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The Public Policy
The Invincible Lie
Once we have put aside the lies and the convoluted use of words, what are we left with?
Anyone who wants to study the tricks of propaganda rhetoric has a rich source of examples in the statements of President Barack Obama. On Monday, July 9th, for example, he said that Republicans “believe that prosperity comes from the top down, so that if we spend trillions more on tax cuts for the wealthiest Americans, that that will somehow unleash jobs and economic growth.”
Let us begin with the word “spend.” Is the government “spending” money on people whenever it does not tax them as much as it can? Such convoluted reasoning would never pass muster if the mainstream media were not so determined to see no evil, hear no evil and speak no evil when it comes to Barack Obama.
Ironically, actual spending by the Obama administration for the benefit of its political allies, such as the teachers’ unions, is not called spending but “investment.” You can say anything if you have your own private language.
But let’s go back to the notion of “spending” money on “the wealthiest Americans.” The people he is talking about are not the wealthiest Americans. Income is not wealth — and the whole tax controversy is about income taxes. Wealth is what you have accumulated, and wealth is not taxed, except when you die and the government collects an inheritance tax from your heirs.
People over 65 years of age have far more wealth than people in their thirties and forties — but lower incomes. If Obama wants to talk about raising income taxes, let him talk about it, but claiming that he wants to tax “the wealthiest Americans” is a lie and an emotional distraction for propaganda purposes.
The really big lie — and one that no amount of hard evidence or logic seems to make a dent in — is that those who oppose raising taxes on higher incomes simply want people with higher incomes to have more money, in hopes that some of their prosperity will “trickle down” to the rest of the people.
Some years ago, a challenge was issued in this column to name any economist, outside of an insane asylum, who had ever said any such thing. Not one example has yet been received, whether among economists or anyone else. Someone is always claiming that somebody else said it, but no one has ever been able to name and quote that somebody else.
Once we have put aside the lies and the convoluted use of words, what are we left with? Not much.
Obama is claiming that the government can get more tax revenue by raising the tax rate on people with higher incomes. It sounds plausible, and that may be enough for some people, but the hard facts make it a very iffy proposition.
This issue has been fought out in the United States in several administrations — both Democratic and Republican. It has also been fought out in other countries.
What is the real argument of those who want to prevent taxes from rising above a certain percentage, even for people with high incomes? It has nothing to do with making them more prosperous so that their prosperity will “trickle down.”
A Democratic president — John F. Kennedy — stated the issue plainly. Under the existing tax rates, he explained, investors’ “efforts to avoid tax liabilities” made them put their money in tax shelters, because existing tax laws made “certain types of less productive activity more profitable than other more valuable undertakings” for the country.
Ironically, the Obama campaign’s attacks on Mitt Romney for putting his money in the Cayman Islands substantiate the point that President Kennedy and others have made, that higher tax rates can drive money into tax shelters, whether tax-exempt municipal bonds or investments in other countries.
In other words, raising tax rates does not automatically raise tax revenues for the government. Higher tax rates have often led to lower tax revenues for states, the federal government and other countries. Conversely, lower tax rates have often led to higher tax revenues. It all depends on the circumstances.
But none of this matters to Barack Obama. If class warfare rhetoric about taxes leads to more votes for him, that is his bottom line, whether the government gets a dime more revenue or not. So long as his lies go unchallenged, a second term will be the end result for him and a lasting calamity for the country.
COPYRIGHT 2012 CREATORS.COM
About the Author
Thomas Sowell is a senior fellow at the Hoover Institution, Stanford University, Stanford, CA 94305. His website is www.tsowell.com. To find out more about Thomas Sowell and read features by other Creators Syndicate columnists and cartoonists, visit the Creators Syndicate Web page at www.creators.com.
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Paul Kotik| 7.12.12 @ 6:53AM
In just 100 years we've come to take the income tax - which required a Constitutional Amendment to legislate - for granted.
We've stopped seeing it as the intrinsically evil thing that it is.
And once we accept the notion that an income tax is okay, we readily slip down the slope to an even greater evil, the progressive income tax.
But the most evil tax of all is the estate tax.
The deal our rulers reached last year did not preserve the Bush tax cuts, for it allowed a highly discriminatory restoration of the estate tax. A progressive estate tax!
The estate tax is the most immoral of all, for it implies that families exist only at the pleasure of the Federal Government.
The double taxation aspect of it - taxing that which has already been taxed - is horrible, but it pales in comparison with the fundamental crime of taxing family relations.
Bob K| 7.12.12 @ 8:15AM
"The people he is talking about are not the wealthiest Americans. Income is not wealth--and the whole tax controversy is about income taxes. Wealth is what you have accumulated, and wealth is not taxed except when you die and the government collects an inheritance tax from your heirs." Thomas Sowell, 7/12/12, from an Essay in American Spectator Online entitled "The Invincible Lie."
You can read it above.
So, is wealth not taxed or is it subject to double taxation by the Inheritance Tax laws all states and the Federal Government have?
Paul Kotik| 7.12.12 @ 10:27AM
As you point out, Sowell reminds us that the Feds tax wealth (again, now) at inheritance time. This is double taxation, no question about it.
As far as I know, Florida is the only state with an annual wealth tax. Florida has no state income tax though. It seems that the net of the two makes it very worthwhile for very rich people to live here in Florida.
JD| 7.12.12 @ 1:29PM
There is far more than double-taxation in this world, as VAT proposals illustrate. Taxes appear in every transaction of life, and much wealth is accrued through multi-transaction processes. I'd worry less about double-taxation specifically and more about the sum of taxation, however it's implemented.
Bob K| 7.12.12 @ 2:22PM
There is no doubt that the Wealth Tax, or Inheritance Tax, or Death Tax, if you will, as it is administered by the Federal Government, puts a much harder burden on families whose wealth not old, is hard to assess without difficult and controversial appraisals and is not in liquid assets.
Trust funders with generations of wealth in their ancestry and income from it's investments will find it easier to raise the money for these taxes than do the heirs of decedents who have built successful businesses or farms in one or two generations. Too many of them are now required to sell their inheritance to pay the taxes on it.
Neither the Republican Party or the Democrats have seen fit to introduce bills raising the limits on the value amount of the estate which could exempt a larger part, if not the entire estate, from taxation.
As Professor Sowell points out, everything is centered on income for political reasons.
TrueBlue | 7.12.12 @ 7:10PM
The idea of taxing inheritance ticks me off. It was taxed when the money was originally made, anything after that is double (or triple in some cases) taxation. The fact that in most cases it is taxed at a higher rate than standard income is even more insulting.
CJW| 7.12.12 @ 10:42PM
The estate tax is loved by tax attorneys and accountants, life insurance salesmen and companies that sell the policies to provide for liquidity in businesses to pay the tax, financial planners, and senators/congressman who receive campaign contributions from these groups.
TLP| 7.12.12 @ 7:05AM
I know that none of what this Creature does, surprises you, Thomas.
It's the only thing he knows how to do.
It's the only thing he's ever done.
He's a Community Organizer/Agitator/Divider/Anarchist. He has been stirring the Racial/Class Warfare pot, all of his adult life. He has "Sought Out" and Surrounded himself with the Hardcore Left, ever since his "Typical White Person" Grandmother, and her fellow Communist Husband, hooked him up with Frank Marshall Davis, which begot Jeremiah Wright, which begot Bill Ayers, Bernadine Dohrn, and Louis Farrakhan.
He is Lenin, and he is Hitler. He's Castro, and he's Mugabe.
He's every Far Left "By any means necessary" Revolutionary that's ever come before.
Lie, Cheat, Steal, Imprison, Kill.
Look around the Country. The 1st three he's already accomplished.
Two more to go.
C'mon Man!| 7.12.12 @ 1:37PM
He did kill, Agent Terry of the Border Patrol.
Appleby| 7.12.12 @ 7:37AM
Obama is the Sixties Incarnate: he is what happens when that manifesto Tom Hayden and Jane Fonda crafted is put into play. It's what happens when Kids Rule The World...and it can only exist as long as Mom and Dad continue to send the cheques. Socialism is premised on the belief that one can make people continue to work when there's nothing in it for them but kicking and screaming and chanting and marching by the Gimmee Generations who grew up thinking everything in life was supposed to be Fun, and somebody else was alwys supposed to Pay.
Well the generation that pays the bills is retiring now, and one day Junior and Susie are going to find the doors are padlocked and the cheques are no longer in the mail. And they don't have any answer to the question "Now what?" save kicking and screaming, marching and chanting, looting and burning and death.
If they'd studied world history and not gender identity in rock and roll, they might be able to figure this out. Alas.
jaytrain| 7.12.12 @ 8:45AM
With apologies to Lady Thatcher , after you run out of income to tax and spend , you move on to spending and wealth . To wit , Spain raised its VAT to 21 %, which don't hurt the old folks so much having got most of what they need , but consder the poor Milennial with a home to furnish . But the real killer is a tax on wealth : all those IRA's and 401k's . Aregentina has done it , it's called the corralito . And besides what could be more FAIR , taxing (seizing ) the wealth of all those people who got rich by saving what they made .
Bob K| 7.12.12 @ 9:32AM
Professor Sowell stated above that there is no tax on wealth. Perhaps you mean a tax on the attempt to accumulate wealth through IRA's and 401k's?
JD| 7.12.12 @ 11:54AM
From context, it is clear that he meant that there is no DIRECT tax on wealth, and that the highest incomes do not necessarily correlate with the highest wealth.
There are, of course, many taxes on all of the means of acquiring wealth. Given that, any tax on wealth, after acquisition, would be a double-tax.
Who Knows?| 7.12.12 @ 11:34AM
The key word by the invaluable Doctor Sowell, came near the end---calamity.
It’s the American voters who “freely” put “The One” into the White House who are the calamity. Public education CAMPS work!
The only relevant question is, have enough of them been hurt enough to realize what they have done, and to either vote for Romney or sit out the election. How much pain can they take, before getting the message---CHANGE!
I remember a cigarette ad from my youth---a guy with a black eye, holding a fag, proudly says, I’d rather fight than switch. (And, for you youngsters, “fag” is a word for cigarette.)
Maybe most people are masochists, who like being lied to. Or, like battered wives, coming back for more, more, always more!
“When hungry, eat.
When tired, sleep.
Above all, don’t wobble”. A Zen poem
These days---it’s when NOT hungry, eat, and when NOT asleep, you’re tired. Ergo---wobble on!
Petronius| 7.12.12 @ 12:29PM
The words Earn and Value are never mentioned among the unwashed who live by the words "have, get, and benefit."
JD| 7.12.12 @ 12:34PM
Sowell says no one believes in trickle-down economics. That's not true. Lots of people believe in it.
They're called liberals.
"I think when you spread the wealth around, it's good for everybody." That quote is evidence that Obama thinks people other than the recipients of wealth benefit from the received wealth. Similarly, liberals have justified all manner of social redistribution for many years with the claim that all of society benefits from the moving of wealth to the recipients of social welfare.
Most recently, Obama's "stimulus" was faced with the criticism that it motivated no economic growth at all, but merely gave money to the likes of public school-teachers, whose produces no wealth, save for the extreme long-term future productivity of their educated students (hardly a reason it had to be passed by Presidents' Day 2008, as Obama demanded, because "every day counts!"). The unanimous refrain of the Left has been "but when you give money to these people, they spend it, and those they spend it on then spend it, and so on!"
That is trickling. Exclusively trickling. Trickling seems to be the ENTIRE basis for liberal economic policy!
David| 7.12.12 @ 10:17PM
Hey folks, I do appreciate everyone's thoughtful comments today. It has been getting pretty nasty in recent months with all of the insults hurled among many of you on this site.
My thoughts: as to taxes, we need to have a federal consumption tax - not an income tax. Everyone will have to pay something.
Everyone, and there all millions in the underground economies. Many tipped people do not pay their FULL share of their incomes; all of the rich people who illegally obtain their money will have to pay. How many people are in the "adult entertainment business" (also known as titty dancers, waitresses, and bartenders in such establishments, and porn stars and everyone connected with those businesses)?
David| 7.12.12 @ 10:18PM
continued
We are never going to elect senators and house members at the federal level who campaign on LOWERING THE 47% PERCENTAGE WHO PAY ZERO FED INCOME TAXES TO, SAY, 40%, where it was when Bush took office. It won't happen.
The only way to get those 47% to pay SOMETHING at the federal level is to have a consumption tax. It can be enacted without quite the furor from dems as it would be to ADD people to the fed income tax roll. The less fortunate, but by no measure people in poverty, may think twice before buying those luxury items at the expense of actual taxpayers. They may settle for the 27" tele instead of the 50" tele IF there is a fed sales tax attached to it.
I do not pretend to know what the appropriate figure/percentage is for a fed sales tax. I do know there are people who do know what it will take to keep the fed government alive and well.
On another level, to replace the income tax with a sales tax may encourage Americans to start saving again, which has been a fault of our's for decades.
Frank Natoli| 7.13.12 @ 3:06PM
"Once we have put aside the lies and the convoluted use of words, what are we left with?"
The renewed awareness that the original definition of "Satan" is "deceiver".
Marie| 7.13.12 @ 3:33PM
I'm sick of the ACTUAL spending on stupid things like Haiti. Those people wanted their freedom, so they should be left to it.