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Why Taxing the Rich Does Not Work
Real Clear Markets ^ | 08/09/2011 | Louis Woodhill

Posted on 08/09/2011 8:12:31 AM PDT by SeekAndFind

President Obama has said that he wants to "spread the wealth". He proposes to raise taxes on "the rich" to get more money for "stimulus" spending, such as longer unemployment benefits. Let's look at how this "spread the wealth" thing would actually work.

Joe Lunchbox works in a factory owned by Reginald Bigbucks III, a billionaire. Obama stops at the factory during a "Jobs" bus tour through the Midwest. Joe and his coworkers assemble in the lunchroom to hear Obama speak.

"Good news," the president tells the workers. "We are going to be spreading the wealth. We are raising taxes on millionaires and billionaires-like Reginald Bigbucks III-and we are going to spend the money to benefit the middle class, people like you."

Joe raises his hand. "What do you mean?" he asks. "I mean, like, what is actually going to happen?"

Obama explains, "To pay my new taxes, Mr. Bigbucks is handing this factory over to the federal government. We are going to tear it down and sell it for scrap. Then we are going to use the money to extend unemployment benefits for another 99 weeks."

"Oh," Joe sighs. "Well, then, I guess that I'm going to be needing those unemployment benefits."

If the above example strikes you as fanciful, consider the following. To "tax" is to take away something from someone and give it to the government. "The rich" are rich because they own a lot of assets. So, what it means to "tax the rich" is to take assets away from rich people and transfer them to the government.

So, what are the assets that the rich own? The rich don't have money bins full of cash, like Scrooge McDuck. Rather, they own things like factories, office buildings, and oil wells, either directly, or indirectly via stocks and bonds.

In other words, the rich own most of the "nonresidential fixed assets" of the nation. These assets certainly count as "wealth", but what they are physically are the tools that workers use to produce America's GDP.

The government doesn't want factories, office buildings, or oil wells. It wants cash. So, taxing the rich forces them to liquidate assets. This liquidation is accomplished financially, rather than by actually tearing down factories and selling them for scrap.

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TOPICS: Business/Economy; Constitution/Conservatism; Government; Philosophy
KEYWORDS: rich; taxes; wealthy
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To: GreenvillePatriot

You are actually funny, you know that?

By the way, it’s spelled “scourge.”

And none of our problems are “economical.” We have a lot of “economic” problems — that is, problems with our economy — but they’re all very, very expensive, as far as I can tell.


81 posted on 08/09/2011 4:52:00 PM PDT by Steely Tom (Obama goes on long after the thrill of Obama is gone)
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To: Cyber Liberty

Christ on a cracker. I said trickle down instead of supply side!! Keep attacking terms and not addressing what I have said specifically. You have tap danced around everything I have stated. I am sure you gave yourself a high five.


82 posted on 08/09/2011 4:54:21 PM PDT by GreenvillePatriot
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To: Steely Tom

Now attack my spelling and grammar. When you have no retort go to grammar. Are you going to call me a nazi now. Let’s Godwin this MFer.


83 posted on 08/09/2011 4:55:48 PM PDT by GreenvillePatriot
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To: GreenvillePatriot
Now attack my spelling and grammar. When you have no retort go to grammar. Are you going to call me a nazi now. Let’s Godwin this MFer.

Why not learn to use the spell checker and how to write coherently?

Then, after you've done that, you can move on to bigger things, like how to have a coherent thought.

84 posted on 08/09/2011 4:58:12 PM PDT by Steely Tom (Obama goes on long after the thrill of Obama is gone)
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To: GreenvillePatriot
I am sure you gave yourself a high five.

Uh, no. That would be rude. Now run along.

85 posted on 08/09/2011 5:05:37 PM PDT by Cyber Liberty (Even Herbert Hoover kept a AAA bond rating.)
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To: GreenvillePatriot; null and void; holdonnow; Jim Robinson; Diana in Wisconsin; stephenjohnbanker; ..
I think “the rich should have a minimal tax increase. ~snip~ I know this is controversal for some but....

"but" is the short form for "Behold the Ultimate Truth".

You do know that the government raises more money when taxes are lower, don't you?

And why would the rich give an even higher percentage of their earnings so the government can give it away to the 'less productive' members of our society?

Why would any free person do that? How many hours each week should the average business owner work for free simply because he/she took the risk of opening a business? 5? 10? 40?

86 posted on 08/09/2011 5:07:40 PM PDT by fanfan (Why did they bury Barry's past?)
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To: GreenvillePatriot

The ‘rich’ as you put it already pay more than their ‘fair’ share.
You know who else wants to tax the ‘rich’, or at leats those with more money than he has?
Moronic Matt Damon.

“If trickle down worked we would have seen close to zero unemployment under Bush. “

If spending were actually cut and regulations were not as anti-business and anti-growth, you ‘might’ have a point.
But you don’t.
Because regulations are put into place by government to stifle business because.. they are there to gouge more money from businesses as a stealth tax on actual work done.
Yes, onerous regulations are part of the problem with unemployment.

But, reading your ‘soak the rich’ post, I doubt you’d understand any of the above.


87 posted on 08/09/2011 5:55:38 PM PDT by Darksheare (You will never defeat Bok Choy!)
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To: GreenvillePatriot
If trickle down worked we would have seen close to zero unemployment under Bush.

You never studied economics have you? There is a natural unemployment rate that will always happen around 4%-5% because free economies by definition are dynamic. That said, guess what the average unemployment rate was under President Bush- around 5%-6%. With all the problems, employment was very vibrant (as long as you didn't listen to the Dem's propaganda). Anything lower and frankly, it is either an unusual boom or it is artificially controlled. After all, the Soviet Union claimed to have 0 unemployment.

88 posted on 08/09/2011 6:05:37 PM PDT by mnehring
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To: GreenvillePatriot
. I am sure you gave yourself a high five.

No, moron, I gave YOU a zot.

89 posted on 08/09/2011 6:06:18 PM PDT by Admin Moderator
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To: fanfan; GreenvillePatriot; null and void; holdonnow; Jim Robinson; Diana in Wisconsin

” Why would any free person do that? How many hours each week should the average business owner work for free simply because he/she took the risk of opening a business? 5? 10? 40? “

I know one thing....as an international banker, I can tell you the “rich” are leaving here in DROVES! For instance, the top tax rate in Malaysia is 28%


90 posted on 08/09/2011 6:12:35 PM PDT by stephenjohnbanker (God, family, country, mom, apple pie, the girl next door and a Ford F250 to pull my boat.)
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To: Admin Moderator

Thank you for that wise ZOT : )


91 posted on 08/09/2011 6:13:33 PM PDT by stephenjohnbanker (God, family, country, mom, apple pie, the girl next door and a Ford F250 to pull my boat.)
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To: GreenvillePatriot
Matt Damon!
92 posted on 08/09/2011 6:24:49 PM PDT by Darksheare (You will never defeat Bok Choy!)
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To: Darksheare; stephenjohnbanker; Tax-chick; Monkey Face; NicknamedBob

You guys know this would make a wonderful undead thread for Sept., eh?


93 posted on 08/09/2011 6:34:47 PM PDT by fanfan (Why did they bury Barry's past?)
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To: GreenvillePatriot

I have no idea but am sure there are places where they welcome people that have lots of bucks and want to retire. It doesn’t even have to be a first world country, many third world countries have places for rich folks to live posh lifestyles and are more likely to welcome someone with money. Some Vietnam Veterans live in Thailand and seem quite happy there, not sure what the laws are about moving there but many have businesses and some are just retired there. I admit to not knowing the ins and outs of people with money just moving elsewhere but I would imagine if you had the money you could find a new place to live.


94 posted on 08/09/2011 6:35:14 PM PDT by Tammy8 (~Secure the border and deport all illegals- do it now! ~ Support our Troops!~)
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To: GreenvillePatriot
I also think the Government should cut spending in all of the pet projects on both sides.

Serious question: What are conservatives' "pet projects?" Maybe the military and border defense. Not so much charity and safety nets, both of which are abused and can be handled by faith-based organizations and families without government funds. But by and large, what do you think conservatives want to spend government money on that isn't a Constitutional function?

95 posted on 08/09/2011 6:55:01 PM PDT by TN4Liberty (My tagline disappeared so this is my new one.)
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To: fanfan
"You guys know this would make a wonderful undead thread for Sept., eh?"

Well, it is by now technically a ZOT thread.

96 posted on 08/09/2011 8:47:41 PM PDT by NicknamedBob (As soon as the rush is over, I'm going to buy some stocks. Next question is, who goes in 'em first?)
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To: fanfan

BIG BUMP to your post no. 86, fanfan.


97 posted on 08/09/2011 11:57:48 PM PDT by Cindy
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To: fanfan; stephenjohnbanker; Tax-chick; Monkey Face; NicknamedBob; Anoreth

Hmmm... throw it into the grab bag.

Looks like I’ll be heading off to AIT in October.
I’ll be heading to drill in Sept, but I’ll be here for thread change.
[My head spins]


98 posted on 08/10/2011 9:51:40 AM PDT by Darksheare (You will never defeat Bok Choy!)
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To: GreenvillePatriot

Awwwww....bye bye.


99 posted on 08/10/2011 10:07:16 AM PDT by Mr.Unique (Very generic, non-offensive, tagline.)
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To: Darksheare

The military is good at changing your schedule.


100 posted on 08/10/2011 2:12:07 PM PDT by Tax-chick (Do you know why I love reptiles? It's because they don't play guitars.)
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