Sunday, November 25, 2007

Tax Freedom

On Black Friday, Americans spent over 10 billion dollars. While not all of that money went for luxuries, it is probable that most of it went for nonessential, such as an iPhone for the kids, a $400 dollar Wii, and the rest of the new electronic inventions.

Many wonder how we can justify such extravagant spending on frills while so many around the world live in poverty. A family in Africa starves, while a rich American upgrades to a Playstation 3. AIDS spreads across the real world, while Americans think only their virtual lives on MySpace. Even here in America, there still exist homeless, hungry, and impoverished people. Wouldn't it be better if just half of what we spend on our toys was given to those who really need it? Isn't it cruel to reduce taxes on the rich so that they can buy a new 54 foot yacht (because 38 feet really won't cut it). Wouldn't the world be a better place if that money was taxed in order to be given to the poor and homeless?

No. It would be a wonderful world if government charity worked. The world would be a great place if there was no sickness, no death. The world would be better if the desperately poor of the world have just some of the advantages we expect. (There are really enough resources in the world to go around. Most the the really desperately poor live in dictatorships where most their products are stolen to line the pockets of that countries ruling class or criminal gangs). But we don't live in that world, we live in this one.

Government funded charity just doesn't work. People create wealth primarily in order to enjoy it, not to make other people's lives better. (Helping others can be a desirable sideline, however, and many of the world's richest people do do impressive charity work.) The government can try to cure poverty, disease, or any of the world's ills. But it is a , hopeless, Sisyphean task.

If the rich are taxed too much, it removes the incentive to create more wealth. There is no point in taking risks, as any reward will be slashed by the highest tax bracket (over 65% in some countries). So the wealthy captains of industry stop taking risks, and stick to safe, tried and true methods that maximize short-term profits.

Or else they leave the country. During the Seventies, England had a top tax bracket of over 90%. So what did the rich do? They moved to nice islands in the Caribbean with low taxes. So England got nothing. England has lowered tax rates (not enough though), and has stopped hemorrhaging billionaires.

Their is only one way to make government funded charity work, and that is to find a country with a natural resources, a docile, small and hardworking population, and homogeneous culture. Then the government can manage that countries resources in order to provide everyone with benefits. Of course, any countries resources can only go so far, so the country always ends with massive debt and has to cut services after a few decades. But that is the best case scenario. (Look at Scandinavia for a example of this process).

Liberals say that "trickle-down" economics doesn't work. It is certainly not perfect, or even particularly good. The only thing you can say about it is that it is better than all the the other economic systems. (Much like Churchill's famous quotes about democracy: "Democracy is the worst system of government, except for all the others").

Liberals may complain about the "cruelness" of our economic ideals, and speak scathingly of the "haves" and "have-nots". But it is better to live in a country with both "haves" and "have-nots" than a country with only "have-nots". The living rate for every American has gone up faster than almost any other in the world since Reagan slashed tax rates. Can any quasi-Socialist European country say the same? Does anyone want to live in their countries? These countries can call ours cruel, but when disaster strikes, they turn to us for help.


At November 25, 2007 at 6:03 PM , Blogger Beth said...

Great points, as always, Daniel. There is a reason our relatively young country has become as great a nation as it has, because our personal freedoms coupled with our free market economy which brings forth prosperity.

At November 26, 2007 at 12:56 PM , Blogger WomanHonorThyself said...

If the rich are taxed too much, it removes the incentive to create more wealth...the Libs will never understand this Daniel!

At November 26, 2007 at 1:23 PM , Anonymous Anonymous said...

You started to scare me with the beginning of your post, Go Hillary

At November 27, 2007 at 4:07 AM , Anonymous Anonymous said...

You've made some very good points here dan
Great blog

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