To Tax Or Not To Tax: Spread Not The Disease

on 12th Nov 2012

Previous article – To Tax Or Not To Tax: Interdependence

I got a few responses to my article Spin Doctor: Wealth Is Necessary a few weeks ago, both written and verbal. Their gist was this:

Fat kitty get all the perks? (image: disney.wikia.com – under creative commons license)

The problem with taxes regarding the rich and corporations in general is that they pay too little income tax in comparison to people who earn an average or lower income.

In other words, it’s about uneven percentages.

Not only that, but profitable corporations like Standard Oil and Boeing are still receiving subsidies.

Not fair, the argument went.

I agreed, to a certain extent. The issue is more complicated than that, but let’s just say that the playing field is not level. The wealthy – be they individuals or corporations – are indeed in a much cushier position than the average Joe.

What I didn’t agree with was the urge to start squeezing whatever part of the playing field had managed to slip out of the squeeze, so that we could make things level.

Live By The Shakeup…

Percentages are tricky and deceiving. When taken as an end in themselves, they don’t mean anything. They can tell us whatever we want them to tell us, because they are always relative, as the analogies of the bar patrons and the bar employees reveal.

In other words, percentages don’t tell us bupkis.

Yet when faced with scarcity, people will do anything to solve their problems. This sometimes involves strange, adolescent and self-defeating behavior. Like supporting taxation.

Punch cartoon in 1907 depicting how a new Labour income tax would work in Britain (image: wikipedia.org)

My question was simple and my feelings of perplexity genuine. When did we reach the point of demanding higher taxes? Is it not ironic, if not insane?

It isn’t, they replied. Not if the hike spares the poor and targets the rich. Higher taxes are just for rich folk.

Right, I said. And I suppose it’s going to stay that way. The taxman will not come after you and you and you when the time is right, given the authority.

Well…

Did you know that Income Tax started in Britain in 1799 as an emergency tax?

Erm…

Did you know that it was repealed in 1802, only to be brought back in 1803 as a second emergency measure, and that it kept coming back in finer and more evolved form, until one day it stayed for good? Look at it now. As institutionalized as running water.

Silence.

Championing taxes is not smart. Raising them where they have been cut in the name of leveling the playing field makes no sense.

Not to mention that all these hits have a way of coming full circle and biting the average Joe in the ass (click here for more on the issue of “oil subsidies” to see how everything is interlinked). Trickle down economics may not work where profits are concerned, but the pain sure trickles down when the grip starts squeezing everything to a pulp.

I asked people what would happen if corporations like GE and Boeing closed shop and left as a result of the squeeze?

Some of them laughed, finding the argument silly. It won’t happen, they said.

I suggested to them that they were wrong. Given the reason, enterprises relocate, moving from hostile to friendly environment as fast as their lawyers can carry them. They would be stupid not to.

Given the reason, enterprises relocate. They would be stupid not to.

So let’s say it’s happening right now. GE, Boeing and corporations like them are packing their bags and leaving the country. What does everyone do? What does Mr. and Mrs. C and indignant citizen XYZ and populist politician K do to cover the gap these enterprises are leaving behind? Cover the bill themselves, generate the jobs themselves, open up a new GE themselves?

Create a super law enforcement agency to bring them back by force?

Yes, bring them back by force, they said. Or tax them everywhere, through an international tax agency that funnels the money back where it is due.

Uh-huh. Back to the creation of an all-powerful regime we go, whose job is to skim money other people made. Make it global this time, so it can get people everywhere. Good idea!

…Die By The Shakeup

Forget the global tax regime for now. We’re not there yet, and hopefully won’t ever be, unless of course we do it in the name of a grand and groundbreaking vision, like breaking out of earth and securing our future.

But more on that later, in coming articles. For now, let’s just focus on the flight of business and wealth. Do you want it to happen?

After fat cats, next in line for shakeup round-2 is always the average Joe (image: wiki commons)

It’s a question both citizens and politicians should ask themselves when dealing with key operations. Yes, it’s easy to talk in theory about social equality, but in practice we need to improve on things in ways that work. We cannot pretend that we are going to wave a magic wand and things will be alright. Wealth and knowledge are in the hands of certain players, who must be approached and dealt with accordingly, not with brute force, but pragmatically, lest we cut off the head of the geese that lay the golden eggs. Should we raze those heads, it will take a long time to replace them with new ones and raise the standard of living, making life so much harder and bloodier in the meantime.

And if it is equality and fairness we are worried about, dissatisfied as we are with the way one group is getting slapped around, paying higher taxes, while the other group is in the clear, paying lower taxes, it seems to me that what many people are proposing is that we start slapping around the group that is in the clear in order to make both sides equal and the playing field fair.

According to that logic we must also strip all wealth away from the rich states, like California, Texas and New York. Why let them enjoy all the perks, while poor states like Mississipi and Kentucky are struggling? State wealth is unevenly distributed, so let’s redistribute it to make things fair.

Hell, why stop there? Let’s tap into the entire Union while we’re at it. There’s dozens and dozens of countries that are struggling out there. Why should they take all the beating? Let’s requisition US national wealth and hand it over to them.

In fact, let’s do this with the entire Organisation for Economic Co-operation and Development (OECD) AKA the rich country club. Sweden, Switzerland and Germany, Canada and Australia, South Korea and Japan, they have plenty of money, so let’s take it away from them. We can tap into France, Italy, Spain and the UK too, and into Hungary and Poland. Their current economic woes are nothing compared to those whom we will be aiding.

In other words, let’s go get them. Make those “rich bastard countries” fess up the money.

I bet you wouldn’t like that, would you? Have your money taxed and requisitioned so that you can support parts of the world that for some reason think they have rights to your property, time and productivity? No, you wouldn’t, unless you were at the receiving end of such an arrangement.

Create equality by making everyone better off, not by destroying the front runners

I hope you agree. If you don’t, please hand over your wealth to the first administration that comes to mind. I am sure they will distribute your donations fairly. Let me know how that goes.

Or here’s a thought: try and look at progress not as a function of spreading the disadvantage. How about spreading the advantage instead?

In other words, create equality by making everyone better off, not by destroying the front runners.

The same goes to rich folk who are profiteering. Stop picking pockets and look at the bigger picture. The five mansions may become one and the overnight supplies of rock oysters from the Riviera may need to be curbed as a result of a less aggressive approach to business, but the world will become a safer and more profitable place as a result.

Eyes open, mind sharp.

In coming articles, I will identify the razor-sharp qualities of taxation; and compare trickle-down economics to drip-drop welfare.

About Nicolas D. Sampson

173 points

I write fiction and non-fiction material, from novels, novellas and short stories, to articles, social commentary and aphorisms. Plus the occasional poem. I find faith our biggest asset and religion our biggest liability. I deem progress inevitable so long as...

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