Posted by
Mark Holt on Friday, October 03, 2008 12:44:48 PM
Every election cycle, Democrats spout the platitude that, somehow, the rich are to blame for all the problems of the poor and middle class. This they then use as justification for whatever tax strategy they think will increase revenue, so they can use our money to buy more votes the following cycle. So far so good. But why does no Republican ever bring up the fact that these so-called "progressives" are, in fact, extremely regressive in their financial strategy?
Obama is a perfect example. He claims to want to reduce the income tax burden on the poor by raising it on the rich. But here's his problem: Every one of his expensive programs would increase deficit spending, and therefore inflation, and inflation is a regressive tax, which hits the poor hardest.
Think of it this way: certain things in our economy have been proven to hold their value. Real estate (especially if it produces a commodity such as food or oil) is a good example. Gold is another. Ownership shares in a profitable business. All of these hold their value when the dollar falls (in other words, their price goes up, and their value appears to increase over time). These kinds of hard assets are where the rich keep their money.
Where do the poor keep their money? Probably in cash. They're just trying to scrape together enough to have an emergency fund, or maybe a down payment on a home. Perhaps their money is in a 401(k) or IRA retirement plan. These hard-working, trusting souls save their money in the hopes that, over time, life will improve. They think that by saving their money, they can escape the burden of taxation.
But regressive politicians (including, unfortunately, presidential candidates from both parties) have shown no compunction in flooding the world with newly printed dollars to encourage spending. And each newly created dollar steals a little bit of value from every existing dollar out there. Is your nest egg in dollars? Then the government gets a chunk. The dollars the Fed prints don't come from the rich, whose money is in hard assets. They come from the poor, and those with their money in cash. And the dollars don't go to the poor, who, when the dust clears, Democrats don't care about that much at all. Those dollars go straight to the rich, in the form of government subsidies and bailouts.
The reason our income tax system is progressive isn't compassion, as the left would have you believe. It's to balance out the regression inherent in our financial system as implemented by the Fed.