Trickle Down or Trickle On

I'm not done with gun control quite yet but I need more time to get my thoughts in order. This time I want to move on to taxes. We all in some form or another pay taxes. Income taxes on the money we make at our job or in our business. Sales taxes when we buy goods. Excise taxes, road use taxes, property taxes, it really is amazing how many different ways the government has managed to reach into our pockets and grab some money. It is surprising at times that there is anything left in our pockets aside from the lint that seems to gather in the corner. I'm sure if the government determined it had value they would find some way to tax it as well.

Congress is currently looking at ways to overhaul the tax code. I will agree the current federal income tax system has gotten far to complicated. I have gone to the mailbox a few times to find a letter from the Internal Revenue Service telling me I have made a mistake on my tax forms. The good news for me is that those letters have never resulted in me having to send more money. I had reported the correct amount of income and paid the proper amount of tax. My error was reporting said income on the wrong form. So, from where I sit, a less complicated tax code would be a welcome change. I don't mind paying my fair share. Life has been pretty kind to me and it is my duty as a citizen to pay taxes. There are children to educate, roads to build and maintain, food and shelter for the less fortunate, medical care for the aged and infirm. My concern is the ongoing bullshit story called trickle down economics. Basically the argument is that if we give rich folks and corporations more money they will invest and hire more of us less fortunate to work. While it is an interesting idea, it doesn't work that way. Here is why.

Jeff Bezos is the big cheese with Amazon. In August 2016 Forbes reported his net worth was 66.2 billion dollars. In August 2017 they reported he was worth 81.7 billion dollars. So in a year his net worth had increased 15.5 billion dollars. In more manageable terms each day for that year his net worth increased by $42,465,753. If you would prefer monthly, every month his wealth increased by almost 1.3 billion dollars. For the purposes of my argument I will treat his income as though it were wages from a job. It isn't and realistically will not be taxed the way I am going to show. He will pay less tax. Most likely much less. If that 1.3 billion dollars a month was taxed at the current maximum rate of 39.6% he would have a monthly tax bill of 511 million dollars. This would leave him a net income of about 780 million dollars. If the tax rate is dropped to the proposed 35% his tax bill would drop to 452 million dollars a month and his net income would rise to 839 million dollars. Our economy is built on consumption. People buy goods and services and industry buys more raw materials and machines to provide those consumer goods. So, is Jeff Bezos going to spend 839 million dollars every month on goods and services or raw materials and equipment for his businesses? I think not. He will invest the money or perhaps hide a substantial portion off shore to avoid taxes.

How would the system work better for everyone even Mr. Bezos? Would I raise his taxes? Maybe. Would I lower taxes on middle and lower income folks? Yes. This is why. Look at rent, utilities, groceries, fuel, clothing and all the other expenses it takes to raise a family. If you provide a raise in the minimum wage to $15 per hour you allow those folks some more money. It is not money like Mr. Bezos has. It is money that will go back into the economy. They will buy cars, furniture, clothes, household goods. Those dollars spent will result in more jobs. More folks working and paying taxes. Less folks working and still qualifying for food stamps and medical cards from the government. I can hear folks complaining now. Those kids flipping burgers at McDonalds don't deserve more money than that EMT working in an ambulance, or that soldier fighting in some far off land. They should see a raise as well. The economy is not built from the top down. It is built from the bottom up. The poor spend what they get and it moves the economy forward. Let's jump back to Mr. Bezos again for just a minute. If he took his monthly net income and bought houses valued at $250,000 , every month he could buy 3,120 houses. He isn't going to do that. If folks at the lower end of the income scale were given the opportunity they would buy homes. They would build homes. So, the rich like Jeff can afford to pay the taxes they are paying now. The minimum wage should be raised and taxes at the lower end should be reduced to flow more money into the economy. It will work and the economy will grow.

Here is the problem. It won't happen. The guys with the money get to talk to the guys who set the tax rates and determine the minimum wage. They don't want to share the pie. It reminds me of this story. There were 10 cookies on a table. Seated at the table was a businessman, a laborer and an immigrant. The businessman grabbed 9 of the cookies and turned to the laborer and said, "You better watch out that guy is going to take your cookie." That my friend is trickle down economics. We sit on the floor and fight over the crumbs that fall from their table. Like George Carlin said, "It's a big club and you're not in it."