What Dalton Would Do: The Very Un-Regressive Use of Your Tax Money

President Obama in his State of the Union speech on Tuesday used the opportunity to repeat the same mantra he’s be voicing since August and the debt ceiling crises, saying the rich should pay more.  He even invited Warren Buffet’s famed secretary who allegedly pays a higher tax rate than her billionaire boss. 

Funny how Mr. Buffet, when he complained about this, failed to point out that he pays a lower tax rate because he elected to pay himself a nominal salary in exchange for stock options, which when he cashed in on them as a capital gain,  that gain was taxed at a lower tax rate than his salary would have been.  So, he could have elected to pay himself in a more traditional manner and thereby pay a higher rate than his secretary.  Hmmm, let’s just disregard these technicalities, shall we?  He’s such an enlightened billionaire saying that he should pay more. 

So pay it, pal.  Write a check to the US government… but we’re off topic here.

And of course it’s not limited to the US.  The NDP, the Liberals are all making the same noises here about our corporate tax rates, our tax rates on upper brackets etc.

This, all despite the evidence that in both countries, the top 10% of income earners pay approximately 50% of all income taxes, and the bottom 50% of income earners pay approximately nothing.  Zero.   

But who makes use of the vast bulk of the services paid for by taxes, like health care; that 50% who are essentially free loaders.

So, the Occupiers were crying they are the 99% – what about the 50% who pay taxes for everyone?  Here’s a Regressive idea – you want to increase government revenues?  Lower basic income exemptions and start taxing lower brackets higher.  Again… we’re off topic.

But, the issue then becomes distorted for political purposes, into a debate about income disparities, just to avoid such sticky discussions.

The inference from the progressives then is that higher tax rates for the rich will address the disparities in income in our society.  The progressive left’s solution to income disparities is to tax the rich and then redistribute as they see fit, picking winners and losers.  Ah, the genius of government.

But when conservatives push back and say, ah you’re just engaging in cynical class warfare, and they stick to the doctrine cry for lower taxes! Lower taxes are good for everyone! for economic stimulus! despite some evidence that that is not necessarily true, they miss the point quite tragically we think.

Tax cuts may not generate economic activity per se, but having the government take it and redistribute it is what conservatives need to argue is what is directly detrimental to the economy and society.  What tax cuts do, or should do in theory, is limit the size and power of government.  Government more often than not are the abrasive that can seize up the wheels of the economy with overregulation, skewing of the market in favour of uncompetitive or false economies and competing with the private sector for labour needed in the inevitable expansion of government services.  But conservatives fail to make this point, maybe because so many of them now are big government believers themselves.

But really, what would government do with all this additional tax money from the rich?

Pay down the deficit?  Fix infrastructure?  Fund research and innovation?

Nah.  Case in point our Premier Dad, Dalton McGuinty.  Here he really believes that the public unions will be reasonable next year.  We doubt it.  This is code for he intends to give them back everything they have now, plus a little bit to make it all good for funding those Hudak attack ads during the campaign.  And how will he fund paying off his debts to the public sector unions?

Increase taxes.  On the rich of course.

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