Taxing the Rich Makes Society Poor

Capitalism vs. communism

Read today’s newsletter like a script for a play. While you’re doing so, notice the similarities between the Democrats’ scripts and those of Karl Marx. While the word choices are not identical—how Democrats put it compared to a quote from Karl Marx—the meaning of the messages are virtually the same. Here we go…

Democratic Party representative: “Tax the rich!”

Lyndon B. Johnson, former U.S. President (Democrat): “Take it from the haves and give it to the have-nots who need it so much.”

Karl Marx, father of communism: “From each according to his ability, to each according to his need.”

Editor’s comment: What is the message shared by all the above people? Take the wealth. Take the capital. And with it take the means of production. No more wealth. No more capital. No more means of production. This is virtually always the way of communism, even when that communism is disguised as “democratic” or “democratic socialism.”

Why communism can’t produce

When communist governments build housing units, they rent or sell them at below market price (cost). They do not make a profit. They do not create wealth. Without more taxpayer money, there are no funds for maintenance. The buildings quickly become derelict. The people who live in the units have no sense of ownership. They simply don’t care. So they don’t care if the buildings degenerate and decay. The buildings usually become rat-infested slums. In addition, without free enterprise, there’s no sense of supply and demand. Government officials have no good way to estimate demand and notoriously fail spectacularly. This leads to a glut of some items and a scarcity and rationing of others. Ration-cards and bread lines are typical features of communist governments. Overall, communists see economics as a zero sum game in which there is a fixed amount of wealth in a nation, or in the world, and no more wealth can be created. Their only source of money is to steal it or, as Karl Marx advocated, levy heavy progressive income taxes.

How capitalism creates wealth

When people buy a house or stocks and bonds, they are providing capital (funds) that others can use to create wealth. This wealth is created in the form of building more houses or growing new or existing businesses that provide goods and services. The building of additional houses and the growth of new and existing businesses continually creates more wealth. Additionally, capitalism efficiently uses the supply and demand forces that naturally operate in a free market to quickly and accurately determine how much of each good to sell at any given moment. History has consistently shown that nations with free enterprise (capitalism) have the highest standards of living in the world. Many more people are moved out of poverty into middle-or-higher income brackets in nations with free enterprise.

Tax the rich? Bad idea. It’s already been tried and failed in communist governments operating in many different places at many different times. The results are always the same. The consequence of not looking at the results of policies that have already been tried is that the failures are bound to repeat.

Insanity is doing the same thing over and over again and expecting different results. —often attributed (without direct evidence) to Albert Einstein