Correct me if I’m wrong but…

It always infuriates me when people say that we should “tax the rich.” In theory, this idea is great. There are numerous articles listing extremely shocking statistics:

1% of households (the upper class) owned 34.6% of all privately held wealth. (source)

When you really think about it, those numbers are huge. So enormous that it can be hard for people in the lower class, middle class, or even upper class to fathom what it must be like to be a part of the elite ultra-rich. To be in an income bracket where it does not even matter whether your taxes are raised or not. They’re making more money in one day than could spent in an entire week. Even if they have a side hobby of collecting small islands. It’s mind blogging.

When we hear “we need to raise taxes for the rich,” many are quick to accept this idea. It has, in essence, become a mantra to many democrats. But regardless of political leanings, or whether you agree with tax hikes or not, the reasoning behind this concept is quite clear: these people are earning more, they are consuming more, they should pay more to support the infrastructure that has given them so much. But it doesn’t quite work like that.

Taxing the rich does not tax the rich.

Taxing the rich does absolutely nothing to resolve the issue of unbalanced distribution of wealth in America. The rich do not pay taxes. Yes, that is correct, the rich do not pay taxes.

The top 1% of the population (you know, the ones with 34.6% of the money) do not pay income tax like you and me. Their money is gained through acquisitions, sales, mergers, accounting, and other such ways. All their expenses are written off or funneled through corporations. When new tax laws come into place, they find ways around them. They move money around, between corporation to corporation, and find ways to keep their money. Everything can be a business expense. And owning a corporation is as filing a piece of paper.

When making money becomes more of a game than anything else, having someone take away your money means losing the game. Even if that “someone” is a government whose officials have way less money than you. Especially when the source of income is extremely confusing even when dumbed down. You’re untouchable.

Sure, people making over $250,000 have a lot of money, and are richer than most Americans. But they’re not the one’s causing the problems, because many of them DO pay taxes. Raising their taxes even more doesn’t help any issues at all, but instead keeps the lower, middle, and upper classes arguing and debating while the ultra-rich acquire even more money. The mantra “tax the rich!” is a red herring that (mostly) punishes those that are already helping.

There are no easy solutions to any of these problems, and I cannot offer any ideas myself. Rather than blindly raising taxes, we need to find a way to show the ultra rich that spending money on those with less money will bring them greater wealth in the end. Which is difficult, especially when so many of the ultra rich make their money in accounting, trading and other sources of intangible income.

We need to focus on tackling the root of our problems, rather than simply putting on band aids. Wanting to tax people making over $250,000/year is a band aid and nothing more. Many of those people are just like you and me. People who had a great idea, followed through, had some luck, and now they’re making good money. Someday I hope to make over $250,000/year myself. And when I finally make it, making me give you more money won’t help anything. I’ll be resentful, you’ll have a temporary fix, and the problems will continue.

Raising taxes does not effect those who aren’t paying taxes. The ultra rich aren’t paying taxes. Let’s get a new mantra.

Related Posts:

• Taxing the Rich For Fun and Profit
• How the Rich Make their Money
• TED Censorship: The Rich Don’t Create Jobs