What happens when the government decides to raise taxes on the “wealthy” in America, all in the name of fairness? This is going to be the main focus of this article today. Not everyone fully understands the ramifications of raising taxes on the wealthy and business people in today’s world.
The majority of people are not considered wealthy and this is the reason why we mostly just ignore it when our politicians are spewing the class warfare lingo of the rich need to pay more in taxes. So what happens when the rich have more of their money taxed by the government?
Before we go into details of answering this question, we first need to explain a few business concepts to everyone. Not everyone is a businessman or understand why people start businesses.
Businesses exist for the sole purpose of earning money for the owners. By owners we are not simply talking about the person or persons that started the business either. Several of the large businesses have stockholders who are also part owners of the business. The majority of adult Americans own shares of stock in businesses today, so in essence we are all businessmen. We should all want our businesses to be successful and make money for us. If the company is making money its stock will continue to increase in value and our 401ks and IRAs will continue increasing in value. This will help all of us out when we retire and have to live on this money for the remainder of our lives. We all should fully understand by now that we are not going to have any social security money left by the time we retire, so we will need our 401ks and IRAs to be able to survive.
Now, if the government decides that they want to tax businesses more in order to re-distribute wealth to the “less fortunate”, businesses are forced to do one of three things in order to continue making similar profits as they were before. They can either cut benefits to its employees, fire employees or raise the prices of their goods and services which they are selling to the consumers.
None of those options are ideal for us, the employees of these companies or the consumers. If the businessmen can’t make a decent profit for his troubles, he will be forced to close the business. If the business closes, workers lose jobs and the government loses tax revenue.
Businesses, both small and large, are what drives the economy of the United States. The Obama sound bite of let’s increase taxes on those making 250k a year, hits a lot of small businesses in the wallet. The Obama administration frames the dialogue where it appears they are only increasing taxes on individuals or couples when in reality the tax increases are going to hit small businesses the hardest of all.
Apparently Obama’s ivy league education did not teach him the principles of economics and a free economy where businesses do not need to be soaked with taxes and regulations. By taxing and over-regulating the businesses in America, you will lose tons of jobs and innovation will be brought to a stand still.
Why would a businessman or wannabe businessman take the risk of starting a business when the odds are going to be stacked against him even more than they already are? Most businessmen are not idiots and for them to take chances, they need incentives to do so. You may not like cutting their taxes or giving them tax credits to purchase new equipment, but when they hire new workers, it’s a big win for the American economy and society as a whole.
Ideally, you want to lower taxes and help businesses hire more people. These new people will have more money to spend as consumers and they will also be paying more in taxes to the government.
Did you know that when Ronald Reagan, the greatest president in recent memory, cut taxes across the board and gave businesses incentives to hire more workers and purchase new equipment that the revenue the federal government brought in from taxes alone increased to more than it had been in the history of the United States?
If you simply listen to the left wingers, all you will hear them talk about is how the debt increased so much during Reagan’s presidency, which is also correct. What they do not tell you, is that the congressional left wingers were increasing their spending of revenue faster than it was coming in. This is what lead to the budget deficits and increasing debt for America.
If the social experimenting left wingers would not have spent so much money, America’s debt load would not have increased so much. If you are bringing in more money than you ever have and you are still going deeper into debt, that should tell any sensible human being that the problem is with your spending. You are spending entirely too much.
The tax cuts worked well under Reagan. There is absolutely no denying that. Everyone, and I repeat everyone’s standard of living improved. The rich got richer and the poor did better as well. This is the reason why Reagan was such a popular president and won a second term in a land slide. The evidence speaks for itself and no amount of left winger re-writing of history can refute these facts.
The exact opposite happens when you increase taxes on businesses or those individuals that are apt to start businesses. Jobs are lost and the prices of goods increase. Instead of paying $5-$7 for a meal from a fast food restaurant, you will end up paying $7-$9 for that same meal. Businesses are not going to sit idly by and lose money because they are paying more in taxes.
They are going to increase their prices in order to make a comparable profit. This will hurt the poor people the most as their discretionary spending is much less than those that make more money. Instead of them going to the grocery store or auto repair shop and paying $100 or so dollars, they will now be paying double that amount, if not more, for the same goods or services.
So, I ask you again…are the poor better off when you raise taxes on the rich and businessmen?
Isn’t the answer obvious?
I think the answer is common sense.
~Boo~
