Weasel Words

I'm growing weary of hearing that we should increase taxes on the "wealthy". Hearing wealthy people talking about increasing income tax rates for high income people and businesses.

Wait. Stop.

Income is not wealth.

The income tax is not a tax on wealth.

Income is the means by which one accumulates wealth (or, more accurately, capital.)

Which means: We're talking about raising taxes on the means of accumulating capital.

Taxes are a penalty on the taxed activity. Taxing an activity discourages that activity. You'll get less of it. So you'll get less income-generating activity (and less capital accumulation).

Capital accumulation benefits society. We want capital accumulation. People and businesses usually invest accumulated capital, starting new businesses, expanding existing ones, spurring economic growth.

A family living in Manhattan with an income of $100,000 (and no other capital to draw on) probably would not be considered wealthy (in fact, they'd probably be considered destitute.) The same family living in Arkansas might be considered wealthy. It all depends on lots of factors besides 'income'.

People who are already wealthy (that is, who have accumulated large amounts of capital over the years) will remain wealthy. Yeah, maybe they won't increase their wealth as quickly, but hey, they're already wealthy, right? The proposed tax increases won't reduce their wealth one bit, will they?

People and businesses who aren't yet, but are trying to become wealthy? Well, they'll just have to work a lot harder to get there. If they get there at all.

Which is kind of interesting, I think. Who benefits from increasing impediments to capital accumulation? Those who are already wealthy. Those who are at the top of the economic ladder.

Wealthy people (I'm looking at you, Mr. Buffett) advocating increases in income tax rates on high income earners is like kicking off people below you on the ladder. Or, Mr. Buffett's case, adding rungs and other impediments to the ladder now that he's reached the top and no longer climbing.

And, lest we forget, truly wealthy people like Mr. Buffett can afford to hire an army of clever advisers who will find legal ways to avoid paying some or all of those increased taxes. Those of us who aren't yet wealthy? Well, we can't really afford to hire a comparable army, can we?

Income is not wealth. It's a means of accumulating wealth.

Income is how you become wealthy.

Increasing taxes on high incomes stifles competition, makes it harder for others to become wealthy, via government policy.

And that just sucks.

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Income: A meaningless, misleading, and pernicious concept

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Betty Yee (a member of the California Board of Equalization), writing in SFGate.com, says that e-retailers thrive on unfair advantage.

"Unfair advantage." Isn't every advantage unfair? Is it "fair" that Rafael Nadal or the Williams sisters are so talented? Is it "fair" that Gerard Butler is so handsome and cool? Is it "fair" that Google owns internet search and advertising and makes so much money?

Every advantage is unfair.

States without a sales tax have an unfair advantage over California. Shall we call for mandatory state sales taxes in every state, with a uniform taxation rate? How about a national sales tax, with proceeds divvied up between the feds and the states? (Don't laugh, you know it's coming.)

One could say that local retailers thrive on unfair advantage. They have a place where people can visit and browse products before buying. They have a place where people can make returns without packaging and shipping. Yee admits as much in her editorial.

Local retailers who learn to exploit their unfair advantage will thrive. Those who do not will wither and die.

Yee uses the "fair share of taxes" argument:

I hope my local bookstore can beat the odds and keep its doors open as it continues to feel the squeeze of online retailers avoiding their fair share of taxes.

"Fair share of taxes" - let's dissect this one: Retailers don't pay taxes. Customers do. Retailers collect sales taxes from the public and forward them to the government.

Businesses subject to these unfair sales tax laws act as unpaid tax collection agents of the state. That's a burden. It increases their operating costs.

Online retailers like Amazon pay their "fair share", every penny they are required to pay, and not a penny more, not a penny less. Certainly Ms. Yee isn't arguing that a person or business should pay more than required by law.

The un-level playing field between Main Street retailers and online sellers threatens California jobs, public services and the stability that comes from local businesses having roots in their communities.

Online retailers' "unfair" advantage in California was created by the government of the State of California. It was created by California's government when it decided to impose sales tax collection duties on retailers located within the state.

The un-level playing field was created by California's government during a time when most retailers had no choice but to open a local storefront in order to sell goods to the public.

That assumption has proved wrong. The world has changed. The internet has changed the way people do things, and it has certainly changed the way people shop for and purchase products.

The State of California's assumptions and taxation models are wrong and unfair. The sales tax imposes an unfair burden on local retailers. Continue reading or add a comment»

In the spirit of fairness and spreading the wealth around: students blessed with a high GPA should share their GPA wealth with the less fortunate students. Take the top 10 percent of GPA points and distribute it to the bottom 10 percent.

The video below shows how students react to the proposal: they reject it out of hand. What a ridiculous idea! How dare you take the results of my hard work from me?

I love how the victims students fail to grasp the direct analogy to monetary earnings and material wealth. If it's fair to impose a progressive income tax that is supposed to soak the rich, if it's fair to take from one class to give to another, less fortunate class, why not impose a graduated grade tax, and redistribute grades to those most in need? It's only fair!

Some choice quotes from the video:

"I earned it!"

"I worked for what I have."

and... drum roll....

"It's not the same thing, because money's different!"

Why, some of these students sound like reactionary running dog capitalist stooges. Looks like they need a refresher course in social responsibility, altruism, and egalitarian ethics.

http://youtu.be/lOyaJ2UI7Ss

Socialistic platitudes sound great (especially if you're an unthinking fool). Things tend to change when the fruits of your labor are up for grabs.

Is the Federal Reserve system engaged in domestic terrorism? According to a recent statement by U.S. Attorney Anne Tompkins, quoted in the Asheville Citizen-Times:

“Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism,” U.S. Attorney Anne Tompkins said. “While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country.”

Frankly, I can't think of an entity that's doing greater damage to the 'legitimate' currency of this country. Except, of course, the Federal government.

Think I'm exaggerating? Check the national debt. Check the money supply figures. Watch 'real' inflation over the next few years. Check the employment figures.

Yes, I took Tompkins' quote out of context. The context is the recent conviction of Bernard von NotHaus, creator of silver Liberty Dollars barter currency. If we can stretch the definition of domestic terrorism to include undermining a nation's currency, we can certainly levy that charge against any person or organization engaged in similar activities.

Ah! I see now. Tompkins qualified her statement–it's terrorism when you undermine the legitimate (legally defined) currency. But wouldn't that include any action that undermines the country's legal currency? No? Why not?

Adding to the irony: creating a sound money based on precious metals–Silver, in the von NotHaus case–seems like a strange way of undermining 'legitimate currency', an implicit admission that 'legitimate currency' (AKA Federal Reserve Notes) would be threatened by a precious metals-backed currency, but hey, that's the topsy-turvy world we live in.

Up is down, wrong is right, love is hate, war is peace, and fiat currency is sound money.