Red Dirt Liberty Report: The Wealthy Aren’t Taking Your Money

Wealth and Tax Cuts
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Hopefully, by now, everyone had a nice holiday and most Americans managed not to die due to the passing of the new tax bill. Nothing ruins Christmas like dying from a tax cut.

There’s a lot of criticisms to be had with the new Republican tax plan.

It’s fair to criticize favoring some things over others, with different advantages put on the table and taken off the table in the shell game that says, “We’re going to decrease taxes here, but then we are going to remove deductions over there.”

And, at the same time, there are no spending cuts to accompany this plan.

While the net effect of the overall plan will likely decrease taxes for a majority Americans, those that tend to benefit most are likely going to be wealthier individuals.
The left is giving its usual criticisms that the wealthy are benefiting at the expense of those with less wealth, but this couldn’t be further from the truth.

It stands to reason that when the wealthiest 16% or so (those making adjusted gross income above $100,000 per year) pay almost 80% of all federal income taxes, that those same people would enjoy the majority of the benefits of a tax decrease.

The nearly half of Americans that pay no federal income taxes should understand that if you are paying 0%, after tax cuts, you will still be paying 0%. So, how can it be possible for the wealthy people to be getting cuts at the expense of people who already don’t pay anything? Yes, Nancy Pelosi, tax is theft, and for those who are getting tax cuts, it is just a little bit less theft. It just isn’t theft in the sort of way you might suggest.

The idea that tax cuts benefit the wealthy at the expense of the poor comes from the way the left views economics.

They fully believe that the only way a person can get wealthy is on the backs of the poor. It’s entirely flawed thinking rooted in jealousy.

The thought process goes something like this: “I work harder than my boss, contributing more to this company than he does. Therefore, I should be making a larger portion of the company’s income. The company has only a limited amount of income, and therefore my boss gets a larger portion at my expense.” It’s deeply flawed thinking on many levels.

There’s another thinking process that goes something like this: “I spend more than I should have to, to buy the goods and services I buy, and the people at the top of businesses are profiting at my expense because I have to pay too much for my purchases.”

Here’s how both lines of reasoning are flawed at a basic level.

In a free, non-coerced, and open market, a transaction cannot occur unless both parties are gaining something greater from the transaction than what they are putting in.

If you don’t benefit from a transaction, you have no reason to perform it.

Because both parties are getting more out of the transaction than what they put in, both are gaining wealth.

If I sell you something at a profit, your money has greater value to me than the product I’m selling, and the product I’m selling has greater value to you than the amount of money you’re spending.

You’ve gained more and I have gained more, otherwise we would have had no incentive to transact. We both have gained just a little more wealth out of the transaction.

If, on the other hand, I point a gun at you and tell you to give me some of your money or I will lock you in a cage, then I give that money I took from you to someone else – only the person I gave it to is gaining wealth. You have less, and the other person has more. No free transaction has occurred, and overall wealth has not grown.

This is why capitalism grows overall wealth and socialism does not.

Force by the government, of taking from one party and giving to another, ultimately only benefits those who are receiving the handouts and at the expense of those from whom the wealth was taken. If we reduce what we are forcibly taking from people, then we are only stealing less, while government continues to contribute the same amount to the people who were receiving it before.

In the case of how much you are paid and thinking of it as unfairly disproportionate to your contributions, then you must blame yourself – not your boss!

You have all the freedom you need to reject an offer for employment. You would not accept the level of pay you’re receiving unless you benefit more from your pay than the amount of labor you give. At the same time, your employer would not pay more than what it believes it will gain from your employment. The value of your work must be greater than the value of your pay.

It has nothing to do with what your boss is making. It’s a free transaction. You can always seek another transaction somewhere else, and so long as businesses are paying you more value than what you are willing to put in, you will accept that work.

No, the wealthy do not gain at the expense of others.

When the wealthy conduct transactions, everyone grows wealthier. If we reduce taxes for some, it does not come at the expense of others.

It’s just statistics. Those who are paying the bulk of taxes are going to be the ones who benefit most from a tax cut.

Taxes come at the end of a barrel of a gun and threats of imprisonment. Taxes are theft.
Merely stealing less from some people should be applauded and not derided as something sinister. Everyone is happy when there is less crime. Why shouldn’t we all be happy when there is less theft from our government? We need more free transactions and fewer coercive and threatening transactions.


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Danny Chabino

Danny Chabino has a background in operating small businesses. He has been involved in managing and/or owning the operations of multiple retail establishments, a sub-prime lending company, a small insurance company, a small telemarketing venture, and insurance consulting. In addition to these activities, he also has spent many years managing investments in stocks and stock options as a successful trader. He is the married parent of two adult children, living as a proud lifelong Oklahoman and a part-time redneck. Danny writes for the enjoyment and pleasure of sharing ideas and for the love of writing itself. His opinions skew libertarian, but he enjoys hearing open debate and listening to or reading of opposing ideas. As an odd confession, he personally detests politics, but enjoys writing about political ideals and philosophies.