They don’t sock it away

[Note to the Reader: I have transitioned to a new, more flexible column in The Boerne Star! I am calling it American Dreaming. It will appear on the editorial page of Tuesday’s edition. Write of Center will remain the Kendall County Republican Party column and will be written by a collection of party volunteers.]
 
Two questions to ponder as we wrestle with righting the USS Economy: 1. Who is wealthy? 2. What do they do with their money?
 
On the former query, some would simply answer “millionaires.” But does that mean one who makes a million dollars a year, one who has made a million dollars in her lifetime, one who has assets of a million dollars, or one who has net worth of a million dollars?

And what if that net worth is tied up in a home he can’t easily sell? Or in retirement funds that have restricted use? Or in a business that is not readily marketable?

Still on the former, some, like the occupier of the White House, would answer “annual income of $250,000.” The basis of that figure, please? Why not $150,000 or $350,000? And is that $250,000 regardless if she’s a New Yorker or a New Mexican? The New Mexican would answer “please;” the New Yorker, “please no.”

Perhaps the wealthy are those who own homes or cars or TVs with satellite or cable connections. Whoops. That last one would darn near get us all.

A trip to the third world teaches that wealth is relative. The rich there are poor here. And vice versa: the poor here are rich there.

Moving on to the latter question: What do the wealthy do with their money? Speaking from observation, not experience:

1. They invest it, usually in businesses. They may buy stock in The Home Depot or build up a Bergmann’s Lumber. Whether in large cap stocks or privately held businesses, the result is the same: businesses use the wealthy’s money to offer things people need, to hire people, to help the economy.

2. They loan it, often to government entities for public projects. Government bonds build neat things like bike trails and necessary things like sewer plants. Investors get a steady return. The public gets new infrastructure. It’s an incentives-aligned win-win.

3. They save it, often in banks that circulate the funds into loans that meet local commercial and consumer needs. The funds provide housing and cars and working capital for companies. Each party, from the FDIC-insured depositor to the bank to the borrower, receives a benefit from the arrangement. And each participates willingly.

4. They give it, usually to causes in which they have a vested interest. Non-profit organizations depend on wealthy underwriters to fund their operations and accomplish their social missions. If you shrink available incomes by raising taxes, then you will shrink the funds flowing to charity.

5. Lastly, they spend it. Let us be grateful, not resentful. Their spending gives your daughter a job at Green Bull Jewelry. It gives your son his summer landscaping job. It drives the demand for goods and services that wouldn’t come to your town without it.

With all these bona fide uses, tell me again why I should want an arguably incompetent federal government to take more of the wealthy’s money?

Notice what was not on the list: they sock it away. Still, seemingly intelligent people think they do, such as actor Matt Damon who said as much recently while arguing for higher taxes.

Political sage Peggy Noonan wrote last week of why the president’s calls for the wealthy to pay “their fair share” fall on dull ears: Americans don’t like to be divided.

E pluribus unum – “out of many, one” – blazes across the official United States Seal. Our laurels were won, and our future depends, on this fact.

I don’t make $250,000. But I don’t want to penalize the productivity of those who do. Exorbitant marginal tax rates weaken the economy and national unity. And a house divided cannot yet stand.

 
Kevin Thompson is a columnist for The Boerne Star. He can be reached at www.kwt.info.

2 Responses to “They don’t sock it away”


  1. 1 Len Driskell August 22, 2011 at 14:39

    KT, I couldn’t agree more. It seems like the best way to increase government revenue, if that is the goal, is to close the loopholes that keep the majority of citizens from paying any taxes at all.
    Currently I have a good-paying job in the military that provides adequate income and great benefits. Yet for the past two years I have not only paid no taxes I have actually received money from the government. It may even go back farther than that, I don’t remember specifically.
    If someone who lives comfortably as I do is not paying taxes under our current code, then think of the millions that also not paying anything, but still receiving hand-outs in the form of welfare and unemployment payments.
    We need more people paying taxes, even if each of those payments is small. It will add up much quicker than taxing the millionaires, who, as you point out, are creating jobs and adding to the economy.

  2. 2 John Halloran September 6, 2011 at 16:37

    KT… while I agree – in principle – with what you are saying, I can also see the other side. I cannot agree with the Matt Damon approach in its entirety, I also understand the principle of lowering the tax base and doing away with many of the loopholes. That will bring more money back to the Federal Govt. What we need to remember is that the Fed Govt does serve a purpose – most especially for the poor, the unemployed, the elderly… and yet, we can’t seem to get a handle on that aspect either.

    Our system of government calls for those who have more to take care of the least in society. How do we do that? In many of the ways that you list, and at the same time through Social Security, Medicare and welfare. Are there abuses in the system? Yes, and we must get a handle on those.

    But did you know that during WWII, the wealthy (and back then, that was defined as those who made more that $20,000/year) voluntarily paid up to 71% in taxes? This is historical fact. And the reason will amaze you – it did me, when I found out… Why would anyone pay that much?

    Because we are Americans! It was thought back then (with some very real truth and justification) that if all Americans take home more or less the same amount of money, then our democracy would work much better. In other words, I can sit at the same table with Donald Trump and he with me, and he can’t buy a lobbyist or anyone else to “purchase” Congress. There was also a very healthy estate tax, so that one didn’t simply inherit (like the royalty of Europe), but worked for their well-being.

    What caused us to lose this approach to our democratic society? Communism and the overwhelming consumption of fear that the communist manifesto called for all to be equal. We were so much against that manifesto, that Congress began unraveling the tax rate, just to show that in America, anyone can get wealthy.

    I am for free enterprise, and for everyone making what they can… But I think we need to remember the democracy to which we belong… we have lost site of much of that, due to our zeal for capitalism…


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