Tax Breaks for Millionaires and Billionaires, How Stupid is that?

There are factions in the USA that believe that it is important to give tax breaks to Millionaires and Billionaires. The first group consists of the Millionaires and Billionaires themselves. The second group consists of the congressional representatives and senators that the millionaires and billionaires have purchased. The third and more important group is made up of the idiots that Millionaires and Billionaires have tricked into believing that giving them tax breaks will somehow help the economy. I wish I could trick someone into giving me money, of course when I would do this it would be considered fraud or theft.  So let me be clear, really rich people do not need tax breaks. They are already rich and do not need your help to get rich or stay rich. The rich have used all the tricks possible to get rich or stay rich. They use all the tax loopholes, tax shelters and off-shoring techniques that normal people cannot use because the rich can afford the best money management possible.  When the rich struggle, they sell property, jewels, and investments or get a loan a low interest rate loan from a bank. When you need money what do you do? Get a payday loan? Pawn your TV or car? Ask your parents or friends? Get a high interest loan from the bank or use your high interest rate credit card?

More importantly the rich are not struggling. They are doing better than ever. Their level of wealth has increase significantly over the past 10 years while the rest of us have lost wealth and our wages have reminded stagnant.  Michelle Singletary reported in the Washington Post in July 2010 that the average income for the top one percent of earners rose 281 percent, or $973,000 per household, in the last decade. When was the last time you got a raise like that? Also would a 281% increase of your salary equal $973,000? I’m guessing probably not.

The faulty economic theory of Supply Side Economics AKA “Trickle down Economics” is just ridiculous. It always was and it has proven itself false over the 10 years during the Bush Administration. In 1982 when George Bush Sr. was running for president against Ronald Reagan he called it Voodoo Economics and that was the right name because the idea seems to have cast a spell on large swaths of the populations. Here is how Supply side works: We give money to a few rich people and rich corporations. From the top of the pyramid, they release the money into the economy and the effects of that release create a flood of jobs and money downward to the low economic levels. That is what the advocates of this dubious theory say will happen. However, this never happens and it is ridiculous to think it would work. Here’s why it hadn’t and will never work: There are less rich people and corporations than there are normal people. The rich can never spend enough to put a lot of money into the real economy.  Yes they do buy big ticket items but not enough little or middle ticket items. They do not generate the volume of sales that the Middle or lower income brackets can generate. Large corporations do not even generate the number of jobs that small and medium size businesses create. The actual growth of large corporations is stagnant, primarily because they don’t want to increase the number of people they employ.   Corporate growth has to do with increasing profit by gaining efficiencies, e.g. outsourcing, investments, creating faster ways of doing things, automating and making the consumer do things that they would have hired an employee do, like pumping your own gas, ordering online or self-checkout in stores. 

What is rarely spoken about is Demand Side Economics AKA “The Real Economy”.  The pyramid it flipped on its head, the giant base is at the top and the small top is at the bottom.  If money is given to the poor and middle class, who make up a larger portion of the population and who spend money at a more diverse and greater number of businesses, money is injected into the economy more rapidly creating more demand which causes more jobs to be created. The really simple way to express this is more demand = more jobs.  When there is more money being spent, more people are willing to take the risk to start a new business or hire additional people at existing businesses.  When people have more money to spend, they go on vacations, buy new cars, contract additional services, buy new clothes, fix up their houses and much more which creates increased demand.  Normal people having money and spending it will do the economy more good than rich people getting tax breaks will ever do for the economy.  If the rich having tax breaks would create jobs and simulate the economy, they could have done it at anytime from 2001 to the present. But they did not and they will not create any jobs. They have their money and they are happy, well clothed, well fed, driving nice cars and living opulent lives.

All of this comes down to this: Do you want to wait for a crumb or two to fall from the masters table and then have to fight over it with a lot of other people? Or would you prefer to have money given to you now and spend it on what you need or want? If you can’t make up your mind, let me help you; you want your money now. Rich people are not rich because they got tax breaks. Tax breaks are the greedy icing on the cake.

The rich are rich because they inherited the money or they had some money and they turned it into more money or they walked on the backs of other people and made money or they just stole it though crime or other questionable actions or means.  No one ever got rich from hard work and saving money, that is one of those lies people tell workers to make them feel better.  The 19^th century Horatio Alger novels are fictional children’s stories; that never, I repeat, never happened. These stories are an unfortunate part of American culture, because their presence has lingered on through the 20^th and 21^st century.  The stories all have the same theme: poor boys that study, work hard can go from rags to riches. Again these were works of fiction.  Horatio Alger was rich, not middle class. He did not have work his way up from nothing; he went to Harvard in a time where only the richest of people went to college.  Alger’s stories were just that, made up stories. They provide a fake nostalgia that is damaging to our national outlook. 99% of the time, you cannot simply pull yourself up by you proverbial bootstraps and get rich. For that one percent that gets rich from nothing, they have had a lot of help and a lot of good timing. The rich do not need our help; it is us normal people who need the help. 

Another favorite meme of those who carry the water for the rich is that lazy people complain about all those hard working rich people and just want to take their money. I read it all the time on comment posts about news stories. Some of the hardest working people in the world are poor. They are not poor because they are lazy. If you are rich and never worked a day in your life no one complains about that.  There are plenty of people that work hard and have no chance at being rich. To find them you might start by looking in the mirror and then look outside at your neighbors.

 The rich are bleeding us dry and when they have gotten all they can out of us, they toss us aside like a used tissue. It is time to grow up and stop believing that success is just around the corner, if I just work harder.  We need to demand a larger share of the pie and stop believing the rich need our help. Keeping the rich wealthy is their problem not ours.  Unless you are being paid (other than your salary) by the rich for your vote, you should really vote your interests.

Ciao for now,
Fobbsie