All my working life I have heard people lament that it does not do any good to make more money, “they” just tax you more or that if you make too much money you’re in jeopardy of being pushed into a higher tax bracket.
Then again, I’ve always wondered why someone would be worried about making too much money (as if there were such a thing as too much money). I mean, you might pay more taxes than you previously had, but it seems you would still have or make more money.
I just read an article that suggests that being pushed into a higher tax bracket still leaves you with more money because you are only taxed at the higher rate for the amount of income over the bottom end of that bracket. So the idea that if you got a raise it would all be eaten up by taxes is a fallacy.
But maybe I’m just drinking the capitalist Kool-Aid, but I am continuing to have a problem with what is called the “progressive tax rate”, the more you make the higher percentage you pay. Why? Why should one who has the good fortune or puts in the effort and/or sacrifices to make more money have to give up more of his “hard earned” money to the government? Well the answer is that people who make more can afford to because they make beyond what is necessary to sustain themselves in life while what you might call the “working poor” need every dollar they make just to pay the rent and food. But I still have to wonder why one who makes more money should have to pay taxes at a higher rate. I mean maybe if tax rates were not too high, even those at the lower end could afford the taxes and the same rate — the flat tax? — could be applied to everyone. Strangely, in looking up some definitions, I find that the idea of the progressive tax rate has had wide support, with most great thinkers, even the conservative’s favorite, Adam Smith.
Actually it might be the very idea of the income tax itself that bothers me (but there has to be some kind of tax because we cannot have a civilization without government and we cannot sustain a government without taxes, I realize).
The whole concept of the redistribution of wealth, of which the progressive income tax is the foundation, seems wrong to me.
I do realize that a problem through the ages has been that a minority in society have their hands on most of the capital and those at the lower end of the scale have not even had any access to it.
But I don’t think it is just the fact that some people make or have so much money while others don’t that keeps whole classes of people down, it is the closing off of opportunities.
People do need access to capital. They do need banks to loan money or they do need government small business loans.
People also need access to education, and that is where tax-supported public education comes into play.
But it is not practical for public education to go beyond the basics for those who do not have the aptitude nor the interest. There is no reason that publicly-funded colleges should spend so much time re-teaching what students should have learned in elementary and high schools.
Entry into higher education should be based on merit and ability.
Those who do not qualify would have their time better spent going a different direction into more of a vocational-type training, which these days may require rigorous standards too, with the advance of technology.
There does need to be more things for people to do. There needs to be more jobs. That is a major part of the opportunity I am referring to.
Communism, which sought to do away with the capitalist system never was able to produce a better standard of living for anyone, other than the communist party elite, although some residents of the old East Germany and the former Soviet Union are said to miss the social safety net or economic protections they once had, but any reading of history or descriptions of life under those regimes has always appeared dismal to me.
The Scandinavian nations have seemed to be the most successful in retaining capitalism but using heavy doses of socialism (redistribution of wealth), but like the oft-vaunted Canadian health care, it depends upon who you talk to as to how nice it is, and besides we can’t all be Scandinavians or even Canadians.
This post is getting too long. But let me conclude by offering that actually the United States has gone the farthest in offering the most people the highest standard of living ever known in the world, our downfall being that we sometimes seem to suffer gaping holes in our social safety net.
But no nation, not even the Scandinavian ones, can guarantee social protections without the efforts of the capitalist system which keeps the wheels of production rolling for all the things society needs to sustain itself and to produce enjoyment of life.
I’m thinking the best social safety net of all is to make as much money as you can and save as much as you can, but you must have the opportunity to do just that.
The article that said you don’t lose all your money going into the higher tax bracket I referred to is at:http://www.huffingtonpost.com/2011/09/06/usa-today-math-for-grownups_n_950707.html
Alas, I did not address the situation in which wealth is passed on from one generation to another through the dreaded inheritance tax (“death tax”), creating a situation in which the inheritors live off of something they did not earn, but that might be a subject unto itself, and I am not sure how I feel on that.