I was listening to Bernake, and then Mr Sanders started the typical leftist propaganda. The Democrats are idiots who are going to self-destruct in about four years. My political leanings are center right liberal libertarian.
The tax cuts that Bush made have raised the hackles of Democrats. Democrats want to nullify the tax cuts. Yet I will argue that Bush was right to make the tax cuts.
I bet you are ready to pounce on me and say, “Only the rich benefit from the tax cuts and they pay so little.” Well, let me tell you a story about morality and being pragmatic.
The moral of socialism and anybody who leans towards the left says it is immoral to give tax breaks to the richest of the rich. The rich should pay more tax than the poor because the rich can afford it.
So a poor person would pay 10% income tax and rich person pays 50%. Many will argue it is ok to tax the rich because they can afford.
Oh really? Tax rates are percentages and thus the rich will always pay more than the poor. So I ask what moral argument do you have to force the rich to pay a higher percentage than the poor? After all the poor are the ones that take advantage of the government services, and the rich don’t. My argument is for a flat tax rate for all (say 14% to 20%).
The reason why the rich are taxed to the hilt is because it is an easy populist thing to do. Let’s face it there are more poor than rich and the politicians can do the math. Yet pragmatically it is the wrong thing to do, and when Bush created the cuts he was being pragmatic.
I live in Switzerland and the taxation levels are extremely low. For example Michael Schumacher who lives in Switzerland earned last year about a 75 million per year and paid about 5 million per year (I am guessing based on a TV report).
Michael is happy and so is the Swiss government. Michael will never take advantage of the Swiss benefits (unemployment, pension, etc). Yet Michael pays unemployment, pension and taxes in Switzerland. Michael’s taxes are being used to pay for services that poor people use.
Now imagine if Michael moved to his native Germany. There the German government would demand 50% of his income. Here is where I ask what right does Germany have to 50% of Michael’s income? Answer, none! Michael is willing to pay taxes as most rich are (Really rich people generally speaking are willing to pay taxes so long as the taxes are moderate.)
Think about this situation. Germany and their socialists believe they are morally correct to charge 50% income tax. If rich people paid 10% socialists would cry foul and demand rich people pay their fair share (which they do since taxes are percentages.)
Yet Germany with its 50% does not get any monies whatsoever from Michael because he pays his taxes in Switzerland. Switzerland is pragmatic and says, “hey 5 million is better than nothing.”
Now enter Bush and his tax cuts. Until the tax cuts many rich and American corporations put their headquarters in Switzerland. Switzerland benefitted quite a bit and the money kept on jingling in the Swiss coffers. When the Bush tax cut became active the rich and American corporations went back to the US to pay their taxes.
The Treasury said the government actually ran a surplus of $44.5 billion for December, the largest ever for that month. The gain reflected a big jump in quarterly corporate tax payments.
And here in Switzerland they have noticed that they have less revenues! Why? Swiss papers have said because tax revenues went back to the US.
So while you might not agree to the tax cuts from a moral perspective, pragmatically it is the right approach. Gotta give Bush credit where credit is due.