottom of that cliff, the explosion and the subsequent mess will be the likes of which no one in history has ever witnessed. And the resulting world-wide economic catastrophe that will be sure to ensue will be absolutely devastating and will make the Great Depression of the 1930s look like a pin prick.
The process of how we get to this economic conflagration has already begun. The precise starting date of when this process began is unclear; however, we know that the reason for embarking on this path to utter ruin was well intentioned: It was driven by the thought that poor people should be helped, neigh, must be helped — as an aside this type of thinking, at least in the western world, can be greatly attributed to christian religious doctrine. Anyway, the fact of the matter is is that many evils have been borne from good intentions and unforeseen consequences can have devastating effects. History, clearly and repeatedly, proves this to us, but few heed these precious warnings, and many that actually do understand the historical implications either choose to ignore them (“oh, that doesn’t apply to us”), or make excuses to dismiss them (“oh, that’s different”).
Specifically, what I’m talking about is the practice of forced charity; otherwise known as “social spending” through so called “progressive taxes.” It all seems innocent and benevolent: Why can’t we take the riches of our country and use some of it to help the unfortunate and needy? The problem is that no one should have the right to tell others what to do with their money, let alone spend other people’s money. It does not matter whether we vote on this or not, or it’s accomplished through democratic process and the legal system. And, at the heart of the problem is that people mistakenly believe that voting on something and making laws means that anything can be made moral. Obviously, this is absolutely not true. If we voted to bring back slavery, would that make slavery moral? Of course not.
The problem is that forced charity, combined with the trappings of morality through democratic processes (i.e., voting and passing laws), is a bottomless pit. As soon as people get used to the idea that they are entitled to other people’s money without having to work for it, it no longer becomes an issue of entitlement, but an issue of how much. So, even if the current generation is satisfied with stealing 10% of rich people’s income or wealth, the next generation will not be and will demand more and every successful generation will increase the ante. This has been the case thus far in our society. Social spending has blown up to dominate the federal budget and is expected to eclipse all else by a factor of 10 or more within the next 20-30 years according to the GAO — president Obama’s GAO.
The pattern is clear: When income taxes were introduced back in the early part of the 20th-century, the tax rate was a few percent and was applicable to well less than 10% of the US population. Now, it affects almost every income earner and the top marginal rate is almost 40%! What’s worse is that it is getting progressively far steeper for the wealthier segment of our society and the definition of who is and isn’t wealthy is becoming less and less onerous. And, as long as we have so called “social programs,” this can and will only get worse. We only have to study the economic history of Europe or Latin America to know that we are on the path to self-destruction.
Sooner or later, our budget deficit is going to get so far out of balance that a 40% marginal tax on income above $400,000 will not be enough to coming close to balancing the budget let alone satiate the greedy liberals and socialists (libs/socs) that are going to continue to demand more and more. By the way, can somebody explain to me why it is greedy to want to keep the money that you earn, but not greedy to continue to demand more and more money that you had nothing to do with earning in the first place? Libs/socs thinking is just BIZARRE! Anyway, as so called “social spending” continues to grow, not only will the marginal tax rate also have to increase, but the threshold for triggering the higher marginal tax rate will also have to be lowered in order to balance the budget. Imagine, if you will, what a marginal tax rate of 70% on income above $200,000 will do to our economy. Obviously, this will completely destroy our country’s economic future. Yet, libs/socs will either deny that it will destroy our economy or they’ll deny that we will ever get there or have the need to get there. Both views are, at best, naive, and at worst, very sinister.
However, the fact of the matter is is that we are headed for just such a scenario at the rate we are growing the country’s so called “social spending.” And, rest assured, so called “social spending” will be just about the only thing that does grow in the federal budget along with the mounting federal government debt and attendant interest payments. Soon, it will start to crowd out critical items such as defense and infrastructure spending, including spending on public education.
What’s worse is that libs/socs have convinced the rest of the world that budget deficits are trivial and easily manageable by raising more taxes from those that they deem as people that can “afford” to pay more taxes. However, this is a gravely mistaken view. Certainly, with a marginal tax rate of 100% on incomes over $200,000, no one will make the effort to make any more money than $200,000. But what if the marginal tax rate were only 99%, 98%, 97%, 90%, 85%, 75% etc.? When would people deem it worth their time to make more money than $200,000? It is my belief that the marginal tax rate at or above 50% is when we will start to see diminishing effort from those that have the capacity to make more than $200,000, and at 75% I would venture to guess that hardly anyone would make the effort to make more than $200,000.
What’s interesting is that if the marginal tax bracket was increased to $10MM then we would hardly see anyone try to make more than $10MM with the marginal tax rate at 75%. However, if the marginal tax bracket were $100,000, we may actually see more people try to make more than $100,000 than if the marginal tax bracket were $10MM, and that’s because there is greater marginal utility for additional income at lower thresholds than at higher thresholds. Meaning, if someone makes $10MM, the difference in utility between making $10MM versus $11MM is very slight; however, at $100,000, the difference between taking home $100,000 and $110,000 is quite significant.
This means that if the marginal tax rate were increased on higher and higher income levels, the amount of tax revenue that would be raised would diminish at an accelerating rate, while raising the marginal tax rate on lower and lower incomes may actually result in a more linear increases in tax revenue. This means that as so called “social spending” continues to increase, raising the marginal tax rates and marginal tax brackets on the wealthier segment of our society is unlikely to result in the deficit reductions that the libs/socs claim or hope to achieve. Therefore, to reduce the deficit, our country may not have a choice but to raise the marginal tax bracket and threshold on lower and lower income levels. This will result in the very lowest of wage earners correctly deducing that it is not worth working and that relying on the government for handouts is a better economic solution for them. Of course, we already saw such a phenomenon during the 1970s and 1980s, and have taken remedies, but as the tax burden grows this will dislocate the poor even more and they will find creative solutions to work less or cheat more or both.
Also, as tax burdens rise, the incentive to cheat on taxes grows as well, further reducing tax revenues. In addition, the wealthier segments of our society will flee the country in increasing numbers to lower tax havens, which would further decrease tax revenues. Sooner or later, we will have no choice but to not only tax income of all and any variety, but also the accumulated wealth itself in order to reduce our budget deficits. This will not only dis-incentivize people from working harder to make more money, but also further encourage the wealthier and capable segments of our society to flee the country, greatly reducing our ability to manage budget deficits, which then forces the libs/socs to raise tax rates and tax brackets even more, which then feeds the vicious downward spiral.
Sooner or later, we then end up like Greece where 50% of our society is reliant on the government to take care of them — by the way, it doesn’t matter whether 50% of the population work for the government or get subsidies from the government, the other 50% have to pay to support them in either case. And, we all know what happened and is still happening to Greece. This is the fate that awaits us; however, unlike Greece, if our economy plunges into the abyss, we will drag-down the rest of the world with us and the resulting economic devastation will be unfathomable.
This is the game of chicken that the libs/socs are playing with our economic future. They are GAMBLING that they can find ways to take the maximum amount of money from the segment of the population that have little voting power — great lobbying power, but sooner or later the politicians have to get re-elected — but the vast majority of the income and wealth, while continuing to spend on so called “social programs” to satiate their own egos and need to feel like they are helping society.
The fact of the matter is is that as the economy implodes under the burden of all of the deficit spending and ever increasing tax burdens, the poor will be the ones that get hurt the most, not the wealthy. The wealthy have a way out: They can leave the country. The poor can’t/won’t. So, while the libs/socs feel good about themselves in their belief that they are helping the poor, the reality is that they are not only destroying the country, but also they are hurting the people they most dearly want to help.
What’s tragic about this is that the libs/socs don’t realize this, don’t get it, and, even when confronted with the truth, they will not retreat from their mistaken ways. Instead they spew stupidity and lunacy: The rich can afford it, the rich didn’t make their money on their own, the rich are just trying to scare people because they’re greedy, the rich should pay their fair share, love thy neighbor, etc.
The pain of correcting the libs/socs mistaken philosophy and policies will certainly be great. However, be aware that the amount of pain that needs to be endured to correct this tragedy is only the reflection of how decrepit and damaging libs/socs’ policies have been for our country. But make no mistake about it, their mistakes have to be corrected; and, every minute that we wait to correct the libs/socs tragic mistakes, the greater the damage, the greater the pain and the longer the duration of recovery.
For more, please read my books, “… Under the Constitution with Liberty and Justice for ALL,” available at http://www.CreateSpace.com/3978962 and also available on Kindle, and “The New Constitution for Modern America,” available at http://www.CreateSpace.com/4281897 and also available on Kindle. Please don’t forget to rate this post. Any comments or questions are welcome and can be left for me on this blog, @Ahmedinejahd on Twitter, on Facebook or via email at AlexAhmedinejahd@Yahoo.com. Thank you in advance for buying my books, and rating this post. And, thanks for visiting my blog; I hope you get an opportunity to read my other posts. Have a great day!