The Democrats and the Zero-Sum Game

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Posted on 11/25/2024 7:36:06 PM PST by econjack

One of the planks in the Harris platform was “The rich don't pay their fair share!” Really? In part, this plays on the emotion that most people don't like the rich. On the other hand, by-and-large, most people seem very supportive of the poor. Why is that? Were you hired by a poor person?

First, let's look at the “fair share” part. The “rich” (i.e., the top 10% of wage earners making approximately $450,000 and up per year) pay about 72% of total IRS tax collections. The top 1% ($660,00/yr and up) pay 40% of all taxes. The bottom 50% (about $45,000/year or less) pay less that 3% of tax receipts. Kind of makes one ask: “What is fair?” Fact is, the rich pay a disproportionately high level of taxes, while almost half the country gets a free ride. That's not fair either. Nobel prize economist Milton Friedman says a flat tax of 17% on individuals would be fair. Those who say millionaires pay no taxes, under a flat tax they would pay $170,000 on each million they earn. The tax code would be so simple, you could file your tax return on a postcard.

Another common theme is to cut taxes on individuals and make up for it by raising taxes on corporations. One flaw in that: Who do you think gives the corporations the additional dollars to pay those higher taxes? The consumer does. That's what the gov't does: Take money from one group and give it to another group. It doesn't really produce anything; it simply redirects dollars from one use that you and I like and redistributes it to some other group that it likes. Personally, I think I can spend my dollars better than the gov't can.

This is a fatal flaw the Democrats make when it comes to economic policy. They want the distribution of income to be more equal. And they see the policies to accomplish that as goal as a zero-sum game. That it, giving more dollars to one group means fewer dollars for the other group: net gain...zero. A simple example can illustrate this.

Suppose we think of the economy as a thousand dollar pie and there are only two people to share the pie: you and me. At the moment, lets say I have $800 of that pie and you have the remaining $200. The democrats typically suggest they want to tax me, say $50, and give it to you. I now have $750 and you have $250. You've had an increase in your standard of living and I've experienced a matching loss in mind. The pie is still $1000 hence, a zero sum game. Now consider an alternative.

Suppose there are no taxes and that, instead of giving it to the gov't and then giving it to you, I invest as much as I can in new plant and equipment because I think the investment will be profitable. Let's say the business is a good one and I make $100 on my investment. Now the economic pie is $1100. I take my 80% of the pie (or $800 + $80 profit) and you take your $220 share of the larger pie.

Note, we did NOT change the distribution of income, our slices are the same relative size. However, we both came out ahead because economic growth increased the size of the pie. It's not the distribution of the pie that's important, it's that both of our standards of living increased! An economic policy that promotes economic growth creates new jobs and greater output to be shared among the system's members.

Raising taxes on corporation and individuals is typically self-defeating. Just ask the leaders in Venezuela, Cuba, South Africa, India, and dozens of other nations who thought they could survive by raising taxes on the rich. Consumers and corporations tend to prosper more under low tax rates than high tax rates. Indeed, the Laffer Curve shows that lower tax rates often leads to large tax receipts. This was the case with the Kennedy, Reagan, and Trump tax cuts.

And for those who bitch that people like Bezos make too much money forget he wasn't always rich. Instead of living a lavish life style, he plowed the profits back into Amazon and expanded the company. And in the process, he lowered the cost of many goods and services we all enjoy. So until you provide food, clothing, and shelter for more than 250,000 souls, I say sit down and STFU.

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The human condition is that we all want to advance up the income ladder. The Democrats base their position on actions that take from one group and give to another. It's much better when BOTH groups advance...a win-win.

1 posted on 11/25/2024 7:36:06 PM PST by econjack

To: econjack

2 posted on 11/25/2024 7:39:16 PM PST by TheThirdRuffian (Orange is the new brown)

To: econjack

3 posted on 11/25/2024 7:42:11 PM PST by jmacusa (Liberals. Too stupid to be idiots.)

To: TheThirdRuffian

4 posted on 11/25/2024 7:50:30 PM PST by Night Hides Not (Remember the Alamo! Remember Goliad! Remember Gonzales! Come and Take It!)

To: econjack

5 posted on 11/25/2024 7:51:41 PM PST by webheart

To: econjack

6 posted on 11/25/2024 8:59:43 PM PST by AZJeep

To: econjack

7 posted on 11/25/2024 9:02:18 PM PST by Ge0ffrey

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