When the young man heard this, he went away sad, because he had great wealth.
Then Jesus said to his disciples, "I tell you the truth, it is hard for a rich man to enter the kingdom of heaven. Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God'" Gospel of St. Matthew, 19:21-24This passage has often been touted as indicating that Christ thought money to be evil in some way. However, examining the words closely, Christ did not say that. Christ used this parable to teach us about the evils of having money for the sake of having it. The young man in this case was unwilling to part with his riches, even at the cost of his soul, hence his riches were more important to him than acceptance into the Kingdom of God. We see some of the same forces at work in the US today.
President Obama has suggested that the Bush tax cuts, scheduled to expire at the end of 2010, be extended for all except individuals earning over $200,000 per year and couples earning over $250,000 per year. The result would be that taxes for this bracket would increase by about 3%, to a maximum of 39%. This is still lower than taxes were during the Reagan administration, when taxes for this bracket were 50%, or even during the Kennedy administration, when taxes for the top bracket was 91%. At the time, various tax cuts were put into place, and they seemed to have positive effects on our economy. Yet, the same trick-down economics is being proposed today, in spite of the US economy being vastly different than it was in 1962 or even 1980.
Globalization was just in its infancy during the Kennedy administration, and still was not in full force during the Reagan administration. Therefore, most goods consumed in America were made in America by American companies. That is no longer true today. American companies can and do continue to outsource everything that can possibly be outsourced, unless somehow prohibited by law. (Banking laws still limit some outsourcing by banks, although I am sure this is under attack also).
If a tax decrease for the wealthiest Americans is continued, then it should be followed with legislation designed to counteract the effects of globalization, and to encourage investment and hiring in the US, not in China, India, or anywhere else in the world. Such legislation should be in the form of a tax which would state that for every company which outsources a job to any other country, that company owes in the form of a tax the difference in the wage between what they are paying in that other country and what they would pay a comparable American worker in the US. This removes the economic incentive to offshore American jobs, simply in to save salaries and working conditions.
Unfortunately, we can look for the Republicans in Congress to block any such a progressive scheme, because the Republican party is, unfortunately, tightly tied to business concerns which would oppose any regulation of their right to make unlimited profits. In that way, they are like the young rich man, with the appropriate potential for problems of the soul.
2 comments:
Well, lets look at historical unemployment rates. From 1945 till about 1982 the unemployment rate steadily rose. It peaked at just below 10%. Once Reagan tax cuts went into effect suddenly the unemployment rate steadily decreased up to about 2008 with the current crisis. During that period we suffered only two small instances of an increase (1992 and 1999).
Now I'd like to point out that the Reagan tax cuts ultimately reduced the upper tax bracket from about 70% to about 28%. Not to 50% as you claim.
There are two things to consider when discussing the upper tax bracket. The first is that they are the job creators in America. Without them actively involved in the American economy jobs do not get created. Without their investments in businesses and the stock markets business do not grow. When the government taxes money it in effect removes that money from the economy and can not be productively used. The more of the money the government takes out of the economy the worse the economy is. Notice that one of the contributing factors to the Great Depression as well as the reason why it was prolonged is directly linked to government controls on prices and the +90% tax rate. The government does not create jobs it only consumes them. Think of it like this. Taxes are the life blood of government. So as the goverment creates jobs taxes are used for those salaries. As it creates more government jobs it must increases taxes on it's citizens and businesses to pay for those positions. As it becomes more expensive to operate as a business and as the citizen have less money to spend on a businesses products then businesses begin to fire people raising the unemployment rate.
The second thing to consider is that the upper tax bracket is really no different than you and I when it comes to our personal budgets. They have a lifestyle they are comfortable in and use to and work to maintain it. The difference is that when we who are not in the upper income bracket expirience tough times we react differently. We both cut our spending but what we cut is different. The people in the upper tax bracket reduce their spending by reducing their exposure in the stock markets. Which effects a businesses bottom line. Which forces them to reduce cost. Cutting labor cost unfortunately is the quickest easiest method to reduce cost. If the invididual happens to be a business owner then the they will also cut labor. So its a double whamy if they both reduce their portfolio in the markets and cut their labor costs.
I would agree that maybe the way we tax should be re-evaluated. Removing the income tax and go to a national sales tax would be ideal. Please don't confuse this with a VAT tax which is VERY different and VERY harmful to an economy. A national sales tax would EASILY fix the jobs being out sourced. If ALL purchases (foreign and domestic) made have a sales tax applied then payments made to a phone bank in India will be taxed.
That said, it's undeniable that as we become more deversified and more international in our economy the unemployment rate has decrease. Yes the jobs may not pay as much as they once did but the costs of the products have not increase. The US inflation rate has been very low for decades. In countries where there are huge hurdles to foreign companies to help protect the costly labor jobs inflation has been extreme and generally unemployment is high.
Also, lets not forget that the upper income tax bracket also spends the most (this generates jobs) and they also are the largest contributors to charities.
Most of our public libraries were built on charitable contributions from the upper tax bracket. Ever hear of Carnegie?
I personally want the government to be working with as little money as possible. There's absolutely no reason for about 90% of the money the US fed government spends. Why on Earth does the fed have a Department of Education? Think of this, the government takes your money in taxes. It pays someone money to process your taxes. It further pays someone to make sure that taxes are paid. Then it pays someone to figure out how to spend the taxes. Then in the case of the Dept. of Ed. it recieves some of that money. Then the DoE takes that money pays someone to account for that money. It also pays someone to decide how to spend that money. It pays someone to make sure the money is distributed back to the states that some of that money came from. Then it pays someone to make sure the state spends the money on programs it was meant to be spent on. That's only at the Federal level. Once the Fed tax dollar is sent BACK to the states the states then eat that money in much the same way the Fed did it. Now I'm not saying I like it at the state level either but excuse me for asking but doesn't that mean that basically the Fed DoE is a complete waste of our money if it's being done on the state level?
At the rates that the federal government is wasting money and based on how much money they are getting I'd ask what Jesus would think of that? A greedy wealthy person isn't any different than a greedy wealthy government.
Lastly you in actuately identify the Republicans as wanting to extend the tax cuts. There are lots of Democrats that want to as well. The latest polls show 50% of Americans want them extended. So if that's all true then lets call a spade a spade and state that most people want to extend the tax breaks not raise taxes. The only reason the democrats want to raise taxes is to fund wasteful programs that will do NOTHING to fix the economy. Also, please don't pretend that Democrats aren't tied tightly to big business interests. For crying out loud they're sitting on the boards of two of three US car manufacturers thanks to Obama. All the "Green" companies are tied to Democrats. The way of politics today and probably always has been has politicians tied to people and companies with deep pockets. Are you going to say that George Soros with a net worth of 14 billion ISN'T an example of the Democrats being tied to big business?
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