-Caveat Lector- From http://www.newsmax.com/commentarchive.shtml?a=2001/3/1/020455 }}>Begin NewsMax.com The American Oligarchy, Tax Cuts and the Taxaholics in Congress Diane Alden March 1, 2001 Analyst Doug Bandow of the Cato Institute states, "Income tax cuts are a moral imperative. Americans bear the highest peacetime tax burden in history. In the face of a possible economic slowdown, Uncle Sam continues to grossly overcharge taxpayers." If that is the case, then why does Senate Minority Leader Tom Daschle, D-S.D., say "the rich would be able to buy a Lexus, while the poor could purchase only a muffler for a used car" if a Bush tax cut passes? It really seems that the super-rich like Bill Gates and Warren Buffett and certain members of Congress believe anyone making over 75 grand a year should be paying taxes out the nose. If they have an estate worth more than $650,000, that should be taken from them at a better than 80 percent rate of confiscation. The ghoulish death tax is one of the most unfair taxes of all. The income of the semi-rich or even the barely rich has already been taxed several times over. The death tax is the finger in the eye of those who have worked hard, invested, and want to pass on a little of their hard work to their heirs or to keep the companies they have built afloat. What is behind the rhetoric of Tom Daschle, the super-rich, the foundations and the leftist media? Do they really believe that Bush's tax cut and abolishing the death tax would somehow be unfair to the "poor" or working middle class? Or does it go deeper than that? Is the tax debate really, in fact, a power struggle which in the end will only benefit the continued growth of government and the financial health and interests of a relatively few super-rich foundations and individuals. It should be obvious to Americans that there is more to wealth creation than a healthy stock portfolio. The creation of capital goods and investment in land or real property or the creation of real property is also wealth creation. The 401K does not just depend on someone signing up with Ameritrade, it also depends on people making real stuff to sell to other real people. Paper wealth is not worth the paper it is printed on if there is no real wealth in kind behind it. Coca-Cola stock is not what the 'real' wealth is. Rather, it is the product, the plant and those who create and build it that is more important to economic good health than a stock market over 10,000. You can manipulate or create more greenbacks, gold, stock, or other forms of wealth. However, it is pretty hard to manipulate the long-term buying and selling of real goods in a free market. Supply and demand still work, although politicians and government want to central-plan it to death and turn those concepts on their head. When Nixon put in place price controls in the '70s it did nothing but skew the economy and put off the inevitable while it made a few people "feel" good. Californians are finding out what happens when you manipulate energ y markets, where real deregulation never took place and now ordinary people are paying the cost of environmental or corporate policy which messed with the free market and destroyed commonsense environmentalism by regulati ng it and litigating it to death. In the real world of the here and now, the up-and-coming Coca-Colas, the new businessmen and businesswomen, the small entrepreneur is being taxed and regulated to death. With central planning emanating from D.C., the pote ntial millionaire or billionaire finds his own tax money used against him, tax money he might otherwise be reinvesting. The small businessmen are boxed in by a tax and regulatory system that is funded by the taxpayer. It is a system heralded as economic "justice" by professional politicians, the super-rich and their foundations. But there is no justice in that notion. Ensconced in their tax-free foundations, members of the super-rich oligarchy have no problem saying that "fairness" is taking to the cleaners the top 1 percent of taxpayers, who are paying about one-third of all income ta xes. Nor does it bother them that the top 5 percent pay more than half and the top 10 percent pay nearly two-thirds. The top 25 percent pay more than $4 of every $5 that goes to the taxman – but who cares. The oligarchs a re so rich and have so much influence and hide their money so well, they can afford to beat up on the merely semi-wealthy. Add that to the power that Alan Greenspan has wielded over the economy in recent years and this continuation of top-down economic feudalism continues apace. It becomes more apparent that too much power is in too few hands . It is not in the hands of the small- to medium-sized businessman or even subject to the cleansing effects of the free market. But it is a function, as often as not, of monolithic government and multinational corporatism , which we could call fascism OR federal feudalism. The free market or individual rights to keep what is earned and investing it in new business or, for that matter, passing it on to others is being strangled by taxes and regulations. Wealth is being taken from the semi-ri ch and the middle to upper middle class by Washington to fund the activities of Washington. Transfer payments in the form of social security, prescription drugs, or buying land to give to the federal government is NOT cre ating new wealth. But it is centralizing power in Washington and creating new classes of dependents. One could ask why the super-rich and some in government would want to stifle the creation of new wealth by imposing high taxes. Bill Gates and Ted Turner do not lose sleep over paying taxes, but the new small businessman or farmer or saver certainly does sweat those taxes. The small- to medium-sized entrepreneur may be worth a few million dollars in capital goods, plant or land, but may not have the liquid assets to fork over to the taxma n. Yet Democrats like Tom Daschle or Bill Gates don't worry about such things. In fact or theory, aided and abetted by the super-rich, the left along with some Republicans are helping to destroy the "little guy." The Lesser Nobles – the Small Businessman Let's take the hypothetical case of former machinist John D. Rippler. John never went to a four-year college; in fact, he only had 1 1/2 years in a community college. Then he spent two years as a grunt in Vietnam. After h e returned home in 1975, John started a machine shop. It was a business he loved and was very good at it. For the most part, the long hours were a joy and even though they took him away from his family, they all coped. A s he carefully nurtured the business, reinvesting his capital in his plant and equipment, his business grew. But John was an old-fashioned kind of guy. Like his father, if at all possible John preferred not to borrow from banks. At first he paid himself very little, barely enough to survive. This made his business associates vie w him as somewhat of a moss-backed Luddite, but he put his money back into the business. In the beginning, John's wife was his bookkeeper and his two teen-agers, a son and a daughter, helped out in various capacities. At some point his business grew too large for his garage and basement, so he bought an old w arehouse and incorporated. Over the next 15 years, the business grew tremendously. By 1998 he had 75 to 100 people working for him at any given time. Because of the complexities of the tax code and bureaucratic regulations, he also needed a phalanx of accountants and tax lawyers to help him wade through the tax code and various regulations imposed by various government s, federal, state and local. In this manner he was able to survive from year to year. Several years ago, he also had to hire an expert on EPA and OSHA regulations to make sure he is up to date on those issues and to keep the bureaucrats off his back. Then he was forced to hire a teacher from some foundatio n who gave lectures to his employees on what constitutes sexual harassment. Somewhere along the line he also had to find money to employ a remedial education teacher to teach 14 of his employees to read and do basic math. He also works the Internet looking for minorities and women who might want to try their hand at learning how to run a machine while learning a valuable craft. He was lucky; his old friend from Vietnam had just gotten out of the Army after 30 years and was looking for a job. So Mel Strathorn went to work as John's only African-American CNC machinist-in-training at age 50. If John's luck holds, next year he will be able to have a high-tech expert come in and train all his machinists in up-to-date skills – but first 14 of them need to learn to read at a fourth-grade level. He pays withholdin g taxes, FICA, 401K and benefits for all his employees, and insurance on the plant and liability, just in case a visitor trips on a wet floor while using John's john. After paying his own personal taxes, along with various fees and business costs including extensive traveling for his sales staff, in addition to giving contribution to the Boy Scouts and other local charities, John bring s home about $175,000 a year. But John D. has a problem. He knows that when he dies the estate tax on his assets may mean the end of his small company. He can sell out and take the money and run, hide most of it in municipal bonds and IRAs, or he can start his own foundation or put it into a family trust. But unless John D. Rippler makes all the right moves, his kids and grandkids will be looking to the government for scholarship money and a down payment on a house. Yet what is all THAT to Bill Gates, Tom Daschle and the class warriors? It would seem they really sincerely believe that such a happenstance is only fair. After all, John D. Rippler and others like him must have had more breaks in life than most. It couldn't possibly be because John D. worked hard, reinvested his capital in the business, saved, did without, and made temporary sacrifices for an eventual good. Daschle doesn't lose sleep wondering if John D. Rippler is so foolish as to die with a net worth of more than $650,000. Tom is not concerned that the government would get over 70 percent of John D.'s estate, as would the state, various lawyers and handlers of his estate. Even after John D. dies, his tax lawyers and accountants will be able to pay for their second home in Vail with the money they will make cutting up John's estate. In fact, however, the inheritance tax produces relatively little revenue for the government, but thanks to inflation, today it often forces the sale of family farms and small businesses when a founder or owner dies. But Tom Daschle will insist that more taxes create more giving to charity. That is a fallacy and an excuse to keep taxes, especially estate taxes, high. Higher tax rates do not encourage greater individual giving. What they do is create more individual giving through foundations, but most foundations do not support faith-based or traditional causes and certainly none that might be called conservative. Therefore, if our new semi-rich capitalist and conservative John D. Rippler is smart, he will hide his money in a foundation or even institute his own foundation. Or put his money in a family trust in which members may pa y themselves a salary. He will make sure that foundation has a limited life span so that overpaid bureaucrats won't end up growing the foundation to fund causes John D. would find despicable if he were alive. His kids have decided that when dad dies, they will avoid the 80 percent to 90 percent tax rate a several-million-dollar legacy would demand by going the foundation or family trust route. Yet they will soon learn that at present, IRS rules favor established foundations over start-ups. In any event, it is a fact the super-rich don't need tax cuts because they have their money hidden in foundations or trusts of one kind or another. It is only the man or woman who has a few more bucks than average to pass along who is going to give most of it to the taxman. But in Tom Daschle's world the need for government to grow and to grow and to grow is paramount. The super-rich and the Daschles in Congress could care less about the small businessman, farmer, rancher or compulsive saver and property owner. What does Daschle care that such a hardworking person will not have much to pass to his or her children. What does he care that there will be no money to maintain the small company hardworking John D. spent a lifetime building. Currently, the Congressional Budget Office estimates that the wealthiest 20 percent of families (with average income of $132,000) paid 16.1 percent of their income in federal taxes in 1999 – about the same as the late 197 0s, before the Reagan tax cuts took effect. The top 1 percent (with average income of $719,000) paid more, 22.2 percent – but still far from the 39.5 percent top rate. In the Washington Post a few months ago, Larry Lindsey, Bush's chief economic adviser, said that tax credits and the like have reduced effective tax rates. But Lindsey said there is "an egregious problem" of higher margin al rates – how much of additional income goes to taxes – as the credits begin to phase out. The single-mother waitress with two kids will only start getting into financial trouble via the tax code when she makes around $27,000 a year. The Bush tax proposal would take her off the rolls entirely. But it would also help those making more than a $100,000 a year. Someone making $31,100 would receive a tax cut of $501, about 1.6 percent of income, while a taxpayer making $915,000 would receive a tax cut of $50,166 – 5.5 percent of in come. It would probably upset the mega-bazillionaires and Tom Daschle that someone is getting rich and/or having any fun or receiving a 5.5 percent tax break. The wannabe rich folk that the cranky tax Puritans want to tax to de ath might make an investment or spend it on something the left would not approve of. Perhaps the semi-rich might use the money to give to a religious charity or to build an addition onto the house, the addition they will need so that when their aging baby-boomer parents get old they will have a place to live. There is a better than even chance that could happen. When there isn't enough in the Social Security fund to give the free-to-be-you-and-me flower child of the '60s even a substandard living in 2020, there will also not be enough educated workers to support an aging populati on in the manner to which we have become accustomed. But dashing Daschle will be in the home by then, collecting his obscene government pension, perks, clipping his coupons and savoring the funds in his blind trust plus anything he has squirreled away under his wife's name or holds in offshore bank accounts. Why should he care that others will not be able to pass along their hard-earned money? After all, it is only "fair" that their tax dollars have given him the life of a modern feudal pri nceling. But who cares about THEM. Tom is living in 2001 where there is plenty of surplus tax money to fund the next government disaster like prescription drugs or universal health care. Then he can go home to scam the old folks i n Pierre that he actually has their best interests at heart. He just doesn't tell them that their kids will possibly have to foot an 80 percent tax monster. In order to really look good and to increase his contributions from the teachers unions, Tom and the tax-and-spenders will throw even more down the rat hole of public education. Meanwhile, Tom takes property off the tax r olls in rural South Dakota or Nevada by passing legislation like CARA (Conservation and Reinvestment Act) that will buy private lands so that federal bureaucrats can screw it up. God forbid anyone should make a profit by cutting a tree or letting a cow graze or, worse yet, allowing someone to build a home on it and enjoy it up close and personal. THAT is only for the likes of Daschle and Bill Gates, don't you know. As night follows day, Daschle and Gates, various tax-and-spenders, and hundreds of "experts" are cut from the same "What, me worry?" cloth. A cloth manufactured at numerous PC universities like Harvard and Yale, which fun nel kids from the rest of the dumbed-down system into places where they learn little and what they do know departs along with their common sense. To top it off, these threadbare leftist tax-and-spend ideas and policies ha ve cheerleaders in the even dumber mainstream media. America is awash in arrogance and stupidity, and they are a plague upon the land. Those Bad Old Reagan Years The Heritage Foundation study on economic growth over the last 25 years shows that in the Reagan years the average annual growth rate from 1981 to 1989 was 3.2 percent, compared with 2.8 percent from 1974 to 1981 and 2.1 percent from 1989 to 1995. The 3.2 percent growth rate for the Reagan years includes the recession of the early 1980s, which was a side effect of reversing Carter's high-inflation policies; during the economic expansion o f 1983-89, the economy grew by a robust annual rate of 3.8 percent. By the end of the Reagan years, the American economy was almost one-third larger than it had been when Reagan took office. No matter what Tom Daschle or Bill Gates or some airhead in the mainstream media tells you, real federal revenues grew at a faster pace after the Reagan tax cuts than after the Bush and Clinton tax hikes. From 1982 to 198 9, they expanded by 24.1 percent. Over a comparable seven-year period, 1990-97, a period that accounts for both the Bush and the Clinton tax increases, real federal revenues will have grown by 19.3 percent The lesson from all this is that Reagan was right. Tax rates are a function of behavior, as people who want to become plutocrats invest in the economy. Thus, contrary to the thinking of the left, making jobs grow also bri ngs more money to government as more "rich," who then pay more taxes, are created. Increasing tax rates doesn't bring in more money, but allowing the rich to keep investment capital does create new jobs and new rich. But Daschle can't stand the idea that he and his fellows in government are not taking every single dime. They live for growing government and making sure no one has "too much." After all, that would not be "fair" and only they themselves have the right to "more" – princes, after all, deserve the best and more of it. In the case of Daschle and the Democrats, they engage in economic class warfare against small to medium business owners and those with a comfortable or even not so comfortable living. They do it because that warfare has w orked in the past. Whether or not it will work this time is a question to be answered by the American people. For the new oligarchy it may be a power trip as they play Edward Plantagenet to the peasants and lesser nobles. But as in days of yore, Malcolm and William Wallace and Robert the Bruce discovered that not even the mighty wannabe sovereigns were invincible or unbeatable when they faced a determined, organized and clever foe. Let us hope that George W. can act the Bruce – if he will – and defeat the dragon of government growth for another s eason. His modest tax cut proposal will only give back to people what they have earned. Americans have got to put these congressional princelings and the oligarchy in their place. We must refuse to play the class warfare game with its soak-the-rich mentality. Increasing numbers of Americans are considered "r ich" and that is the American way. It is why droves and scores of people flock to our shores. If we DON'T give up on this soaking-the-rich mentality, the numbers of serfs among us will increase. The "rich" will have less money to invest in capital, plants, or keeping the family farm out of the hands of the develop ers or the federal land agencies. There will be less money for home building or buying merchandise, which grows the economy and makes others rich. At the rate we are going, in a few years there will be more employees and businesses dependent on government than there will be producers. At that time, the federal government will not be able to pay its bills unless it p rints more money. When that happens, think Weimar Republic and needing a pushcart full of money to buy a loaf of bread. Meanwhile the oligarchy and the congressional tax pimps will tax "the children" to death or drive them into penury and tax slavery or indentured servitude. The other scenario is that "the children" could decide they have had enough and send Tom and Bill and the rest of us peasants on a trip to the great beyond. In a pleasant room, with soft music, lights and pictures of waterfalls and birds, as we lie strapped to a table, a government-pai d nurse with a guard standing by will inject us with terminal happy juice and we will be processed into the great Woodstock in the sky. As always, government is not the answer to the problem, it IS the problem. Americans had better snap out of the idea that government is there to give them a handout and take from the almost-rich to buy another government bureaucrat a dacha on Lake Tahoe. Kill the death tax and start on the rest of the vampire taxes. Bush's tax cut is a start but not nearly enough. Make sure Tom Daschle and his friends in the oligarchy and Congress do not create more government along with a populace of indentured servants because of their blind and selfish attitude. (My next piece will be on foundations – our shadow government and the money that funds every leftist and politically correct cause. Please check out www.aldenchronicles.com on this and other issues of the day.) ---------------- Diane Alden is a research analyst with a background in political science and economics. Her work has appeared in the Washington Times as well as NewsMax.com, Etherzone, Enterstageright, American Partisan and many other online publications. She also does occasional radio commentaries for Georgia Radio Inc. 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