Tax the People

It would seem that the major function of government is to get as much money as possible away from the people and into the hands of government. I received a letter in the mail today from President Biden. He said he was proud of his efforts to save America from the pandemic and mentioned one part of his plan included sending me a stimulus check for $2800.00. My income hasn’t been affected by the virus. I still get my retirement check every month, and I really didn’t need the $2800.00. President Biden had to take the money from some other tax payer in order to give it to me. The government doesn’t create money, the only source f government income is to take it from the people. The trick is to make as many voters as possible believe government money comes from someone else. Government at all levels have become very good at deceiving the people.

Social Security is a classic example. The original law promised no more than one per cent of our income would be collected for our retirement. Boy how that has changed! Today the government skims off about 15% of your income then forces your employer to add an equal amount. Money that is actually part of your benefits. Washington State is just as adept at tax trickery as the feds. One of the reasons I chose to live in Washington when we returned from Alaska in 1990 was their tax structure. They had neither an income tax nor an inheritance tax. They relied on sales tax to fund the state government. Governor Gregoire made a move to tax estates exceeding $2,000,000 promising all revenues would go to schools. School funding never changed nor has the $2,000,000 threshold. What was once a tax on the rich is becoming a tax on the middle class. Advocates of a state income tax, including the current governor, have had their proposal rejected by the people ten times! During the last legislative session, they tried a new end run. On a straight party line vote, they enacted an income tax on Capital gains of $250,000 or more. Just like Social Security, it is a foot in the door. They blocked potential popular referendums with a cagey political gimmick. If the State Supreme Court allows this unconstitutional law to stand, the income tax will be expanded far beyond the rich.

President Biden has been pandering to the “Sock it to the Rich” movement and has proposed to increase taxes on capital gains, corporations, and wealth. He claims his proposal will not impact those making less than $250,000 per year. That is simply not true. First, increased taxes on corporations will be passed on to the consumer just the same as increased prices for raw materials or labor. Corporations can only operate at a loss for so long before they go out of business, and workers lose their jobs. If taxes on corporations become too high, corporations can move. Boeing’s headquarters was in Seattle for almost 100 years. Then the local business climate forced them out. With their new headquarters in Chicago, they still have plants in the Puget Sound area, but those plants are gradually being closed and replacement facilities are being built elsewhere. General Motors doesn’t have to have their headquarters in Detroit. Their pick-up trucks are made in Toronto. It would be relatively easy to move their company offices to a country with a lower corporate income tax. Biden needs to be careful or he will run American manufacturing out of the US.

Capital gains is already taxed twice. It is first taxed on company profits, then again when part of those profits are distributed to stockholders. The American economy is dependent on investors. We are a nation of innovators, but innovations need capitol to become realities. Bill Gates created DOS, but DOS would have died a lonely death without investors. Investors take the risk of losing their money. If there is little hope of a significant reward, there will be no investors. Increasing capital gains tax is a disincentive for investment and a bad idea for America.

Increased taxes on the rich penalizes success. Those who successfully innovate and/or take financial risks should be rewarded not penalized. Maybe the way to financial success is through public office. President Biden amassed a net worth of $7,000,000, as a senator and Vice President. He has never held a job other than as an elected official.

Frank Watson is a retired Air Force Colonel and long-time resident of Eastern Washington. He has been a free-lance columnist for over 20 yers.