One of America's leading authorities on technology and telecom policy, Motley is a writer, television and radio commentator, political and policy strategist, lecturer, debater, activist, and policy advisor to The Heartland Institute.
Latest posts by Seton Motley (see all)
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President Donald Trump and the Republican Congress have both put forward tax reform plans that contain lots and lots of really great ideas. They both simplify the code, eliminate some taxes, reduce the rates of others – and in general are geared to allow for vigor to return to our long vigor-less economy.
The fundamental element behind vigor in our economy – is coin. The crucial component of capitalism – is capital. And the ugly truth for Leftists is – only people that earn money have money. And the people that earn more money – have more money. The rich – have even more than that.
So you need all of these people – most especially the rich – to privately dispose of their capital. Not have the government take it from them. So as to fuel capitalism – and allow the reinvigoration to begin.
Capitalism works – in large part because of Adam Smith’s “Invisible Hand.” Capitalism coin never stays put – it’s always on the go. The Invisible Hand moves that money – all over the place.
To wit: A rich person buying a yacht – does more for a poor person than a thousand government programs. Because – who sells the yachts to rich people? Poorer people. Who drives the yachts to the lots to be sold? More, even poorer people. And who builds the yachts to be driven to the lots to be sold to rich people? Lots and lots of additional poor people. And then there are the crews to sail the yachts, the repair crews to fix them, the harbor crews to harbor them,….
How do we know this? Because in 1991 the Feds imposed a “luxury tax” on expensive cars, furs, jewelry…and boats. Democrat Senators Ted Kennedy (Massachusetts) and George Mitchell (Maine) in particular crowed about the rich finally paying their fair share. Except:
“it wasn’t long before even those die-hard class warriors noticed they’d badly missed their mark. The taxes took in $97 million less in their first year than had been projected – for the simple reason that people were buying a lot fewer of these goods.
“Boat building, a key industry in Messrs. Mitchell and Kennedy’s home states of Maine and Massachusetts, was particularly hard hit. Yacht retailers reported a 77 percent drop in sales that year, while boat builders estimated layoffs at 25,000.”
Get that? The rich people – simply held on to their riches. And tens of thousands of poor people – lost their gigs as a result.
And I can with moral certitude assure you that the checks from these gigs building, driving, crewing, maintaining and housing yachts – are a whole lot more fulfilling and satisfying for poor people than the government welfare checks with which the anti-capitalism Left wishes to replace them.
Despite the Invisible Hand’s obvious, proven-over-centuries empirical success – Leftists remain steadfastly anti-capitalism. And use government to drain capitalism of capital in every conceivable way.
Our ridiculously complicated, complex, dense and confiscatory tax code – is a huge way to do that. And a huge reason why our economy – has for so long stunk on ice.
Both President Trump and the Republican Congress know this. And have gone about reducing the Feds titanic tax take – to leave substantially more coin with those who, you know, earned it. Thereby leaving the capital – within the confines of capitalism. And vigor will ensue.
So why is any Republican harboring even the faintest notion of any sort of tax increase – in the midst of all this capitalism-Reality re-infusion? We speak of the elimination of the carried interest deduction:
“Carried interest capital gains income is earned through a net gain within a partnership formed between individuals with capital and an expert investor. They are indistinguishable from any other type of capital and so they are paid at the same capital gains tax rates.
“While supporters of higher taxes on carried interest capital gains say it takes aim at ‘hedge fund guys,’ it would also hurt pension funds, charities, and colleges that depend on these investment partnerships as part of their savings goals. In addition, small businesses, innovators, and inventors would find themselves increasingly shut out from investment money available to them from these partnerships.”
This wouldn’t help the Invisible Hand – it would sever it at the wrist. And all the very many poor people to whom capitalism would move the money – would also be cut off:
“The Left may not know they’d be pilfering even more from senior citizens and their retirement cash. Or their uber-Left college comrades. Or the charities doing the good work the Left claims to love. Or perhaps they just doesn’t care – and they just want to corral all the coin they can.”
Whether it’s ideology, ignorance or (quite likely) both – there are a LOT of Leftists pushing for it:
The question is – why would any Republican look to join with this clueless clown show?
Here’s hoping none do. And we leave the carried interest rate exactly where it is (or – dare we say – lower it).
And leave the money We the People earned exactly where it belongs – in our hands, and in Adam Smith’s Invisible Hand.
Let capitalism be capitalism. And let the rigorous vigor ensue.
[Originally Published at RedState]