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Saturday, June 15, 2024

Column: I love the rich

At the end of last year, a fierce debate sprang up in Congress over taxes.

Most legislators agreed that they wanted to extend tax cuts for the middle class that were set to expire, but the tax cuts for “the rich” became a source of heated contention. As usual, the Democrats wanted to increase their taxes to 39.6 percent, while Republicans wanted to keep them at the lower levels of 35 percent.

In the end, the compromise that was reached encompassed multiple issues and left people on all sides only arguing even more – this time, about who won or not. But with regard to the tax cuts for the rich, the Republicans more or less “won” since the cuts were extended another two years.

I admit, loving the rich might seem a curious position for me to take. In the face of huge deficits for federal, state and local governments across America, a weak economy and a tough job market, who would have the audacity to refuse for the rich to shoulder more of the burden?

They certainly can afford to. The tax cuts in question were for those making more than $250,000 annually, a rather large sum to me that I will assuredly never reach – not as a teacher anyways. And yet I was relieved to see the tax cut extensions continued for everyone. Why?

For one, the rich pay an exorbitant percentage of our federal income taxes already. The top 1 percent of earners pays 38 percent of what the feds take in, while the top 10 percent pay a whopping 70 percent. Similar numbers hold up for the state budgets, one reason why California needs to ensure that we are not chasing the rich out of our state altogether.

So the rich already pay quite a bit in taxes – far, far more than their proportion of the population. They pay for our schools, our roads, our police and firefighters, and much more. Most of the money the government spends comes from the rich but benefits the rest of us.

In other words, we already enjoy the perks of a government financed primarily by our top earners. That’s reason No. 1 for why I love the rich.

Reason No. 2 isn’t about taxes but instead about the economy as a whole. Arguments from the Democrats against tax cuts for high-earners generally revolve around the little guy – gardeners, educators, factory workers, food service workers, pool boys, etc. The tax cuts must be stopped, they allege, in order to help the masses.

What they fail to realize is that the rich are already helping these folks out, entirely independent of the forced redistribution of wealth by higher progressive taxes.

 Every one of the workers I listed above already benefits from the prosperous among us. The gardener tends the estate in the morning while the tutor educates the child after school. The caterer sets up the food at the birthday party, the factory worker builds the three cars in the driveway and the pool boy does whatever pool boys do.

This is the much-maligned “trickle-down” argument, that the rich spend all kinds of money in our society and their wealth “trickles” down without the heavy hand of Uncle Sam.

 It has long been fashionable to say that the theory of trickle-down economics is discredited. It is evidently not fashionable to prove it, because all I see are vague references from righteous protesters and editorial boards across the country.

Independent of forcing them to pay higher taxes, I love the rich because they create a tremendous number of jobs for all of us. By simple math, by simple definition, they have the money to do so.

Finally, even when the CEOs and celebrities “keep” their money, in banks or in stocks, we are all still immensely better off. When they invest in a business or a technology, or when they deposit their money in a bank to be loaned out for cars and homes, their money is hard at work in the economy and increasing prosperity for us all. That’s reason No. 3.

In contrast, high taxes simply bring a middleman into the equation. Then the incredible wealth of America’s rich has to go through the government, to be inefficiently and unwisely distributed by whole offices and infrastructures that add nothing to our cumulative wealth. If we avoid taxing the rich too much, we will be better off as a result.

I don’t believe in taxing our way to prosperity, not because I want to help the rich, but because I want to help everyone else.

Make ROB OLSON rich with knowledge by e-mailing him at rwolson@ucdavis.edu.

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