October 8, 2008
Basic Economics: Taxes on rich hurt the economy

Liberals will have you believe that the top 1% richest of people / companies are evil and deserve to be bled dry on taxes. They’ll mention “Fortune 500 CEOs” and “Exxon Oil” as their ‘evil’ examples.

And sure, for the pessimistic, ‘my life isn’t my fault’, ‘life isn’t fair’, cry-baby economic light-weight libs out there, its very appealing to want to tax the life out of those evil fat-cat corporations.

But here’s what those people don’t understand:

The top 1% drive the economy:

  • Create jobs
  • Invent new products
  • Cure diseases
  • Will find the solution to our dependence on oil
  • Pay 34% of the country’s taxes

Why do they do all these great things for us? THEY DON’T DO ANY OF IT FOR YOU OR ME. THEY DO IT FOR THEMSELVES. They do it out of selfish capitalistic motivation to line their pockets with cash! Sounds evil huh? Well I have news for you—THAT IS CAPITALISM and IT WORKS.

The more diseases they cure, the more inventions they make, the more factories they open up and fill with new jobs, the more money they make.

Now here’s the real kicker—-The MORE we tax those people/companies, the LESS they contribute in taxes. Now you’re asking yourself, “I thought this guy was good at math, how can he expect me to believe this?”

Here’s the basics….

When you tax the rich MORE, they have LESS incentive to risk money to make more profits. So their profits are smaller. Even though you are taking a higher percentage of those profits, the size difference in the profits actually makes the taxes smaller. Essentially, you are taking a bigger piece (%-wise) of a much smaller pie, and ending up with less yummy in your tummy.

Want proof that companies’ bottom lines are tied to the tax rate?

Check out this little 40 year chart I threw together (1961-2000), with data from yahoo finance and truthandpolitics.org, which shows the direct relationship between the top marginal tax rate (what % in taxes the richest pay on the next dollar they make) versus the stock market, measured by the Dow Jones Industrial Average.

Click on the chart for a large version, easier to read: Now take a look at a piece done by CNN (libs) showing the Obama plan to tax the rich (despite the obvious negative effects that will have on innovation, jobs and growth). Also, its hilarious to note how bias the reporters are, just listen to the tone as they read the numbers. It is also interesting to note that they left out the 161k - 2.9M section. Perhaps those numbers didn’t favor Obama? Anyway, CNN is amazingly slanted to the left for a national media station, but that’s another blog…

And here is Obama’s tax plan: