Message to Washington DC: It Isn’t Your Money
The improbable and meteoric rise of Bernie Sanders over the course of the last election cycle has led to renewed interest in a familiar refrain in American politics; albeit a refrain that was last given credible consideration during the era of FDR. This refrain blames the economic well-being of poor, working class, or middle class Americans on the notion that entrepreneurs and the wealthy do not pay “their fair share” in taxes.
According to Bernie Sanders and his socialist pals in the Senate, he has a quick and easy solution for the economic woes of every day Americans. The woefully undertaxed and greedy aristocratic elites in the United States are not paying enough in federal income taxes. If Bernie and Elizabeth Warren and Al Franken could just get their hands on significantly more money from upper income earners, why…they could solve all of America’s economic and social ills overnight!
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While Sanders and Warren do not advocate violent revolution to implement their vision of social and economic equality, it is interesting to note that socialist revolutionary movements from Hugo Chavez in Venezuela to the Shining Path in Peru to the Khmer Rouge in Cambodia to the Bolsheviks in Russia have used a very similar line of thinking.
It is necessary to create an enemy for the general public: the elites, the oligarchy, the landowners, the capitalists, the entrepreneurs, the industrialists, the factory owners, etc. Then these revolutionary groups use their allies in academia and the media to promote the narrative that the reason that the common masses do not enjoy a higher standard of living is that those with higher incomes aren’t paying enough in taxes, so that the benevolent central government can redistribute these “resources” in a “fair” fashion.
Socialists solve the distribution problem with the stroke of a pen: thanks to the teachings of Karl Marx. “From each according to his ability, to each according to his needs” via the wonders of a sophisticated and highly developed socialist economy.
The legacy of the socialist system speaks for itself, and history has unequivocally shown that it leads to low standards of living.
Bernie Sanders, the only self-described “democratic socialist” in Congress, appears to have learned little from history. The foundation of his economic plan, in essence, is redistribution of wealth on steroids. To listen to a Bernie Sanders stump speech, you’d think that the government wasn’t already redistributing wealth.
Nothing could be further from the truth.
Indeed, for fiscal year 2016, the top 20% paid a record 94.8% of taxes, while the middle class paid in single digits.
But what about the top 1%. Surely they aren’t paying their fair share, right? Surely if we could just take more money from them and redistribute it as Bernie Sanders and Elizabeth Warren saw fit, all of our problems would be solved, right?
When it comes to the top 1%, they pay an astounding 43.6% of federal income taxes, while 45.3% of American households pay no federal income taxes at all.
It would be interesting to sit down with Bernie Sanders and hear his plan: apparently, according to statements he made in debates, he’d like to return to an age when the top income tax brackets were 90%. However, when the top income tax brackets were 90%, the government wasn’t actually collecting more money.
Sanders doesn’t seem to see that if income tax brackets were actually 90%, no one would have the least incentive to earn anything above that marginal rate. How many people do you know that are going to work at anything if at the end of the month, 90% of their paycheck is going to the government?
Despite what a generation of starry-eyed college campus social justice warriors believe, Bernie Sanders is an economic fool. I have serious doubts that he could get a C in a freshman introductory Microeconomics or Macroeconomics class. Case and point:
If Sanders did even the most basic research he would quickly determine that the top marginal rate, over the course of modern American history, has had absolutely no impact on the amount that the federal government has taken in in taxes. This is indisputable and undeniable. And the reason is obvious. No businessman, entrepreneur, or captain of industry is going to work if 90% of his income is going to be going to the government.
In the Eisenhower era, when income above USD $3,425,766 was taxed at 90% (it is hard to believe isn’t it?), virtually no one actually paid this rate. This is why tax attorneys and accountants and offshore banks and complicated shell companies and corporate structures exist. Individuals and corporations in the US and around the world, who were facing such outrageous tax rates found ways to avoid paying such rates.
And the same thing would happen today if Bernie and his socialist pals ever had the chance to overhaul our tax code. Fortunately such a prospect seems remote.
But it is not just an issue of the readily apparent foolishness of attempting to return to an era with 90% tax brackets.
It is a far more serious issue: in an age where capitalism and capitalists are routinely vilified by academia, the media, and the Democratic Party; in an age where films depict CEOs as villains for making perfectly reasonable and necessary economic decisions (such as shutting down an unproductive factory and moving operations overseas); in an age where TV series routinely portray corporations and high-ranking executives as the greatest clear and present danger to the American public…Bernie and friends have been eminently successful in promoting a deceptively simple idea:
The money that an individual or corporation earns does not belong to them. In fact, it belongs to the federal government in Washington DC. They determine how much you get to keep of your money. They can take that money and redistribute it to the needy, to the truly deserving. They can do God’s work with it.
And it would be in incredibly poor taste to suggest otherwise.
For the libertarian movement going forward, there is nothing more important and urgent that counteracting and contradicting this narrative, using every weapon at our disposal.
Government programs are bloated and inefficient. Virtually every service provided by the government would be better in private hands. Time and time again, government programs have failed to bring about the lofty goals that they promise us they will achieve, from “anti-poverty” programs which create a permanent underclass dependent upon the government and destroy families, to the Department of Housing and Urban Development that destroy inner city communities, to the “War on Drugs” which has been completely useless at preventing the wake of death and destruction left by drug epidemic after epidemic, to ObamaCare, which has done exactly the opposite of what it promised to do, to government loan programs which have led to a generation of students burdened with hundreds of thousands of dollars in debt, as colleges and universities recklessly raise tuition confident that the government will continue to recklessly loan out money.
Bernie has a great scam. It is a scam that has deluded a generation of young Americans. And on today’s college campuses, it is likely a majority of students now believe it: the reason we don’t have social justice in America today is because our tax brackets aren’t high enough for upper income earners and corporations; the reason we don’t have social justice in America today is because the top 1% doesn’t pay its fair share; the reason we don’t have social justice in America today is because the wealthy cheat on their taxes; the reason we don’t have social justice today in America is because Bernie just doesn’t have enough money in Washington DC to fund more wonderful government programs!
It is not your money Washington! Keep your vile hands off of our money!