The Daily StirrerThe Daily Stirrer brings you opinion and comment on issues in the news that are likely to affect the lives of ordinary people; political jiggery pokery, money and prices, jobs, health, Nanny State pokenosing and attempts to steal our freedom. Our contributors are old gits who are prepared to say what everybody is thinking.

Tax The Rich, Hurt The Poor

by Phil T Luker

Thanks to the fiscal-cliff deal (December 2012) which raised an extra $41 in taxes for ever $1 cut from public spending according to American economic commentators and the new Obamacare related taxes, the USA now has a tax code that is more “progressive” than at any time since Jimmy Carter was president. In spite of that Obama's supporters and those who think the Obamessiah is too right wing and Pol Pot would be a better President and continuing to chant their mantra "Tax the rich, tax the rich, in mainsteam media and the cybersphere.

It will be interesting to see what long-term effect that has on household-income trends and poverty in the USA.

Tax increases on high-income people may in theory be redistributive, shifting wealth between rich and poor but such policies, whenever they have been tried, always work in the opposite way to what was intended. This is because we pay taxes individually in the short term, but in the long term we pay taxes collectively. Businesses pass on tax costs to employees and consumers as they do with any other cost. Production and administration costs rise, prices go up and wages are squeexed in order to maintain magins.And it is the most profitable firms in many cases will be the ones that have the most power to pass on tax expenses to consumers or suppliers.

A high-value worker is one who by definition is in high demand. Design engineers earn big money because a lot of intelligence and many years education are needed to develop those skills. The same factors as determine a businesses ability to charge higher prices also enable high value workers to demand higher wages in response to tax increases or other factors that diminish his real income. You see this all the time with financial and tech specialistsin New York or Silicon Valley: Workers in that position simply add taxes and other cost-of-living factors into the starting point of income negotiations to make sure their negotiable income remains around the level they want.

Little intelligence and training are required to hold down a job as a burger flipper, brush pusher of box carrier hence these low paid workers are in a poor position to demand higher wages. Anyone can be trained to push a brush or flip a burger.

Thus it should be clear even to the most rabid supporters of Taxenfuhrer Obama that you really cannot raise taxes on the rich because they have the ability to raise their income correspondingly and as the related prices increases trickle down people at the other end of the scale are being pushed below the breadline.

Tax hikes on the so-called rich may temporarily decrease the private sector’s share of income, but they probably will not decrease the real income of high-wage workers, business owners and investors. Longer term all they do is increase government revenue at the expense of low-wage workers and the unwaged. though it is very difficult to disaggregate the complex relationships between taxes, wages, and prices. But those who say that they are most interested in economic inequality would do well to follow Lane Kenworthy’s example and look at transfers rather than taxes. Means-testing Social Security and other benefits would do more to make the total package of taxes and transfers more progressive than any tax hike. This should appeal to 'progressives' and communists who genuinely want to improve the lot of the needy. I suspect that because most of the "Tax the rich" brigade are driven not by conscience but by hatred of the white, middle class, culturally christian society that spawned them (self hatered if you like) and an addiction topeer approval, any policy that would stand a realistic chance of helping the poorest in society rather than simply punishing "the rich" would be anathema

RELATED POSTS:

Panama Papers: British Elite Linked to Corruption, yet Media Only Focuses on Putin It is clear (and very easy to research) that many Amerocan elitists, including prominent political figures are involved in the Panama tax haven scandal. So why are British news organisations focusin on David Cameeron, the Conservatives and Vladimir Putin? Could it be the Gerge Soros funded group behaind the leaks have another agenda besides exposing (perfectly legal) tax avoidance?

How To Help The Poor - A look at how mainstream politics talks of fairness but penalises poverty
All three mainstream parties in the May 2015 General Election are focusing, as they did last time, on fairness, equality and helping 'the poor'. As their senior spokesmen piously pontificate there will be no trace of irony from either Conservative, Labour or Liberal Democrat while the spout such bollocks, even though they know their economic policies will penalise the poor.