Class Warfare and the Occupy Wall Street Movement
Living in
Rhode Island for five years has made me see things in a new way. The state has a one party political system
which has been in place for over 70 years and doesn’t seem to show any signs of
changing any time soon. Democrats
holding elected office out-weigh Republicans by a 9-1 margin (with very few
Independents holding office). The
demographics of the state are fairly similar.
In short, there is no balance of power, and as such, the mindset of some
of the policies set forth by some members of the Democratic party here shed a
glimpse on what the United States is poised to become if it continues on its
current path.
What does this
have to do with the supposed “class warfare” that Republicans are
alleging? Everything. It is (mostly) a Democratic philosophy that
in order to balance a budget, taxes must either be implemented or raised. Republicans (for the most part) believe that
trimming costs will balance a budget.
Both are right – to some extent – but relying solely on increased
revenue only increases this “warfare”.
In Rhode Island, the left is proposing a tax on beverages containing
sugar to help balance the budget. Unfortunately,
beverages containing sugar happen to also be the least expensive, which is why
this tax will hurt the poor more than it will impact the rich. The Rhode Island left are also trying to
increase taxes on the only industry that is (barely) keeping the state afloat –
tourism and hospitality.
History
shows that to increase demand for various industries, incentives need to be put
in place. Taxes and regulation only
hinder economic growth (which is why the European Union, led by Greece, is in
the position it’s in, yet we want to emulate that example with the mindset that
collapse can’t happen to us). In Puerto
Rico, the housing market was just as bad as the United States. However, the governor implemented a strategy
that paid off – if one were to purchase a house, real estate taxes would be
waived for the first two years of home ownership. The housing market INCREASED 50%, which also
impacted other industries and sectors.
Rhode Island
is on the opposite end of the spectrum.
Forbes, Money, and the Wall Street Journal have all ranked the state as
having the WORST business climate in the country due to ever-tightening
regulations. The state also has some of
the highest tax rates for business in the entire country. Companies had no choice but to shut down or
move over the border in Massachusetts, where the tax rate is SIGNIFICANTLY
lower. The high income tax rate has also
driven the rich and middle class out of Rhode Island and into Connecticut and
Massachusetts, leaving a huge divide between the state’s wealthiest residents
and its poorest (Newport is a good example being that it is among the POOREST
communities in the entire state, despite the mansions on the breakers). The state is also attractive to the poorest
of people due to various subsidies that have been passed AND to those who are
here illegally (and as such do not pay into the system). Is it any wonder why the city of Central
Falls has declared bankruptcy, and Woonsocket (home of CVS) is trying to muster
up the money to keep the schools open past April 30th? Providence is also teetering on the verge of
bankruptcy due to the strain that its lower class citizens are putting on
it. Normally, this would not be a
problem, but again, the people who pay the most in taxes – the middle and upper
class – are exiting the state in droves, leaving what’s left of the middle
class and poor to clean up the mess.
This is backed up by 2010 census data, which shows Rhode Island was only
one of two states to LOSE population over the past ten years.
It is no question
that in Rhode Island higher taxes and more regulation has strangled economic
growth, whereas in states and territories that have lowered taxes and
regulations have seen economic growth.
New Hampshire, for instance, is home to some of the lowest taxes in the
country and some of the most lenient regulations, and its unemployment rate is
among the lowest in the country.
Massachusetts has strayed away from its nickname of Taxachusetts and saw
a growth in businesses and population.
Rhode Island’s unemployment rate, conversely, went UP in March, making
it the second highest rate behind Nevada at nearly 12%, mostly due to the
promise by Governor Chafee to increase or implement taxes at the state level
(in addition to many municipalities adding supplemental taxes to make up for
budget deficits).
Nationally,
just under 50% of U.S. citizens don’t pay any taxes for various reasons such as
disabilities, immigration status, etc.
That leaves the rest of us to pay our “fair share”. What exactly is our “fair share” when (according
to a 2008 CBO report) the top 1% of income earners paid a total of 28.1% of
taxes? If it were broken down, it would
look like the following:
·
Federal income taxes: 39.5 percent share
·
Federal payroll taxes: 4.1 percent share
·
Federal corporate taxes: 57.0 percent share
·
Federal excise taxes: 4.7 percent share
Additionally,
the top 20% of income earners top 20 percent paid 86% of the income tax and
42.9% of the payroll tax.
One can
argue that companies SHOULD pay their “fair share” (and I would agree), but it
goes against tried and true economic principles of ENCOURAGING growth,
especially during a recession. For
instance, the trucking industry drives our economy, but how would raising taxes
or taking away incentives for the big oil companies help the broader
picture? The added costs would be passed
on to consumers who already feel they’re paying too much at the grocery store
(consumer goods prices have outpaced inflation) and the pump. Many truckers are already losing money, and
gas prices are expected to go up another dollar per gallon by the summer. Increasing our domestic oil supply will help
keep prices down and decrease demand for foreign oil. Forcing companies and consumers to switch to
renewable energy sources has proven extremely expensive, and energy production
is actually more expensive than conventional energy production. Therefore, it should not be a short-term goal
to make the switch, rather a long term one to ensure all infractures are in
place before the switchover. Tax breaks
must also be in place to entice people and companies to make the switch. And being that the nation’s poor can’t
necessarily afford gas-sipping cars, organic foods at Whole Foods or new
appliances (energy efficient ones no less), they will suffer the most because
of renewable energy regulations and gas prices.
The poor can’t even rely on public transit systems as a cheap way to get
to and from work due to rising energy prices due to taxes and regulation (hybrid
buses are not cheap, and someone has to pay for them). Again, a long-term goal should be to make the
transition to more environmentally-friendly energy and systems of
transportation, but the overnight switch the government wants comes with a
price.
Increased
costs of living across the board has created a climate where the “have-nots”
have become envious of the “haves”, yet the government only wants to increase
taxes and regulations, burdening us all.
Is it any wonder movements like Occupy Wall Street have spread like
wildfire? The average person does not
know what drives the economy. And why
would we? It has become a faux pas to
teach about our nation’s economy and what makes it tick (or even financial
success principles for that matter), as it somehow turns into a political
discussion. And what person in their
right mind would be able to understand Adam Smith’s “Wealth of Nations”, much
less have the time to read it? And it’s
not politically correct to read Robert Kyosaki’s “Rich Dad, Poor Dad” in school
or even for a summer reading assignment.
As such, it’s much easier to believe the notion that if you go to school
and get good grades, you’ll get into a good college and get a good job with
good pay. Only problem is the cost of
education is skyrocketing out of control, and salaries are not keeping up with
inflation. Regulation and taxes are
keeping companies from increasing salaries.
And those who are beating the odds of a down economy and able to make money
are considered evil. The Cold War is but
a distant memory, and it’s much easier and politically correct to believe we
should all be financially equal, even though a person making $300,000/year can
actually be struggling just as much as one making $29,000/year, due to
location, student loans, lifestyle, etc.
Hell, White
House Press Secretary Jay Carney even told reporters on April 13th
that the president doesn’t even want to pay his “fair share”. He made over $700,000, yet is only being
taxed at 20%. “The President believes we
must reform our tax system which is why he has proposed policies like the
Buffett Rule that would ask the wealthiest Americans to pay their fair share,”
Carney wrote on the White House blog. “Under
the President’s own tax proposals . . he
would pay more in taxes while ensuring we cut taxes for the middle class and
those trying to get in it.” Why not lead
by example, especially since he has the choice of paying his “fair share”?
This is only
a political ploy to deflect from the president’s record (or lack thereof). It does not pay down the debt or create jobs,
both of which are what we need in bills to stimulate the economy. In fact, it only pays down one day’s worth of
debt and has many loopholes in its current form. Even Senator Pell, from Rhode Island, who the
Pell Grants are named after, said that lower tax rates on investments
encourages economic growth.
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