Saturday, September 8, 2012

The Truth About "Trickle Down"

A NJ Star-Ledger letter-to-the-editor by Herb Gordon takes aim at Romney's tax rate and Bain Capital:

   Do you think it is fair that an employee pays a higher tax rate than an employer? The tax break was supposed to “trickle down” to new jobs and never did when President George W. Bush endorsed it. Now, the GOP is proposing larger tax breaks for the rich for another “trickle down.”
   When Mitt Romney was CEO at Bain Capital, people lost their jobs due to bankruptcy while he and his investors walked away with millions. 

Here are my comments:

Question for Herb Gordon: Should employees be free to quit a job to pursue better life opportunities, like a better paying job? Or should they be chained for life to the same job? If your answer is free to quit, you are a hypocrite. A business owner has a much moral right to fire an employee as the employee has to quit, and for the same reasons. Private equity firms like Bain make millions by growing good businesses, turning around struggling but sound businesses, and dissolving less viable firms and reallocating the capital to more promising businesses and technologies. Their motives are the same as the employee who quits for a better paying job elsewhere—to make more money. Successful private equity firms like Bain are economic heroes because their wise investments lead to better products and services, more jobs, and more overall prosperity. They are moral heroes because they make money by their own reasoning minds, which leads to wealth-producing, life-enhancing results. 
Anti-capitalists ridicule free market policies as “trickle down,” but here’s another question: How much of what you buy with your money did you produce yourself? There are none as blind as the self-blinded. Look around you. Everything your money can buy is provided by someone else’s productive intellectual and physical work, investments, and pursuit of money and profit. If you think that flood of wealth is a “trickle,” then try putting your money under a mattress, stop spending, and see where your life goes without it. And while you’re at it, quit that job that someone else provided, since you’ll no longer need the money. 

As to taxes; no, they are not fair. Better would be a single flat rate so that all taxable income is treated the same, and tax increases and tax cuts are shared equally by everyone regardless of total income. It’s time to end discrimination based upon income.  

Related Reading:

"Greed" is a Two-Way Street

Distorting Words for Political Gain

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