Concerning capitalism, Talcott Parsons wrote in his forward to The Protestant Ethic and the Spirit of Capitalism (by Max Weber), “If capitalism begins as practical idealism…it ends…as an orgy of materialism.” I agree with that sentiment as well.
There is an old Polish proverb that states, “Under capitalism man exploits man. Under socialism the reverse is true.”
I would put it this way: The problem with socialism is that it creates apathy and diminishes ingenuity and creativity. The problem with capitalism is that it creates envy, selfishness, and greed.
The combination of both causes class warfare, and class warfare, regardless of which side is firing bullets, is counterproductive and only hurts those both sides claim to be helping.
The political left strives to divide the classes by convincing us the rich need to pay more taxes. After all, why wouldn’t a billionaire (or someone making over $200,000) want to pay more to help the less fortunate? Only 5% of the U.S. population are in the upper-class, which means only 5% of households make more than $200,000 per year for a family of four. However, the majority people in the upper-class make far more than $200,000. This group (the 5%) also pay the majority of all federal taxes, approximately 53% of all federal income taxes.
Five percent of the households pay 53% of the taxes. Is that fair? Well, it depends on how you look at it. Take Mitt Romney’s 2011 tax returns for example: According to released documents, the Romney’s paid $1.94 million in federal taxes on a reported income of $13.7 million. Two-million dollars in federal taxes is far more than I will ever pay (or even make) in my lifetime. It seems like an excessive amount. He shouldn’t be asked to pay more. That is, until you consider that $1.94 million is 14.1% of his income, about the same rate of the average family making $50,000 a year. Now, all of the sudden, it doesn’t seem quite fair. Why should the average middle-class family pay the same percentage in taxes on his income as a millionaire pays on his?
The reason the Romney’s tax percentage was only 14.1% is because all of his income during 2011 was on investments. In other words, he didn’t really “earn” any money in the “traditional” sense. He did not “work” anywhere for a salary. He simply invested his money and from that investment, in one year’s time, made $13.7 million. I am no math expert, but I do wander how much money a person has to have invested to earn almost $14 million in interest in one year! I would assume it is at least in the hundreds of millions. So, in reality, a guy with hundreds of millions (if not billions) of dollars paid the same amount of taxes, percentage wise, as a guy making only $50,000. I am not a socialist, but something just isn’t right about that. It doesn’t seem fair.
The reasoning behind the low tax bracket on investment income is because the original capital invested was taxed at the highest level already, possibly as high as 40% or more. So, the argument goes, taxes on investment profit is a double taxation. But is it really? I don’t think so. The original money (capital) is not taxed again, only the new profit. Just like a blue-collar worker makes “new money” his “new money” is also taxed. If a blue-collar worker paying taxes on food with money he has already paid taxes on is not double-taxation, then neither is taxes on money made from investments.
I do understand the argument that if you tax profits on investments to high it will discourage those who have money to invest from investing. I get that, and I can see how people could cut back on their investments. But come on, how can taxing a millionaire the same percentage as an average middle-income earner, regardless of how the money was made, be fair?
I don’t begrudge anyone making lots and lots of money. And the Romney’s, according to their tax return, are very generous people, donating a sizable amount of their income to charity. (They gave more to charity then they paid in taxes, and they should be commended for doing so.) But it is a little disingenuous to say people in a higher tax bracket are already paying their fair share in taxes when their percentage based on income is no different from mine.
On the other hand, it is the wealthy who create jobs for everyone else. After all, no one ever got a job from a poor person; and a rising tide lifts all ships.
It is also disingenuous to lob character assassination rockets on the 47% who, quote, “pay no taxes.”
First of all, it just isn’t true! That 47% reported to have paid no taxes represents the amount of federal taxes not paid during one calendar year. Many in that 47% would have paid state and local taxes where applicable, as well as sales-taxes, taxes on gasoline, and all the other taxes we are subject to. Furthermore, many within that 47% would have paid taxes all (or at least most) their adult lives, but because of the recession, lost their jobs and during one particular year had no income and so paid no taxes. Plus, if they had any sort of job throughout the year, even a part time job, they would have paid payroll taxes (FICA). It just simply isn’t true to say they paid no taxes. All the reports say is that during a 12 month period they paid no federal taxes. In actuality, the percentage of people paying “no” federal tax was 36%. The 47% represent those who at the end of the year neither got a refund or owed any more taxes than what was withheld from their pay-checks during the year.
Some of those, who paid no taxes, actually received governmental assistance, or received more back from the government than they paid in. This makes people really angry and brings up images of that lazy person, who could get a job but would rather get a handout. In reality, however, regardless of what the political right says, that stereotype represents a small minority of those receiving help. A large portion of people who receive without giving are retirees who, while they no longer put anything in the kettle, did so for many, many years. Another large portion of those receiving without contributing are the handicapped and legitimately disabled. Plus, the largest group of people receiving governmental assistance are children. Those who abuse the system are a small, but visible minority. We must be careful not to lump everyone who receives help into their camp, and we have to be careful that we don’t harm those who really need it because of the abuse of a few.
Furthermore, it should go without saying that people receiving the help do not contribute as much as those not receiving help. Why? BECAUSE THEY HAVE NO MONEY TO CONTRIBUTE! That’s why they are receiving help. What are we suppossed to do, take the taxes the wealthy paid and give it back to them in governmental assistance? As rhetoric increases, logic decreases.
Who are the 47%? Below is a breakdown. (Here is a link to a longer article.)
- 60% of the 47% are “working poor.” This group has jobs and do contribute to the payroll tax.
- The elderly; most of which did pay taxes while working, but now do not, although they do receive benefits.
- Low-income families who survive on less than $27,000 a year total household income.
- And get this, an estimated 24,000 people in the 1% category of the wealthiest citizens pay no federal taxes in any given year because of tad-deferred bonds and other nifty tricks.
Please understand the point I am trying to make. Our country is in serious financial trouble. We are imploding! Something drastic has to be done and it will involve cutting back on entitlements and defense and infrastructure, and every other part of government. But class warfare has to stop! We need to quit blaming the poor and assuming all people receiving help are abusing the system. We need to quit blaming the wealthy, assuming they are all stingy and greedy. Neither is true! Class warfare is nothing more than friendly fire.
The rest of us, caught in the middle, need to wake up and realize we are being played by the power elite in both political parties. It’s all about getting the votes to stay in power and the strategy for receiving those votes is to divide and conquer the populace. Right now the strategy is working to perfection.
If our country fails, it will not be the fault of the republicans or democrats or wealthy or poor. It will be all our faults because we have bought whatever lie the group we like best is telling us. We have allowed the two-party system to divide us. We, the populace, need to stand together and say, “Enough is enough!” If we don’t, we will have no one to blame but ourselves.
At least that’s what I think.
What about you, what do you think?