Egberto Willies

Americas Economy and Taxation Designed To Transfer Wealth From The Middle Class To The Wealthy



Posted: Tuesday, March 15, 2011

by Egberto Willies
http://egbertowillies.com

Rick Unger’s article “How The Wealthy Plan To Finance The American Aristocracy With Middle Class Dollars” at Forbes Blog is a must read article. It is amazing that many who think beyond the indoctrination we hear on television and radio constantly come to relatively the same conclusion.

The title of the article sounds apoplectic. It is however demonstratively true. While he makes the argument using Michigan’s tax hike that disproportionately and regressively affect those with lower incomes even as businesses in the state get tax breaks from said  tax hikes (a direct transfer of wealth from the middle class to the wealthy) he may have missed the biggest point of the largess of his article’s title.

Our tax codes and expenditures especially over the last 30 years have effected the wealth transfer in many ingenious ways. It is a well-known fact that Republicans always want tax cuts under the false premise that tax cuts will generate economic activity. It is a well-known fact that irrespective of world conditions, Republicans want a large defense budget. It is a well-known fact that Republicans more so than Democrats are generally more prone to go into or support protracted wars (Iraq, Afghanistan, etc). It is also well known that even as they bemoan entitlements, they have strategically used these for political gain (e.g., the deficit busting drug bill).

All these programs are effected with deficit spending. Ideally if the country decided that all these programs are warranted, which the wealthy generally support but refuse to want to pay for, all would be well. However, because deficits are used to fund them it results in one of the most effective wealth transfer engines.

Again, deficit spending is one of the most effective wealth transfer engines in America. By reducing taxes on the wealthy they keep more monies in their coffers that they would normally pay if the tax codes were fairer. Said reduction in taxes will cause deficit spending. The government must then borrow money (sell bonds) to pay for the deficits. Who buys those bonds? The wealthy buys the bonds with their tax breaks that caused deficit spending in the first place. Going forward this creates yet further increase in the deficit because we must now pay the wealthy interest on the bonds they purchased which is a new deficit expenditure that they further purchase. It is a sure investment with a deterministic return directly from all taxpayers, mostly those in the middle class. The spiral of the middle class owing the wealthy progressively gets worst.

That is not all however. The wealthy gets most of their income from investments that provide capital gains. The middle class get most of their income from working an honest day’s work. Their income is taxed at up to 36% while the wealthy’s income is taxed at 15%. In other words, while the wealthy sits at their pool drinking tea and watching their stocks on their laptop, they are paying a lower percentage of taxes on their gains than the teacher, the engineer, the doctor, the secretary, the lawyer, the garbage man, the custodian, the salesman, the fireman, and the policeman.

Yet that is not all. The middle class pay social security taxes on all or most of their income. As one makes over 100+ thousand dollars, the tax goes away. Contrary to popular belief, the middle class worker will always pay a larger percentage of taxes (income/social security/Medicare) on their income than the wealthy.

Many wealthy would try to guilt the middle class by stating the absolute number they pay in taxes many times is quite large and specifically larger than those taxes paid by the middle class. That is true but a very false equivalency. We have a large military mostly to protect the international markets many of the wealthy is dependent on for their business and commerce. Those who are wealthy benefit much more from a great infrastructure when it is amortized for utility. Expenditures on welfare, Medicare, and Medicaid goes right back into the products and services whose profits ultimately terminate in the coffers of the wealthy.

Our budget will only be balanced when the middle class is educated and with their share volume force the wealthy to do their part and pay their fair share of taxes. Absent this our dollar and economy will collapse. The wealthy need not worry as their investment is worldwide and left unchecked they will just move on when the great pilfering of the American Middle Class is complete.

My Book: As I See It: Class Warfare The Only Resort To Right Wing Doom
Book’s Webpage: here. -
Egberto Willies is a political activist, software developer, and author. Visit http://books.egbertowillies.com to view his books, newspaper articles, and blogs.

Listen to his talk show every Saturday from 12 Noon to 2 PM Central Standard Time Politics Done Right

Egberto believes tolerance is essential and that political involvement should be a requirement for citizenship. He believes that we must get away from the current policies that reward those who simply move money/capital and produce nothing tangible for our society and that if this is not done, we will become the same as many oligarchic societies where a few are able to accumulate wealth while the rest are left out because it is mathematically impossible to catch up.

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Top-level comments on this article: (1 total)
» left by Anonymous 1 year 33 days ago.
egberto writes:***The middle class pay social security taxes on all or most of their income. As one makes over 100+ thousand dollars, the tax goes away. Contrary to popular belief, the middle class worker will always pay a larger percentage of taxes (income/social security/Medicare) on their income than the wealthy.***

Really?

Please tell me how the tax goes away becasue I have some friends who would really like to know before april 15th.

We all pay a percentage of our income to Federal/SS/Medicare. Federal withholding is based on the number of dependants one may have. SS/Medicare is based on a set %. What I've found is that those that have a lot of dependants usually land up paying less.

I often wonder why the younger generation want to attented higher education. Based on your theary if they get a PHD then they will be one of those evil rich people who pay no taxes
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