The Rich and Taxes

My wife and I follow the news every day, as does much of the world. Conservatives insist that, if we keep taxes low for the rich, they will invest their extra money in business ventures, thus providing more opportunities for the employment of more workers.

Sounds reasonable. Remember Ayn Rand? Coming from the Soviet Union it’s understandable that she was all for rampant capitalism. Let aggressive people get out there and stay out of the way. The more successful they are, the more successful we all will be as we ride on the wave of their personal success. People will be working and buying products and so it goes. Well, Ms Rand certainly had one thing right:

When a person starts up a business venture, his interest in inherently personal. He’s not doing this for mankind; he’s doing it for himself. That doesn’t necessarily mean he’s one of Mr. Schultz’s “greedy bastards”. It just means that, like nearly every one of us, he places his own interests ahead of the interests of other people. He sets up a business to be able to do things the way he believes is good for him, and in doing so, he hopes to make a profit. Who wouldn’t like to have more money? Hiring employees comes later. As the business grows and improves, the entrepreneur needs help and begins hiring employees. He doesn’t do this because he wants to give them a job, but because he needs help to run his business. The bigger and better his business gets, the more employees he’ll hire, and all this is beneficial to the community. What’s wrong with that?

In theory it all sounds very good indeed. Makes sense. It’s sometimes called the trickle-down effect. The problem is that sometimes things don’t trickle down in the straight line we may have anticipated. They go off on angles and trickle in directions we never saw coming.

The impulse that causes entrepreneurs to go into business in the first place is, of necessity, profit-motivated, and with good reason. If the business doesn’t make a profit, it fails. There are exceptions; churches, business that pretend to be churches and other non-profit enterprises, but most of these are simply businesses that have learned to work the system.

When a real businessperson learns he can have his product produced in Mexico or China for a fraction of what it costs to produce it in the United States, he’s been doing his research. If he deals with a foreign entrepreneur, he pays much less per unit and can sell each unit for less, thus giving him not only a lower unit cost but a more competitive advantage in the marketplace. Some of his profits are trickling down all right. But they’re trickling into other countries. While his factory is churning out product in another country, his home state has an ever-growing unemployment rate. Does this bother the entrepreneur? If it does, it certainly isn’t going to bother him enough to cause him to relocate his operation to the US. The United States has a great many complicated and stringent laws about labor, environment, pollution and working conditions, etc., and while other businesses continue to have their products produced in other countries, a businessperson who continues to stick to the United States can’t really compete.

Almost all the products we grew up with, which used to be manufactured in the United States, are now produced in other countries. Tires, televisions, computers, radios, shoes, socks, bicycles, silverware…the list is nearly endless.

Around 1970 when you could buy a dandy Toyota or Datsun pickup truck for as little as $3,500, why would you pay much more for a GMC or a Ford? Our government finally took the step of heavily taxing these imports to offset the price difference, thus helping US automakers.

My wife and I were discussing this when a neat idea sprang to mind. Okay, it sprang to her mind.

Many want to raise taxes on the wealthy while others think it more prudent instead to raise taxes on the middle class to help the wealthy have more investment money. We’ve just discussed what happens with this investment money.

But what if our government would cut out all subsidies and raise taxes substantially for the rich while  keeping  taxes reasonable for the middle class…and then make the rich an offer they couldn’t refuse.

For every product a company produces in the US and for every employee the company hires, the company gets a tax rebate. The more American workers hired and the more products manufactured in the US, the lower the tax rate the company would enjoy. Seems simple and workable to us.

We feel this would create a win-win situation for American manufacturers and workers and for the middle class as well.

As stated above, manufacturers are motivated by self-interest. When it is in their best interest — read: when they find it profitable — to hire American workers and manufacture their products here at home, then that’s exactly what they’ll do. They frankly don’t care about helping workers in other countries, many of whom are horribly exploited anyway. Some of these countries have terrible human rights histories.

What can you do about all that, you ask. Well, if you think this is a viable idea, you can write to your political leaders. Write to your newspapers and favorite magazines. Fire off e-mails to everyone you know. Start a blog. Discuss this at church or the bowling alley; around the water cooler. Send text messages. You can do a lot.

Please! Just don’t do any graffiti on buildings.

http://www.cmalbrecht.com

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