Saturday, 8 November 2008
Why Raising Taxes On The Rich Is A Stupid Idea
During the campaign, Obama promised us that anyone making $250,000 $200,000 $150,000 or less will get a tax cut. The rest are going to get a tax increase to help pay for the cuts. The concept of raising taxes on the rich is stupid for numerous reasons. The biggest is that it will stifle growth and job creation.
How does that work? First off, any new business expansion or business creation goes through a risk / reward analysis. One looks at the risks and weighs those against the rewards. If the rewards outweigh the risks, then the entrepreneur/business owner takes the plunge and creates a new venture or expands his current venture. Both of which create new jobs.
Enter tax hikes for the rich. If we are going to punish the success of these business through higher taxation then we are in effect lowering the amount of the "reward" for risks taken. By lowering the reward for risk, we are also lowering the amount of risk that anyone would willingly take. That means fewer new companies are created. That means less business expansion. That means fewer new jobs. In effect, the taxes stifle the natural expansion of the market.
There is a simpler way to look at the problem. Higher taxes on the wealth is nothing less than the government confiscating money from the rich and spreading it around to others. They are in effect taking money from the people who use their wealth to create companies and expand businesses and giving it to people who do not create jobs. I know I have never gotten a job from a poor person. I don't know anyone who has been employed by someone from the lowest parts of the economic ladder.
Such plans are foolish in the best of times, and down right scary when the economy is in a recession. If the Democrats are successful in raising taxes on the rich, look for a much much longer period until our economy recovers.
How does that work? First off, any new business expansion or business creation goes through a risk / reward analysis. One looks at the risks and weighs those against the rewards. If the rewards outweigh the risks, then the entrepreneur/business owner takes the plunge and creates a new venture or expands his current venture. Both of which create new jobs.
Enter tax hikes for the rich. If we are going to punish the success of these business through higher taxation then we are in effect lowering the amount of the "reward" for risks taken. By lowering the reward for risk, we are also lowering the amount of risk that anyone would willingly take. That means fewer new companies are created. That means less business expansion. That means fewer new jobs. In effect, the taxes stifle the natural expansion of the market.
There is a simpler way to look at the problem. Higher taxes on the wealth is nothing less than the government confiscating money from the rich and spreading it around to others. They are in effect taking money from the people who use their wealth to create companies and expand businesses and giving it to people who do not create jobs. I know I have never gotten a job from a poor person. I don't know anyone who has been employed by someone from the lowest parts of the economic ladder.
Such plans are foolish in the best of times, and down right scary when the economy is in a recession. If the Democrats are successful in raising taxes on the rich, look for a much much longer period until our economy recovers.
Posted by at 4:49 AM in Political Issues
