Tuesday, January 20, 2015
Kicking the Golden Goose
In the class discussions we see both the hints, preferences, and in some cases prejudices in the assigned readings as well as well as in ourselves as the discussion took form. This was especially the case in the article pertaining to upward income redistribution, and though Baker's thought had some logical elements its abrasive nature rubbed many the wrong way on all sides of the political spectrum. Bakers argument of how," the conservatives paint the progressives as wanting to tax the winners in society in order to reward the losers" as well as," the right being portrayed as the champions of hard work and innovation while progressives are the champions of the slothful and incompetent" is clever and well written, but fails to completely address the issue. Coming from a state only as poor as it is proud, I can understand the frustration of people struggling financially and even can see why in desperation people can justify the increased taxation of the rich. This looks probable and beneficial on paper, but in my simple rural understanding of the world, I believe that if you kick the golden goose enough, he will go lay eggs elsewhere. Lets look at the French for example, who since the implementation of their "millionaire" tax in which after one makes 1 million euros ($1.4 million U.S.) a 75 % levy on all profits exceeding this point is placed. These people are, regardless of how we personally regard them, the financial leaders, innovators, investors, and potential bosses, and the most able to leave a place to seek citizenship elsewhere if they feel their best interests are not being made. Because of this tax an estimated 300,000 French are leaving the country before it is all said and done, and with them some the country's best hope for financial success. In a time of financial drought a farmer must refrain from kicking his best tools out of frustration because when the time of plentiful harvest comes they might be broken. Or in concluding layman's terms, Please do not kick the golden goose, it is just not worth it.
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This something I believe sometimes people forget when talking about taxing the wealthy, the wealthy can move. There are reasons why countries like BermudsaThe Cayman Islands, Monaco, Liechtenstein etc.. are so wealthy. Not just from corporations moving there to escape taxes but millionaires as well. Most people or are wealthy could easily leave america if the taxes got to high, then we would be loosing a lot more tax revenue then we would be gaining. Your golden goose analogy works perfectly in describing this issue.
ReplyDeleteI believe the 75 % tax applies to labor income, not capital income--that rate is lower, though still high by US standards I think. This discussion is interesting in light of Smith's point that self-interest isn't nearly important in motivating people as other things, even if it initially appears that that is what is motivating them. I would assume more people would move with these high rates!
ReplyDeleteBaker certainly is a partisan. But can we distinguish between bias, and point of view in his case? The two run together, but it is possible to hold an ideology without being blinded by it. That's good news, as all of us have our own points of view.