I was born in California. Eight years ago our voters approved Proposition 63, declaring that the state’s mental health services for poor people were intolerably underfunded so persons with incomes of one million dollars and above should be taxed an extra 1% to fund them. That is, Californians wanted to do something nice for poor people who are sick through no fault of their own, and 53.8% of the state voted to compel less than 1% of the state’s residents pay for it.
The day after the election I stopped my charitable giving to organizations that serve Californians. Yes, the indigent deserve my help, which is why I have been charitable, but they also deserve the help of the 99% who exempted themselves from participation. What had been kindness became stealing so I withdrew my volunteerism—that is, I “shrugged” slightly by directing my giving outside the state.
I awoke Wednesday [Nov8] to find that California Proposition 30 was passed by 53.9% of our state’s citizens to raise the taxes on 1% of California families. It raises the marginal tax rate by 10.6% for those with incomes of $250,000 to $300,000; by 21.5% for those between $300,000 and $500,000; by 32.26% for those between $500,000 and $1 million; and by 29.13% for those with incomes over $1 million. The stated intent is to increase education funding from elementary schools to universities. Education is wonderful and benefits all, yet 53.9% of Californians feel that it should be funded by just 1% of the state’s families.
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Do you see the parallels here? Let’s be clear about them: 53% to 54% of Californians feel the benevolent concern de jour is sufficiently important to civil society that 1% of Californians should be compelled to pay for it. Frédéric Bastiat wrote of this human trait in 1848, “When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it.”
A few points:
1) I find it interesting that this guy assumes that none of those in the 50%-ish range who voted to raise taxes included those in the 1%. He just assumes that it is those on the bottom, and none of those in the top, who support these programs.
2) This demonstrates zero understanding of why it makes more sense for the wealthiest to have higher taxes. I have a fairly high income tax rate (~35% when you factor in state income tax), which means I pay in something like $40,000/year. That is a lot of money. That’s ~3/4 of my entire salary. And yet, we’re able to pay out this high a percentage of our income without too many difficulties because we make enough money that what is left over, some $80,000 and change, is more than enough to cover all of our expenses and then some. If someone at the average income—$50K/year—were to have this same tax rate, they’d be paying out $17,5000/year, leaving only $32,500, which would put a substantial squeeze on their family, because it’s much harder to make do with $32,500 than with $80,000+. For a family at the poverty level—making $23,050—a 35% tax rate would mean $8,000 out of their annual income, leave them with a measly $15,000 a year to make do. If you’ve ever struggled to live on a thousand dollars a month, you understand why a flat tax rate doesn’t make any sense: people at the bottom of the economic ladder are disproportionately negatively impacted in their ability to meet their basic needs, while people at the top keep more of their income at the expense of public services that might help those at the very bottom meet their basic needs. On the other hand, a progressive tax code ensures that those at the bottom are better able to meet their basic needs, while those of us at the top who have more than enough to go around pay in a little more to help fund the public services that might still be needed for the poorest.
3) The most grating this about this though is the belief that the wealthy have become wealthy with zero help from society and therefore have nothing to give back to society, while those on the bottom must be there through laziness and lack of work ethic and undeserving of help. Even when wealthy individuals never go to public schools or receive any sort of public benefits, they still benefit from publicly-supported infrastructure (like roads and highways, which will help this guy move his family out of California when the time comes) and perhaps most importantly, they benefit from cheap labor. A glance at the list of wealthy Americans, it becomes clear that many of these people have become successful in no small part through cheap labor—cheap manufacturing labor, cheap retail labor (half of the Forbes top 10 list is populated by Waltons, the Wal-Mart people), cheap warehouse labor, cheap construction labor, cheap mining labor, etc. When you consider how many of these people have managed to reap huge profits by paying their employees incredibly low salaries and providing few or no benefits—things that might help those in the bottom half of our country not need to rely so heavily on social programs—it becomes clear that they are not rich solely because they are more industrious and hard-working and others are not. It’s because they have made their money in part by under-valuing the labor they rely upon to make and move their products. It’s why so many of these people have had public clashes with labor unions, actively fight unions, or have moved into areas where labor has few protections to begin with. Imagine if Microsoft manufactured all of its computers in America (100% of Microsoft hardware is made in China), and all of its laborers were guaranteed a living wage and benefits. Imagine if Wal-Mart paid all of its workers a living wage and provided decent benefits. (Wal-Mart has imagined this scenario obviously, or they wouldn’t be fighting tooth and nail against their employees unionizing.)
If the people who come to work and do these jobs every day were paid well enough to pay for all the things they need, including their own health care, then maybe we wouldn’t need all the programs we have to help keep people afloat, or at least we could significantly shrink the size of them, and maybe more of the people who currently rely on social programs could be making enough money that they could afford a higher tax rate to help even out support for these social programs. In other words, the rich might find themselves paying lower taxes if they’d pay their employees better and provide decent benefits. Of course, that would mean taking a hit to their pocket books another way. Either way, the assumption that wealthy owe nothing to the people at the bottom…you wouldn’t be able to make your money if it weren’t for those people, one way or another. You do owe them something, particularly if you refuse to pay them what they deserve to begin with.