Archive for May, 2012

When Does the Government Finally have Enough Money

May 3, 2012

I saw the following quote recently:  ”  What kind of person sees nothing wrong in cutting a teachers 50,000 salary by 20%, but doesn’t see anything wrong with a 3% tax increase on a millionaire.”

I would re-word this:  “What kind of government sees nothing wrong in taking more and more money from small business and uses the emotional blackmail of threatening to cut the salaries of public employees, most famously teachers and police.”

This first quote is too simplistic a choice, and issues revolving around pay and taxes go much deeper than this. Governments must learn to live within a budget and can’t continue to take more and more.  England thought they were faced with a similar choice between raising taxes or cutting pay. They decided the fairest thing was to raise taxes on the top tier of income.  A 3% tax increase isn’t what we’re really talking about here.  That would never be enough.  How much is enough?  50% tax rate, 70%, 90%?  They’ve all been tried.  If we did today, what England did, we would have a top income tax rate of 70%.  The median wage would be about $30,000.  Unemployment among the under 25’s would be 40%.  Only 10% would be allowed to go to college.  Health care would be free and mostly unavailable.  The government would become the partial or total owner of all big business in the country.    This was what England looked like in the 1980’s after 30 years of high taxes and the central government running virtually everything.  And the country still came to the edge of bankruptcy more than once.  Emotional arguments like the one above will lead to poor choices.   We think we are being “fair” and can make this type of economic system (redistribution of wealth) work when it has failed everywhere it has been tried.   It leads to people having no motive to excel, and all wealth ending up under government control, when government is not and will never be a good steward of what it manages.  We need to look at where we’re spending our money, not raising taxes.

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