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Here’s One for Thought

October 13, 2010

Writing at NRO’s Corner Douglas Holtz-Eakin of the American Action Forum has an interesting question: Why are we drawing a line of who is “rich enough” to pay for the cost of government?

The reality of the situation is that payroll taxes are earmarked for specific Social Security and Medicare benefits. Income taxes pay the cost of general government, and close to one-half of Americans currently pay no income tax. Why should the cost of government be further targeted on a very few?

He points out that many members of congerss and the administration, with Alice Rivlin from the administration noting once that, “there would be few people that believe $500,000 is not a lot of money.”  Essentially, there’s a blind groping for a target number that will get the American people to think: Hey, that’s enough money.  You don’t need to make more, you need to give it to me!

Well, thanks, government.  I’m glad that you’re quantifying how much I’m really worth before you want a chunk of me.  At this point I’d like you to settle on a number, and then I’ll just figure out a way to never get above that.  Because if I do, all I’m doing is funding the things I’m asking you to cut.  There, that’s the American Way we all know…

I’m semi-kidding, but in some cases you really have to wonder.  What’s the motivation for anyone to actually make money above a certain level if it just goes to someone else?  If you haven’t read Greg Mankiw’s excellent excellent Op-ed in the New York Times from this weekend, then go over there right now and read it.  He accurately points out that a lack of motivation deprives us of more than a few tax dollars.

I’m not an economist, or even a finance person.  I’m a dumb engineer.  But somehow, it seems to me that forcing a harsh line of demarcation between the “don’t have, so don’t pay” and the “have, so get soaked” really doesn’t fly with most people.  But you can easily see it in the actions and strategic intent of the government in drawing that line in ever-darker ink.

2 Comments leave one →
  1. October 13, 2010 6:01 pm

    Why does this administration continuously say they want to help small business,but constantly put barriers in the way to impede their progress?. They are de-incentivizing these folks to invest their money into their businesses and hire more people. People are very wary of this government and it’s bizarre economic policies. The rich aren’t going to sock the tax savings away, they’re going to invest it and spend it, boosting the economy and in the process, help other small businesses re-invest and spend. Usually, investing in your business means hiring new people and updating equipment.

    I’m not an economist or financial genius either, just an architect with his brains knocked out,( Carpenter), but even I can see that.


    • October 13, 2010 7:03 pm

      Hey, Mike,

      Why would you hire people to build houses? You’d just stuff all your money in the mattress to hide it from the government revenuers, you wingnut! 🙂

      Seriously, though, I keep telling my wife not to make too much money in our small business. We won’t get anything out of it. It’s tough to grow the business when you have to stop at a certain point.

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