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Tax the wealthy, tax businesses! It seems that’s all I hear when it comes to paying for the unprecedented spending being pitched by this new Administration and their henchmen in Congress. It is the traditional rallying cry of the proletariat. Take money from the “haves” to fund relief for the “have nots”. Government operated welfare has been a part of this Country for years, and I think is a necessary safety net for the most unfortunate of our citizens. However, welfare of this magnitude has never been proposed by any administration of any party, and I fear it threatens the very fabric and future of the American economy.
This spending orgy in DC is an attempt under the guise of economic stimulus, to bestow tax “refunds” on people who have paid no income taxes, bail out irresponsible or larcenous home buyers, and shower immense sums of money on governmental and community programs that don’t produce jobs, deserve the funds, or have the accountability in place to control their use. Not to worry though. President Obama says we will pay for it all by increasing taxes on the top 2% of wealthiest Americans, eliminating tax breaks on business and by adding onerous “cap and trade” restrictions for carbon producers in this Country. Many Americans, because they earn less than the $250,000 Presidential benchmark or do not own a business are feeling pretty smug about their position in this scheme.
Have I got some bad news for you! I owned a business for eight years, and paid a lot of taxes in that time. I will tell you however that during that entire period, not once did I reach down into my own pocket to pay those taxes. You know who did foot the bill for my company’s tax? My customers did. The people who bought my goods and services paid my business taxes in the form of higher prices. The same applies to “cap and trade” legislation. First of all, it will do nothing to abate carbon production in the United States, but that’s a subject for another post. More importantly, any costs incurred by businesses as a result of C&T will only be passed on to consumers of American made products. The bottom line is: You can never tax a business, only its customers, and all of this is in reality a back door national sales tax which everyone, even the poorest of the poor will have to endure.
Speaking of businesses, many owners of smaller companies, (fewer than 500 employees) are carefully weighing the cost versus benefit of continuing on under this new Administration. During the next year, I fear that all too many will choose to close their doors and cut their losses rather than witness the crash and burn of their investment in the American economy. Small business is the lifeblood of this Country’s workforce and these economic policies will cause a further increase in joblessness and decrease in GNP, as cash strapped entrepreneurs pull the plug. I believe this is one of the reasons the Stock Market is still in the tank. Those people are experts at divining the future, and clearly they don’t like what they see.
Now for the wealthy. The upper 2% of wealthiest Americans have two important things: Flexibility and mobility. Most of us make financial decisions based on necessity and limited resources. In our current economic climate, many Americans don’t have the luxury of deciding where to invest their money for the best return or where to hide it for the least liability. We also can’t just move somewhere else when we feel the tax structure is taking too big a bite. That 2% can do both, and I guaranty they will. We may well see in the next couple years, an exodus from this Country of this high end tax base, and when they are no longer a resource for our insatiable tax and spend government, I’ll let you guess who will be offered up next.
The economic fall out from this spending binge is not going to be the change that Americans hoped for when they went to the polls in November. The Republicans are fighting it, and many Democrats are already showing some discomfort with what their party is doing. Common sense Conservatives from both parties have got to rein this in before the destruction of our way of life is complete.
President Obama’s plans to source this insane spending are flawed and short sighted, and are a direct result of our Government being run by people who have never once in their lives, flipped over an open sign, or written their name at the bottom of a paycheck.
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