The hypocrisy of taxing someone else

According to Twitter, Wisconsin Public Radio’s Joy Cardin show (that is, substitute host Glenn Moberg) will ask its guests next hour … well, let’s let Twitter describe it:

Wed at 7am, @JoyCardinShow asks his guests: “Should taxes be increased on the wealthiest Americans?” Take the poll at http://t.co/mSsPGW8

If you care about the results of a totally unscientific poll asked of a majority-liberal audience, then go to the link and answer yourself. I would predict the answer will be Yes by an overwhelming margin. All those who answer Yes will be wrong, of course, but the right to free expression includes the right to be wrong.

The question is being asked in the light of a Washington Post story with this headline that serves as news and opinion: “With executive pay, rich pull away from rest of America.” The Post could have substituted a few words and made for a more interesting story, but that would not do for the newspaper of record of the District of Columbia: “With federal power grabs, federal government pulls away from rest of America.”

This is, first, a math issue. If person A makes $200,000 and person B makes $20,000, and each person’s income grows 5 percent in a year, then A will have $210,000 and B will have $21,000. The gap between A and B thus grew 5 percent.

But, as I wrote the first time this came up in the 1990s, the question is not whether person A is doing better. Rich people have ways to grow their income that are not accessible to the middle class or even the upper middle class. What person B wants to know is if B is doing better.

I would argue, in fact, that one reason why the state’s economy has underperformed the nation’s for more than three decades is that we don’t have enough rich people in this state. People who know something about state businesses can probably tell you who the really rich people in this state are. According to the annual Forbes 400, the richest Wisconsinite as of September was John Menard of Save-Big-Money-at-Menards fame, followed by Herb Kohler of Kohler Co., Don Schneider of Schneider National, Diane Hendricks of ABC Supply, four members of the S.C. Johnson family, and James Cargill of (the evil, according to Ed Garvey in 1988) Cargill Inc. Menard ranked 51st, and of the nation’s 400 richest Americans, just nine of them are Wisconsinites.

Everyone on that list got their money from businesses, or being in a business-associated family. With the possible exception of the Johnsons (and I write that only because I don’t know for certain), every person on that list got their wealth from their own hard work in establishing profitable businesses that employ people, serve customers and contribute to their communities.

Which, of course, means nothing to the “Tax! Tax! Tax the Rich!” crowds that befouled the state Capitol and Square earlier this year (to the tune of more than $8 million in damages and police overtime) protesting that most novel of Wisconsin things, a somewhat financially responsible state budget. Gov. James Doyle signed into law a $2.1 billion tax increase in 2009, giving the state the “honor” of having the fourth highest state and local taxes in the U.S., to fix the state’s bad finances. But the tax increase (which wasn’t high enough anyway according to the misguided) didn’t fix state finances; instead, Gov. Scott Walker got handed a $136.7 million deficit as a Welcome to the Executive Residence present, on top of a structural deficit heading into the next budget cycle of up to $3.6 billion. The state’s GAAP deficit at the end of this fiscal year will likely be close to the 2009–10 GAAP deficit of $2.94 billion.

The Institute for Wisconsin’s Failure claimed that a mere 1.5 percent increase in taxes on the top 1 percent of state income-earners would have raised $125 million to allow the state to waste more money. (That fictional $125 million, by the way, represents 4.3 percent of the GAAP deficit. That’s all.) Tax increases on the “rich” don’t work because the “rich” have enough money to hire tax experts to create perfectly legal tax avoidance strategies for their money, up to and including changing the “rich” taxpayer’s state of residence. Moreover, the purpose of government is to perform the functions of government, not to employ people (beyond who is needed to perform the functions of government), not to redistribute income, and not to effect trendy social change. (The protesters don’t grasp that, and often those in the big domed building around which they were protesting don’t grasp that either.)

I suspect the real reason for “Tax the Rich!” is the belief of the chanters that tax increases wouldn’t apply to them. Sales tax increases, of course, apply to everyone, as do property tax increases within a particular municipality/school district/county combination. Business tax increases are passed on to business’ customers. And as with every tax,  every dollar paid in tax is $1 that will not go anywhere else — not to buying consumer goods,  not into savings, not into a new house, and not into, say, starting a new business or getting involved with venture capital or angel investing.

To advocate tax increases that would not apply to you is dishonest and hypocritical. (For the religious, it’s also a violation of two commandments: “Thou shalt not steal” and “Thou shalt not covet.”) Some said during the budget and budget-repair deliberations that they would be willing to pay more in taxes (while never saying how much more, of course), and since the Feds will take your extra money toward the $14 trillion federal debt, I suspect the state Department of Revenue will take your money as well if you want to send extra money to be wasted in Madison. But to advocate raising taxes that won’t affect you (unless your suggestion is intended as satire) means you’re advocating taking money that doesn’t belong to you. Outside of politics, that’s called theft.

6 responses to “The hypocrisy of taxing someone else”

  1. The hypocrisy of taxing someone else « The Presteblog | Top Celebrity

    […] See the original post: The hypocrisy of taxing someone else « The Presteblog […]

  2. Franz Buhlmann Avatar
    Franz Buhlmann

    I want to see an increase in taxes for the rich. However, raising the rates is the worst thing that can be done in order to get the most tax revenue from them.

    I believe that by lowering tax rates and by decreasing regulations on businesses will actually increase taxes. I am not talking about regulations that are in place to protect people. I am talking about regulations that have prevented new businesses from even starting or those that help close the doors of new businesses.

    While growing up, I have heard that it is much better to charge a low price that many are able and willing to pay then to charge a high price that very few people will pay. While this was applied to products and services from a business perspective, why can we not apply this to taxes as well? We have a huge tax burden and a huge unemployment rate. The “rich” business owner does not know what to expect by own current leadership. They will hold onto more of their money and thereby decreasing the number of positions that they will have available in their businesses to be filled with other people that could be paying taxes.

    I have been taught that I should figure about 25% of my earned pay to be deducted in some form of tax. While this does not all go into income tax, our government in one way or another does use it. If a business has a hundred employees earning $20,000 each, (a rather sad rate,) these employees are paying an additional $500,000 in taxes. These taxes does not include the amount of additional tax revenue that they create, such as sales tax, sin tax or the taxes we drive to and from work with, (the tax on gasoline.)

    While this is not a direct tax that we get from these “rich” business owners, if they did not provide these jobs, there would be that much less in taxes that this government could collect. To compound the problem, by having fewer jobs, we are creating a bigger burden on the lowered tax revenue that is collected.

    So, let us raise taxes and not tax rates. In fact, we can lower tax rates and still and still raise taxes!

    Of course, there is another side to this; we should also increase wages to reflect the increase of revenue generated by the workers. In my opinion, any employer that only pays a wage that keeps an employee in poverty level is no different from those that demand higher tax rates from those with more money. Stealing is stealing no matter which side of the “money” fence you live on!

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  6. Great idea! You first, Warren. « The Presteblog Avatar
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