I know enough about economics to know that there are certainly a lot of people with inherited money, but that inheritance would not be there if someone in that family, somewhere up the line did not create a product or service that increases somebody’s standard of living. “Poor” people in the United States of America are able to purchase a lot of the things that are sold at Walmart, which means that “poor” people in the USA enjoy a standard of living which is better than “wealthy” people 200 years ago. In the United States there are a lot of “poor” people who own cars, and have electricity and running water and plenty of appliances that are running from electricity, and foods that are imported from around the world. Rich people didn’t even have electricity when the USA started, but now “poor” people have dozens of appliances that run off of electricity. So clearly the standard of living of “poor” people has increased dramatically. Everytime somebody created and manufactured enough of a new product at a low enough cost per item that “poor” people were able to own this new product, it means that this person probably became wealthy as a result of all of that hard work. I think that we should not penalize people for increasing our standard of living in this country. If you want new products and services to be created and produced in this country as quickly as possible so that we can all enjoy an increased standard of living, then the only logical thing to do with taxes is to lower the tax rate on productive people. It is just as simple as that. If you punish something you will get less of it. Taxation is essentially a punishment because if you increase the taxes on a productive person you are guaranteed to get less productivity out of the productive person. Democrats think that the rich get richer and the poor get poorer. This is only half true. The rich get richer because they increase the standard of living for everybody, including poor people, so when the rich get richer it is often times because the poor get a richer standard of living. Yes, poor people typically spend all of the money that they earn, but saving money in the bank does nothing for you if you are not able to use that money to purchase something that increases your standard of living. Accountants call this “utility.” Having the money in the bank is not what gives you more utility. It is receiving an increased standard of living that actually gives you more utility. A “poor” person with a nice car and a nice house full of nice appliances and plenty of food, is actually a lot “richer” than a person with a million dollars in the bank who has not yet bought a house or a car. You don’t get truly “richer” because you get more money. You get “richer” because you get more products and services that increase your standard of living. So, when the productive people earn more money, it is because the “poor” people have gotten “richer.” Poor people are able to afford new products and therefore get more UTILITY and a higher standard of living and this money that the poor people spent goes to the productive person who made this new product available at a price the poor person could afford. So yes, the rich get richer, but often times because the poor have more utility. So you might as well say that the rich get richer because the poor get richer. I may not have used all of the correct words in all of the right places, but if you understand economics, you can not dispute the concept behind what I am saying. But unfortunately, economics is not common sense.
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You said, “Taxation is essentially a punishment because if you increase the taxes on a productive person you are guaranteed to get less productivity out of the productive person.”
While this CAN be true, it is not necessarily true. What you are describing here is the Laffer Curve, which states that Zero (0) taxation produces as much revenue as 100% taxation, that is, they both net the government Zero dollars. This is true because almost no one will work if they are guaranteed not to profit one red cent from their own work. However, the wiggle room comes in starting at, say, 30% taxation… you experience push back in form of some (but not all) people not wanting work because they don’t like working for less then 100% of their profits. So politicians must decide how much push back is acceptable, 35%? 45%? 65%. How close can they get to 100% taxation and get little pushback? It’s different for different cultures and it changes over time.
Sergeant Knuckles, I hope you are right because I would hate for people to stop buying the things they want to buy after the fairtax passes. Lets hope there is plenty of wiggle room between the current sales tax and the 30% fairtax sales tax.
Rich people — AS A GROUP — get richer because they are helping to increase the standard of living for everybody. This is patently true. It may not seem intuitive or common sense, but unfortunately economics is similar to differential calculus in that it is neither intuitive nor common sense without a lot of studying and practice.
The homeless guy with an iPhone has more utility than the homeless guy without an iPhone. Also, the homeless guy who goes down to good will and gets dozens of useful gadgets has more utility than the homeless guy who has not yet gone to goodwill to get those items. Wealth does not do anything for you until you use it to purchase something that you are able to UTILIZE.
I was actually “homeless” for about half a year when I was 26 years old. But it was not that bad because I actually enjoyed a lot of utility. I owned a car that I was able to drive anywhere I wanted to go. I slept at several different friend’s houses on different days or sometimes I slept in my car. I was renting a garage sized storage unit that held all of my stuff. I had a cellphone with seemingly unlimited roll-over minutes. I had a membership at L.A. Fitness where I was able to take nice long hot showers everyday. I got lots of free pizza at the place I worked at and I was able to save a lot of money since I was not paying rent. For me, being “homeless” was actually not that bad because I enjoyed a large amount of utility, and it forced me to depend alot on other people. I have found that I have not felt as lonely, during times in my life when I had to depend on other people, as I have felt sitting by myself in my very own apartment. Have you ever wondered why there are an aweful lot of “rich” people who get depressed? I guess that is a question for another discussion.
Here is a brain teaser for you. Lets say you have zero money in the bank, but you own a bunch of appliances and gadgets and books and other stuff that cost you twenty thousand dollars to purchase brand new over the years. Lets say you decide that you want to get “wealthier” so you decide to sell everything you own on Ebay. Your stuff all works just as good as when it was brand new, but since it is technically not brand new anymore, you are only able to get five thousand dollars for all of your stuff on Ebay. Are you wealthier with 5,000 dollars in the bank or with the utility of a house full of items that cost you 20,000 dollars to purchase brand new? Are you able to live a wealthier lifestyle with 5,000 dollars in the bank or with the utility of 20,000 worth of useful stuff?
Here is another brain teaser for you. Lets say that you have two “rich” people who both have twenty million dollars in the bank. Lets say that the first “wealthy” person is very good at finding the best sales but the second person is not. They both go out and spend all of their money on useful and fun stuff, but the first person ends up getting twice as much useful and fun stuff as the second person because the first person was able to purchase everything at half price. They both started out with twenty million dollars in the bank, but now the first person has twice as much stuff to enjoy. So, here is the “million dollar question.” Who is “wealthier” now? They both spent the same amount of money, and now they both have zero dollars in the bank. Which one of these two men is “richer” now?