About the only thing more rare than credible UFO photos these days is a government not desperately short on cash.
Depending on the level of fiscal desperation, we are witnessing various forms of debate regarding how and by whom the seeming inexorable expansion of government must be funded.
In the U.S., and to a lesser degree Canada, we are hearing a growing chorus of voices expressing the need to “tax the rich” in order to fund the ravenous maw of government excess.
In the U.S., the call is for greater taxes on wealthy individuals, while in Canada it’s generally assumed that the “rich” provinces will shoulder an even greater tax burden to be bestowed upon the less fortunate.
If we examine one truth of this debate, we will be led to another.
Tax the rich. It sounds so easy.
The problem with that is muti-fold.
One is that there just ain’t that many rich-folks. In the United States, there are only a quarter-million people who earn over $1 million per year. That’s 40 per cent less than just a few years ago. Those people pay close to $200 billion in federal income taxes. Back when there were over 300,000 citizens earning over $1 million annually, they coughed up $309 billion in taxes.
For the record, those with incomes of over $10 million a year — out of a population of 300 million — is down to less than 10,000. Not much more than the population of Innisfail.
In Canada, only 174,000 people make more than $250,000 per year.
Right now, the “millionaires” that President Barack Obama is hoping to coerce more tax money out of account for 20 per cent of all U.S. federal tax revenue. If we go down a notch or two, the reality gets even more stark. Stateside, those who make $200,000 or more already account for half of all tax revenue.
In Canada, B.C. and Alberta contribute to equalization, and Ontario is currently running at about break even.
What all this illustrates is that, no matter how you slice it, the so-called “rich” are already paying their share. It also illustrates that you can tax the rich all you want, but there soon comes a point at which there’s just no more water in that well.
In the U.S., where some states have imposed income surtaxes on wealth, the extra revenue never materialized simply because the intended tax targets simply moved to neighbouring states with no such tax surcharges.
The unintended consequence of such shortsighted tax policies has been that private sector job growth in the low tax states has eclipsed states where legislators stupidly thought they could tax their way to prosperity.
This is mirrored in Canada, where lower income and property tax rates are direct indicators of private sector growth.
The debate over taxing “the rich” has also inadvertently exposed a very hard economic truth: There are no socialists.
Those who profess an affinity for socialism always use lofty phrases such as “the greater good” or “the public good.” They always speak of the need for sacrifice, and disparage the concepts of profit and private enterprise and wealth as unhealthy self-interest.
Think about that when you hear American news about tax debates centered on taxing “the rich.” Think about it in this vein — the Obama administration wants income tax surcharges that start — conveniently — just above the highest pay grid in the U.S. federal government.
Think about that when you hear the premiers of provinces perennially on the receiving end of equalization constantly calling for greater public spending on health care and schools and, of course, job creation programs. They want more taxes on the “rich” provinces.
Think about that, and then try to imagine the possibility of a New Democrat MP or MLA advocating for all NDP politicians to be paid, say, a salary equal to the average Canadian family income.
Try to imagine the leaders of a large public sector union accepting a pay package equal to the average wage of their dues-paying members, or teachers advocating widespread pay cuts in order to keep more teachers on the payroll and reduce class sizes.
Can’t do it, can you?
You see, the most powerful advocates of advanced socialism in this and many other countries only advocate socialism for others, and never for themselves. In reality, they’re the hardest of hard-core capitalists.
As Margaret Thatcher correctly pointed out, socialists always run out of other people’s money. There aren’t enough rich people to pay all the bills the socialists want paid, and rich people just ain’t as rich as they used to be.
Bill Greenwood is a local freelance columnist.