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Robert A. Taft Quote

No one can think intelligently on the many complicated problems of American foreign policy unless he decides first what he considers the real purpose and object of that policy…There has been no consistent purpose in our foreign policy for a good many years past…Fundamentally, I believe the ultimate purpose of our foreign policy must be to protect the liberty of the people of the United States.

ideas > Why progressive taxation is bad for the lower and middle classes

Why progressive taxation is bad for the lower and middle classes
Progressive taxation involves taxing an individual at increasing rates as their income increases. In the United States, our federal income marginal tax rates vary from 10% to 35%. Interestingly, the biggest percentage jump is from 15% to 25%. Any income under $31,850 for a single person is taxed at 15%. Any income from $31,851 to $77,100 for a single person is taxed at 25%. Progressive income taxation has long been an important part of Marxism and socialism. It is the primary vehicle used for the redistribution of wealth. Barack Obama proposes to pay for increased social spending by increasing the highest marginal tax rate for those who make over $250,000 a year. Progressive taxation sounds great for those who are not rich; but its intended effects like so many government programs are often the opposite. Progressive taxation harms the lower and middle classes more than it helps.

First, it makes it more difficult for those who are not rich to become rich. Under progressive taxation, the more you make, the more taxes you pay. To become rich, you must work much harder to overcome that higher tax bracket than someone who makes less.

Second, increasing taxes on the rich does not take money that has already been earned away from the rich. It only prevents those who are not rich from becoming rich. In other words, it protects the wealthy. The wealthy know that they only need to buy off the politicians through creative tax loopholes to maintain their wealth. They no longer have to serve the public by providing goods and services that the masses want.

Third, progressive taxation allows the government to decide the winners and losers in a society. This often means that the winners are those who provide very little in terms of goods and services to the consumer. Instead, the winners may often be those who are politically connected. This leads to fewer goods and services being produced that leads to a rise in prices. This hurts the middle and lower classes more than the upper classes. The American Revolutionary war was fought because the King of England wanted to determine the economic winners and losers. The idea that government should determine the winners and losers is a patently un-American idea.

Fourth, the rich often pay less tax than the lower classes. The rich donate more money to politicians which buys them access. In turn, the politicians create tax loopholes. The rich hire lawyers and accountants who understand and take advantage of the loopholes, thus paying a lower percentage of their income to taxes. The tax code is currently thousands of pages long. There have to be thousands of loopholes that only those with money can exploit.

Fifth, progressive taxation punishes those who become rich. Primarily, people who become rich do so because they provide a good or service that other people want. In other words, they give the masses more of what they want than other people. Punishing the rich means that others who are less gifted at providing goods and services to the masses will be rewarded more. This means that there will be less goods and services that people want and the poor and middle class lose out more in this scenario.

Progressive taxation sounds good politically, but economically it makes very little sense for the lower and middle classes. A much sounder solution would be to have a lower flat tax that the rich and the poor could afford. This would lead to more goods and services that people want which would mean that the poor would actually be richer. When the government decides the economic winners and losers, society as a whole is poorer. The rich are not hurt by progressive taxation. It actually protects their wealth.
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