Examining the Logic Behind Class Warfare & the “Soak-the-Rich” Mentality

Rich

Support for imposing ever-increasing tax rates (or new taxes), especially on the “rich”, reveals a twist of logic that contradicts many precepts of economic analysis.

Consider President Francois Hollande that would increase the marginal tax rate on French citizens to 70%. Such proposals are made as though incentives don’t matter; that actions do not have consequences.

How naive is he to imagine that taxpayers will not respond by either engaging in evasion or finding legal means for avoidance. And then there is the extreme act of avoidance. emigration, an act undertaken by France’s richest person, Bernard Arnault, who filed for citizenship in Belgium.

Punitively-high tax rates suggest that public officials should judge the limits to success. Earnings within a competitive market economy can only occur by providing goods or services that are valued by the broad community. In this sense, earnings are rewards granted by consumers to those that add value to their life & are a matter of merit.

Imposing different tax rates on individuals based upon income violate a basic premise of the “Rule of Law” that all laws should apply equally to all individuals, Basing differential tax rates on income is no less arbitrary than requiring women to pay higher rates than men; tall people to pay higher rates than short people, etc.

If the purpose is to boost revenues for government, coercive redistribution is a poor substitute for passing laws that facilitate increased opportunities for exchange that can lead to higher economic growth rates. As it is, much of the recent reduction in the size of the fiscal deficit of the US federal government has come from higher tax revenues due to economic recovery, however weak it has been.

In all events, governments that would demand a right to impose higher tax burdens on productive individuals ought first provide good-faith efforts to curb waste & fraud in existing public spending programs.

Further, demonizing certain group by creating “them-versus-us” categories (e.g., 99% versus 1%) does nothing to promote social harmony. It is primarily a game that encourages citizens to identify with particular political parties & is a distraction from economic realities.

Finally, assertions that the “rich” do not pay their fair share & should shoulder a greater burden supposes that governments have first claim on citizens’ incomes.

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About christopher

Content of "Natural Order" attempts to reflect the commitment of Universidad Francisco Marroquin to support the development of a society of free & responsible individuals. The principal commentator for this blog is Christopher Lingle.

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