Debunking Leftist Drivel: The Rich and Wall Street

The American left. They championed Occupy Wall Street, they champion Socialism, and they champion class warfare. Just the other day, I heard Bob Beckel call the Republicans the party of the rich. Now it doesn't take a genius to use Google and it doesn't take much digging to find out that seven of the top ten richest members of congress are Democrats. These members of congress sport last names such as Kerry, Rockefeller, and Feinstein. It also doesn't take much digging to find some of President Obama's biggest donors were evil corporations such as Goldman Sachs, Microsoft, Google, JP Morgan Chase, Citigroup, IBM, GE, and Morgan Stanley. If you want to you can look and see how many corporations that took bailouts made that list but that's another story for another time. Now I'm not demonizing private citizens and corporations for doing what they want to with the money that they earned, I'm pointing out a major hypocrisy of the left. On the subject of wealth and Wall Street there are more than just a few.

1) Warren Buffet's Secretary pays more money in taxes than he does.

Over the past few weeks this is the mantra we have heard from the left. They think it's such a big deal that his secretary even got to sit with the First Lady during the State of the Union. To bad there are a bunch of misconceptions and all out lies that have been circulated so the president can gain support for the so called "Buffet Rule."

For starters, Buffet can easily reorganize his taxes in a way that would allow him to pay more money in taxes. He is getting away with not paying these taxes because he is taking advantage of dishonest loopholes in the tax code. Again, it just takes some digging on the internet to find anyone of makes over $379,150 falls under the 35% category. By default this means he pays more income taxes than his secretary and everyone else, even those in his tax bracket because he is the third richest man in the world. I know this is before deductions and Warren Buffet does use some shady methods of showing that his actual income is far less than what it really is but that can't be fixed until the loopholes are closed.

Another point that has been largely ignored here is the fact that whoever is crunching these numbers is comparing Apples and Oranges. When people say Warren Buffet is paying a 15% tax rate it is true, for his capitol gains. For those of you who don't know, capitol gains is the income you make off of investments. Capitol gains taxes are nothing but a double tax on the wealthy, they end up paying both personal income taxes and capitol gains taxes. When Buffet's taxes are compared with his secretaries taxes they are comparing her PITs and his capitol gains. If Buffet really did have a 15% tax rate he would have to make between $8,000 and $34,500 a year.

Before I move on I would like to point out a few things. If you look at dollars paid in taxes Warren Buffet still pays more in taxes than most everybody in the country, including his secretary. Two, his secretary does not represent all the secretaries in the country. She is very high paid and most likely a one percenter. Three, people earning less than $50,000 a year can be taxed but like the wealthy they have quite a few deductions and they earn tax credits that brings their taxable income down to very little, zero, and in some cases they actually make money off of the system. Those who do make that much money and end up paying taxes only contribute to around two percent of the federal income taxes.

2) The Rich are not affected by the Fairtax.

I'm a Fairtax guy. For those of you who don't know what that is it completely abolishes the IRS and all federal taxes and replaces them with a national sales tax of a uniform percentage. One of the arguments against the Fairtax is that it will unfairly affect poor people more than rich people because rich people will make investments and never pay the tax. That is probably one of the dumbest arguments ever made.

Rich people have to buy stuff too and they happen to buy more expensive things than poor people so they are still paying a tax. Like my dad told me the other day, a $10,000 television is more expensive than a $500 television therefore the tax on the $10,000 television is going to be higher. Who buys $10,000 TVs? Rich people do. Under a Fairtax system only new items on sale for the first time in stores are taxed. This means that used items are not taxed. So whoever you are rich or poor if you don't want to pay taxes you buy used items. Plain and simple. It's not a matter of how many investments you make because you can't invest in a TV or a car or a computer. You have to purchase those things. If you purchase them new, you pay a tax. Period.

3) Wall Street does not produce anything.

This one is a fun lie. It is easy to convince people that Wall Street doesn't produce anything. It is also easy to prove it wrong. Here's why.

Wall Street produces money. Money makes the world go round. When companies go public, their sole purpose is to make money for there investors. If they are not making money for their investors the Board of Directors steps in an reevaluates the way the company does business and attempts to make it profitable again. If investors pull their money out of a company, the company loses money. 

Without Wall Street, things like retirement and saving for college would be a lot harder. People, especially middle class people, invest in the stock market to make money for their retirement or to pay for their children's college. The reason they do this is because Wall Street is a better faster way to make money off of small amounts of money. Earning money in traditional savings accounts or CDs takes a really long time. Yes, stocks are risky but if the market is good and you make informed investment decisions you can make significant amounts of money quickly.

4) Raising taxes on the rich helps the economy.

This argument is just plain stupid. These people already pay most of the taxes. It hasn't helped the economy at all. I'm not saying tax cuts should only be for the richest of Americans but you can't expect to cut taxes for the poor and raise them on the rich and see economic growth. Going back to remarks I made earlier the economy would boom if we moved all income taxes to zero and replaced them with the Fairtax.. The progressive income tax penalizes success. It tells people that if they work hard the government is going to take away more and more of what they earn for no particular reason except for the fact that some bureaucrat says they have too much.

The truth is that raising taxes on any one poor or rich doesn't work. Why? Well if you take away more money people have less money to spend. It's that simple.