Tax resistance, the practice of refusing to pay taxes that are considered unjust, has probably existed ever since rulers began imposing taxes on their subjects.
It has been suggested that tax resistance played a significant role in the collapse of several empires, including the Egyptian, Roman, Spanish, and Aztec.
Many rebellions and revolutions have been prompted by resentment of taxation or had tax refusal as a component. Examples of historic events that originated as tax revolts include the Magna Carta, the American Revolution, and the French Revolution.
What has changed over the past 250 years that has allowed the U.S. government to easily legislate and levy taxes on its citizens?
Why don’t Americans demand an overhaul to the system of taxation with the goal of reducing all forms of taxes? Reducing the burdens of taxes improves the quality of life for everyone.
With the tax burden rising year after year, the question of when it will end has taken on an almost metaphysical dimension, not unlike the title of that popular book, “Why Do Bad Things Happen to Good People?”
For many of us, the tax burdens foisted on us by government have accelerated to a level where we can’t fully adapt. Yet, we rarely complain and do in fact adjust our lives, accepting that our hard work and the money we earn is going to be taken from us.
The average American works 4 months of every year to pay the taxes levied by government taxing authorities.
Money is on everyone’s mind. The COVID-19 pandemic has presented a wonderful opportunity for those of us who want greater control over our lives.
But, once again, feeling trapped and powerless to resist, too many Americans have already taken the bait of the COVID-19 disaster… hook, line and sinker!
We’ve allowed politicians and bureaucrats to dictate to us what’s an essential business and what isn’t, who has access to hospitals and who doesn’t, and a host of minor and major dictates.
Leftist politicians who want to get into our pocketbooks are beginning to argue that the COVID-19 pandemic is the best argument for a wealth tax. The gigantic spending in the past ninety days, three trillion dollars, will soon need to reckoned with.
Let’s first define a wealth tax. A wealth tax is applicable to and levied on a variety of accumulated assets that include cash, money market funds, real property, trust funds, owner-occupied housing and other wealth accumulations.
Assume a taxpayer earns $150,000 a year and falls in the 32% tax bracket. That individual’s income tax liability for the year will be 32% x $150,000 or $48,800. Say the taxpayer has a net worth of $500,000 consisting of a business or home and the government imposes a wealth tax of 32%, the person’s tax liability is $160,000.
The problem with most politicians is when they enact a law, they seldom ask, “Then what?”
They assume a world of what economists call zero elasticity wherein people behave after a tax is imposed just as they behaved before the tax was imposed and the only difference is that more money comes into the government’s tax coffers.
The long-term effect of a wealth tax is that people will try to avoid it by not accumulating as much wealth or concealing the wealth they accumulate.
A wealth tax has become increasingly attractive because it lends itself to demagoguery about the significant wealth disparity in the United States. The Federal Reserve reports that, in 2018, the wealthiest 10% of Americans owned 70% of the country’s wealth, and the richest 1% owned 32% of the wealth. That fact gave Democratic presidential contenders such as Bernie Sanders and Elizabeth Warren incentives to propose a wealth tax as a part of their campaign rhetoric. Leftists lament that multibillionaires such as Charles Koch, Warren Buffett, Larry Ellison and Sheldon Adelson have not made charitable efforts to address the coronavirus crisis.
Questions to these political leeches must be: To whom does the billionaire’s wealth belong? And how did they accumulate such wealth?
Did they accumulate their great wealth by looting, plundering and enslaving their fellow man, as has been the case throughout most of human history?
No, they accumulated great wealth by serving and pleasing their fellow man in the pursuit of profits. Unfortunately, demagoguery and lack of understanding has led to “profit” becoming a dirty word. Profit is a payment to entrepreneurs just as wages are payments to labor, interest to capital and rent to land. In order to earn profits in free markets, entrepreneurs must identify and satisfy human wants in a way that economizes on society’s scarce resources.
Here’s a question to consider…
Which entities produce greater consumer satisfaction: for-profit enterprises such as supermarkets, computer makers and clothing stores, or nonprofit entities such as public schools, post offices and motor vehicle departments?
I’m guessing you’ll answer the collection of businesses, NOT the governmental services. Business survival depends on pleasing ordinary people. Public schools, post offices and motor vehicle departments’ survival are not strictly tied to pleasing people but rather on politicians and the ability of government to impose taxes to maintain their existence.
Some advocates of wealth taxes and other forms of taxation might argue that they are temporary measures to get us over the COVID-19 crisis. Do not buy that argument. The great Nobel Laureate economist Milton Friedman once said, “Nothing is more permanent than a temporary government program.”
The telephone tax was levied on wealthy Americans with telephones in 1898 to help fund the Spanish-American War. That tax was repealed over 100 years later in 2006. One of the objectives of the World War II withholding tax was to bring faster revenues to fight the war. The withholding of taxes is still with us blinding Americans on the taxes they pay. Let us not allow a crisis such as COVID-19 to bamboozle us again.
What does all of this mean for America’s future? Wealthy people in America have been the stimulus to much of our innovation, technology and conveniences. They do their part by investing, providing seed capital and research resources that enable creative people with a vision to pursue their ideas… bringing them to reality. Those who are growing in wealth, have been leaders of innovation, developing products and services that improve the lives of everyone.
Earning a profit is not a bad thing. Nor is the wealth of those who have invested and taken the risks to build the dynamics of an industrial and technologically advanced culture, fair game for government who cannot seem to operate within their budget.
When problems arise, usually driven by government over-spending, the growing deficit, the first place politicians look to attack-with-tax is the assets and accumulated wealth of the “so-called super-rich.”
The less fortunate in our society cheer these ideas to tax the wealthy. The politicians know that proposing such plans will gather grassroots support from middle income America.
Here’s the risk… taxing away the wealth of those who drive innovation in our country, and for that matter our world, will STOP them from caring about risking their wealth in driving innovation in the future!
What does that mean? America, without the benefit of wealthy individuals investing in economic growth, development and innovative prosperity, will render America a second class nation in the world.
Maybe that doesn’t matter to you right now. Like many people, you might think it would be more fair to balance and share the wealth for all Americans. Except it won’t work that way.
Taxing the wealthy, taking it away from those who legitimately earned it, does not do one single thing to increase the bank accounts of average Americans. Whatever is taxed, is not shared with average American households. It all goes to the U.S. Treasury! Then the majority-controlling political party fund their pet projects and buffet the overspending disease that afflicts our government.
America cannot afford to be a second class nation. America cannot afford to see its creative innovation fall behind other nations.
America must begin to value and honor the wealthy in our society, who have laid it on the line, assuming risk most of us cannot begin to fathom, nor could we tolerate, to build the sources of their wealth.
It’s time to stand up and honor WEALTHY AMERICANS as true heroes who merit our respect and thanks for making it possible for all Americans who want to work, to have a paycheck.
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Commentary by Steven K. Haught, MBA -
Publisher and Editor of GLOBAL INSIGHTS & TRENDS
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