Progressive taxes: What is the definition of too much?
Americans generally accept the concept of progressive tax rates. We do. That is a fact of life. But our tax rates must not be punitive or de-motivating. Allowing those things to occur causes damage to the social fabric. That is the problem with socialism.
What Socialists miss
Leftists do not understand, or they refuse to accept, that there are long-term consequences when a majority imposes confiscatory taxes on the minority. They do not grasp that when the mob votes itself greater and greater largess from the public coffers, real harm is done. The harm effects the majority more than to the rich. The rich have the ability to simply move. This results in unintended consequences.
Does reducing the incentive to earn really make things better for more people? And if it does, then please explain how. How will putting in place incentivizes for successful Americans to transfer their citizenship and wealth to other nations result in the greatest betterment of most people? Socialists say they are making things better for more people so let’s test that assertion.
What has capitalism accomplished in the last 20 years?
Here’s the benchmark for helping the least among us that raising taxes must work to match. The statistics on raising people out of poverty worldwide are dramatic. The number of impoverished people worldwide as a share of the total population in developing countries fell by half, from 43% to 21% between 1990 and 2010. That’s a reduction of almost 1 billion people in 20 years. What has socialism accomplished?
Most of the credit for that rise in the standard of living goes to capitalism and free trade which enable economies to grow. It is growth that has eased destitution. Around two-thirds of poverty reduction within a country comes from growth. China is responsible for three-quarters of the recent achievement. Its economy has been growing so fast that extreme poverty is disappearing. China pulled 680 million people out of misery in 1981-2010.
Conclusion:
We now know how to reduce poverty. Targeted policies; basic social safety nets and cash-transfer schemes help. The biggest poverty-reduction measure is liberalizing markets to let poor people get richer. That means freeing trade between countries and within them. China’s great leap forward occurred because it allowed private business to grow.
Raising taxes reduces the standard of living. It transfers economic freedom and power to the government. Are we trying to make things better for the people or are we trying to make things better for the government? We need to work together by aligning our actions with the goals we intend to achieve.