Hitting the rich ends up hitting everyone: the Biden plan and the eternal obsession of the left
It's a matter of time, but Joe Biden's huge business plan now appears to be ready for final congressional approval. The president is convinced that his $ 1.75 trillion program, reduced from the original $ 3.5 trillion, will keep the US economy up to date in terms of infrastructure, ecological transition and social spending. At the heart of this agenda are spending increases that would embarrass even its illustrious predecessors. On the other hand, Biden does not want to be second to left-wing idols like Franklin Delano Roosevelt and Lyndon Johnson.
Given the recent electoral defeat in Virginia and the narrow victory in New Jersey, it is more crucial than ever for the White House to ensure the passage of its economic plan. However, the president risks running aground on welfare and taxes, where in addition to the republican opposition, the skeptical positions of moderate senators Joe Manchin and Kyrsten Sinema have been added. As is well known, in the Senate it is essential for Biden to have a united majority, having extremely low numbers.
The heart of his plan reveals the greatest nonsense from which the left still cannot break away. It is clear, in fact, that to support the federal spending bazooka, the infamous 1 percent will be relentless. Alongside the global minimum tax of 15 percent for multinationals, the proposal provides for a 5 percent surcharge for incomes over $ 10 million, plus a further 3 percent for incomes over 25. millions.
It may seem repetitive, but it must be remembered that hitting the rich does not work and has negative effects on the economy as a whole and on those who would theoretically be excluded from this punitive maneuver. Unsurprisingly, this logic is foreign to those who, a year ago, chose Biden thinking that the increases at the top are totally disconnected from the rest of the system. That of fiscal aggression is a mantra also known to the left of our house, which will certainly look with admiration at the direction taken by Biden. Unfortunately for them, the historical evidence clearly shows the failure of such economic policies. Democrats proudly argue that the economy grows faster as a result of tax hikes, taking as an example Bill Clinton's first term, where the maximum tax rate on income rose from 31 to 39.6 percent. Indeed, growth (2.6 per cent) was much lower than in the previous decade (3.2 per cent). The real boom came in the second term, when Clinton changed course and approved cuts in both spending and taxes on capital gains.
To put things in order, there are three big reasons why relentlessness on billionaires is highly counterproductive. First of all, the fact that large capital holders have always known perfectly well how to circumvent these charges, entering into the quibbles of the measures, escapes. Consequently, it will only remain for the middle and lower segments to fill that fiscal vacuum left by the so-called rich, taking on their shoulders the burden of irresponsible political spending. And Charles Adams of the Mises Institute remembers it well :
"The rich have always had the wherewithal to avoid excessive taxation. They just rearrange their affairs to avoid taxation, something the middle classes are not able to do ".
The second point to clarify concerns the eternal belief that the earnings of the rich disadvantage the less well off. Nothing is further from reality than this zero-sum game. If we look at the data of the last decades, we note that, with the increase in overall wealth, absolute poverty has decreased exponentially. Where the rich have gotten richer, the poor have gotten less poor. Rather than focusing solely on immediate benefits for some or inequality, the overall benefits produced for all should be considered. As usual, in the words of Bastiat, we ignore what we do not see , remaining anchored to the idea that someone is always destined to lose out. That absurd equation according to which the acquisition of individual wealth must necessarily correspond to an impoverishment for the rest of the world. Always taking up the Mises Institute ,
[…] The fact that “the rich” might also gain does not alter those good consequences for others. The gains for the average worker are always underestimated or even ignored.
The third great illusion is, ça va sans dire , the redistributive one. By confiscating more money than the greedy 1 percent, the state will not help those in need and will hardly improve the quality of public services. It is nothing more than a transfer of power from the individual to the state, rather than a passage of money from the wealthiest to the most needy, as Bertrand De Jouvenel recalled. It is then Milton Friedman who reminds us how this is another way to feed public clientelism and bureaucratic agencies capable of managing money that is not really, without worrying about how it will be spent, where it will arrive or who it will be destined for.
It remains to be clarified why several giants of world wealth are proud to leave a larger chunk of their income to the government's coffers. As we previously suggested, big business knows how to get around the law and therefore doesn't care if Biden raises its taxes. This is where we understand why, for example, the giants of Silicon Valley or some of the richest individuals in the world have long supported the Democrats.
It is the great hypocrisy that they approve of higher taxes knowing that they will be able to avoid them and receive special treatment from the government, facilitated by those regulations that characterize the incestuous collusion of crony capitalism . And in the meantime, everyone else is paying the price in terms of taxation and competitiveness. From small, medium or large companies that make their own on the market, up to the individual citizens of the lower-middle class who were told in the election campaign that the tax increases for billionaires would not have touched them in the least.
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This is a machine translation from Italian language of a post published on Atlantico Quotidiano at the URL http://www.atlanticoquotidiano.it/quotidiano/colpire-i-ricchi-finisce-per-colpire-tutti-il-piano-biden-e-leterna-ossessione-della-sinistra/ on Fri, 05 Nov 2021 03:54:00 +0000.