Adam Graham
September 17, 2006
The forgotten truths #4: We are economically connected
By Adam Graham

Most often when discussing tax policy, it is couched in class warfare rhetoric. "Tax Cuts for the rich" is a favorite epithet. Indeed, our Income Tax came about in 1913 out of a desire to soak the rich. It was originally a tax that most Americans were not subject to, but it was embraced to get the rich to pay their "fair share."

Time and time again, politicians unsheathe class warfare rhetoric, urging the majority of Americans to view those who have succeeded financially as big fat walking piggy banks which we can tap whenever we have a need. We have no problem picking our neighbor's pocket, because we don't realize in the process we're picking our own.

The money we take from the rich or upper middle class man is money that can't be invested, and it can't be spent. It simply goes to the government. It is through the purchase of goods and services that jobs are created. It is through investment that companies expand. The money in the government's hand is more often than not consumed on the pleasures of the moment rather than spent wisely.

It's much the same with regulations. It's easy to clamor for regulations with little thought to whether the regulations are necessary or harmful until you realize the costs of government, regulations, taxes, etc. are business expenses that get tacked on to the cost of every consumer good purchased.

If we realized this, most Americans would be more thoughtful about the type of regulations that were enacted as well as being far less anxious to support tax increases that only affect "the rich." We would abandon the belief that we can get something for nothing when we realize that even people at the lowest side of the income scale end up paying for the "tax increases on the rich."

The fear that people will realize this drives Democratic politics and explains, among other things, why Democrats oppose Social Security reform that includes private accounts. Private Accounts are not opposed because it's a bad idea. No one has proposed taking Social Security retirement accounts and day trading on "hot tip" penny stocks e-mailed to the President. Rather, the idea has been to allow individuals to invest in their choice of well-established mutual funds with decades-long track records.

The reason liberals oppose this is not because "it'd be gambling," but because, those Americans who chose this option would be hit with a fresh realization that our economy links all classes. In fact, those right now who are relying on 401(k)s and investment IRAs are already aware that the success of businesses and the overall economy will make an impact on their future. If we create an environment that punishes success and makes it harder for businesses to survive, the shareholders and consumers suffer the most.

What has to scare liberals is this: Everyone knows that they're a consumer, but what happens if everyone becomes a shareholder in multiple companies? At that point, over taxation and unnecessary regulations that are bad for business become bad for everyone and the greatest myth of liberalism will come crashing down.

© Adam Graham

 

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Adam Graham

Adam Graham was Montana State Coordinator for the Alan Keyes campaign in 2000, and in 2004 was a candidate for the Republican nomination for the Idaho State House... (more)

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