Economics 101- What the Government Gives and how much it takes… Without Us Even Knowing it!
A Simple, Inarguable Fact:
Government gives nothing to anyone without first taking it from someone else.  PERIOD!  It can’t give to me, unless it took from you, your family or your friends.  Whether in the form of taxes, printing money (which devalues what you already have), bonds (that we eventually someone has to pay back, usually, us), it always takes it from someone. ALWAYS!   It’s already creating debt for the children and grandchildren that you don’t even yet have!  It simply can’t give to me or anyone unless it took from you, your family, or your friends.

The desire of our politicians to “give” us things and be rewarded with re-election, has become so profoundly out of control, that they have run up an astronomical debt for me, for you for your children, my children and yes even our grandchildren!

Politicians Love to Give… But what did they they give us?
Debt!  A mountain of debt, the likes of which has never before been seen in the history of man (thanks?).  Me, you, my kids, your kids, each and every single one of us at this very moment OWES about $189,000 dollars each!  This according to the NY Post Jan 29, 2012…

I don’t know about you, but I don’t remember, signing an IOU.  Neither did my kids, but my kids and your kids are going to have to pay it.  Isn’t about time that we stop this insanity, by holding our politicians accountable???

Wait!  I forgot…. We can always just increase the taxes on the rich.  That should take care of it, right?  Wrong!

Whether we like it or not, taxes CANNOT solve the problem

An inconvenient truth…
If  the government imposed a 100% tax on people making over $250K
AND confiscated all last year’s profits of ALL Fortune 500 companies
AND TOOK ALL assets of the top 400 billionaires…
we would still only fund our government for 8 months!

and then, WHO and WHAT is left to tax??  (see new article re “the disappearing rich“

OK, so increasing the taxes on the rich won’t fix it, but…

• Well, we should at least, make them pay their fair share shouldn’t we?  OK, I agree… but what’s fair.  Here are the facts…
  • The top 5% of earners pay well over half of all federal Income taxes.
  • The bottom 50% of taxpayers pay almost no federal income taxes.

So, if we are really worried about fair, shouldn’t the top 5% pay less and the bottom 50% pay more?  Of course not!  This is not by any means what I am advocating, I’m just pointing out the absurdity of the rampant shouts of “fair share!”.  This is nothing but despicable demagoguery.  It is a lie perpetrated in the hopes of winning an election by stirring up sentiments of class warfare.  It might win an election, but it will destroy the country.

The class warfare that some politicians are espousing, may sound good to some, but putting in place the increased tax policies they promote for the purposes of lowering budget deficits will accomplish even worse than nothing, and and our liberal politicians know it.  This creates is vicious a cycle that has repeated itself over and over in the US and all over the world… look at Europe, Greece, Spain, France, etc…

We Have to do Something. Right?  Yes, but shouldn’t we make sure it doesn’t make things worse?
Choices have Consequences, many, of which are unanticipated.
Dramatically increased taxes, in the short term, always generates a quick budgetary  windfall, but what then?  Increased taxes also, ALWAYS puts pressure on the job creators, the business owners.

In simple terms it means less profit to them, which leads to cost cutting, which means layoffs, which means more people on unemployment, which means more expenses to the government, which means that want to increase taxes AGAIN, to cover their increased costs!… This is all in addition to the fact that many companies simply go out of business…  That then reduces the tax base and government revenues AGAIN… That doesn’t sound like economic recovery… It actually results in…

• fewer workers,
• causing increased unemployment and required social aid,
• increased government expenses
• but fewer workers means an even smaller tax base,
• which means even lower revenues to the government,
• so less income to the government…
• Means a larger budget deficit…
• Which means we need another tax increase?!… 
• Does that sound familiar?  Isn’t that how we got here in the first place?

This is Government  and bureaucracy in Action…
Do what sounds good, makes the most people happy (’til after the election), take the credit for doing “something”, getting re elected for doing such a “great” job; (the hell with the long term consequences)… and then when it doesn’t improve or gets even worse?  Blame the other political party… after all, the only reason it’s not fixed is “they didn’t let me do more!”  Sound familiar?  Both political parties do it… but for Liberal politicians it has become an art form.

Unfortunately, I may have just offended a hundred thousand or more democratic voters.  For that I’m sorry.  But the truth is the truth… And nothing I’ve said so far is even remotely an opinion.  It’s pure fact.

The usual big government, higher tax solution is logically unsustainable.   Higher taxes diminishes wealth, costs businesses, costs jobs, lowers the tax base, which lowers tax revenues, which causes budget deficits that creates the motivation for more taxes, which diminishes wealth, which lowers the tax base even more, etc…  If this country is going to survive as the land of opportunity, we have to stop the Insanity!

Whatever the solutions may be, one thing is certain… Increasing Taxes is not it!
The above is not a hypothetical.  Just look to Europe.  This was the road they followed.  They tried to solve all social ills by creating a Utopia of entitlements and increased taxes on the wealthy.  Take from the rich and give to the poor.  The result has been an unsustainable tax burden, destruction of businesses and jobs… A never ending race to keep up with an unsustainable burden of debt and social entitlement.  The burden of taxes and business regulations are destroying wealth while at the same time, increasing the dependency of the people; a sense of entitlement that the government should provide for everything!

Since no government can give without first taking from someone else, what happens when government can’t just take more?  What happens when there are no more rich to tax because the government has either taken it all, or they’ve left?   What happens when the government has to reduce what it “gives” to the people, because there is no one else from whom to take?  What happens when a society has been transformed to one in which, there is no longer gratitude for the assistance provided to them because they needed it...  to a society in which the recipients of government largess believe they have a right to a check, just because they are breathing?  When a majority of the members of a society are either unaware or simply don’t care that every penny they receive from the government was taken out of the pockets of their neighbors, you have a society that is in decline.  A society bereft of personal responsibility or ambition; a citizenry  on a non stop search for a hand out rather than a needed hand up.   What happens when instead of being thankful, for temporary assistance, there is a sense of entitlement, a feeling that the “government” (i.e. their friends and neighbors) have an obligation to let them sit on their couch watching TV, while others work, having their earning confiscated by the government to support the slovenly lifestyle they seem to believe is a God given right bestowed upon them by their local congressman?

There is no longer a need to speculate, now we know… Just look at Greece, riots in the streets!  The result of government assistance run amok.

Europe’s attempt to solve all problems with tax increases and more social entitlement spending has led to chaos and ultimately riots.  It has and will do the same in the US, if not checked.

Understand, I believe in a social safety net.  I believe in helping those who can’t help themselves.  I believe in a hand up.  I even believe in an occasional handout.  However, I don’t believe in taking my or your hard earned money, to support someone who can work… but simply prefers to let you and I support him.  When we do so, I really don’t believe we are helping them.  As said by Ronald Reagan  “You do no man a favor by doing for him, that which he can and should do for himself….  

When we do this, we make economic and emotional cripples who will never reach their full potential as human beings..  As was said by Cavett Robert, “He who cuts his own firewood, is twice warmed”.

Anyway we slice it, this country does not have a revenue or tax problem.  It is impossible for tax increases to solve our problems.

No matter what a personal political persuation…
Facts are facts, numbers are numbers… no matter how much we may like to believe that if we just taxed Bill Gates more, we’d be fine, IT JUST IS NOT TRUE…  As shown above, if we took ALL the money from the rich, we’d still sink. 

The US does not have a tax issue… IT HAS A SPENDING ISSUE.
True solutions do exist. We’ll discuss many possibilities in other articles, but it’s important to know that none involve throwing grandma off a cliff.

The first step?
Decisions must be made   We have to start looking at and making decisions based on the short term and even more importantly, the long term consequences of  those decisions; not just based on what feels or sounds good for the next election.

Second Step?
The insanity of politics must stop.
The political parties don’t have to agree, but our politicians must stop playing games, stop lying and start talking about actual solutions.  Get rid of the class warfare and get rid of the insanity!  It’s time to stop being US politicians and start being engaged US citizens.

For more information on economics please see  Economics101

 

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