The (un)Reality of a Perfect System;

Or, In Defense of True Extreme and Working Capitalism

I'll get this off my chest now, I know it, you know it: we're going to disagree. I'm going to ask you to make a jump incredibly difficult for most people, I'm going to ask you to momentarily suspend your disbelief and allow me to pander in theory, to claw at a substantial understanding of reality through a more in depth grasp of theoretics.

I hear you ask me, "why would you do such a thing? Why be an obtuse intellectual who doesn't recognize he lives in a real living world?" And I would answer simply, "I know you're smart and I know you pay attention, so why is it you live in the same fantasy world? Why do you let yourself be led every which way by empty words?"

I want to spend my time today on the politician's need to cater to the lowest possible intelligence of voter, in specific the rallying cry of "Tax Cuts for the Rich". I understand the need to avoid pedantic financial dribbling on national television; of course your ratings will drop and you would never get reelected. But far too often do people get so swept up in the emblematic rallying cries that they forget that they're only meant as leading off points. The moment a Democrat hears someone even hint at uttering these words, they all grab their pitch forks and torches ready to toast any union-busting Scrooge McDuck. But for a moment, suspend your disbelief with me and open your mind, check your preconceived notions at the door and think.

Taxes: How They Are Now

The Middle class, making no more than $70,700 but not less than $17,400 for a married couple are paying 10% taxes (or $1,740) on the first $17,400, while every penny over that $17,400 is taxed 15%. For instance, if you are a married couple making $65,000 a year, you would pay approximately $1,740+($47,600*.15)= $8,880 in taxes. This equates to 13% of your gross income.

The Upper class, or those making more than $388,350 are charged $105,062 in taxes no matter what then an additional 35% on every penny over $388,350.

That means that for every dollar made over $17,400 for the middle class citizen, the government receives 15 cents. Likewise, the upper class individual gives 35 cents to the government for every dollar made over $388,350, or over 1/3 of their income.

Then you hear plenty of people slinging around the idea of equality, equal this and equal that. Most importantly equal taxes for everyone. There's but one exception to this: no one knows what's equal, no one wants to be the great decider of equal taxes for everyone. Before you have the chance to double back on what you want, let's just explore what equal taxes for everyone would entail.

Scenario 1: Equalization to the Lowest

You're in the middle class, so you don't particularly like your 15 or 25% (the next bracket above 15%), but you can make it fine if those greedy rich people paid their "fair share". So Let's make them. Since it would be terrible to make those in the lowest tax bracket pay as much as you do, let's level the playing field and make it truly equal. That means that your tax rate is lowered to 10% of your gross income like all American families; equality then must mean that you would like the upper class to pay their equal share: 10% of their gross income. Let's throw some numbers up.

Let's say your rich cousin, Rick from Toledo (because why not?), makes $500,000 as a salaried CEO for a crazy explosive Facebook app. So his base tax is $105,062 in the normal 35% bracket we are in now. On top of that he would be charged an additional 35% on the excess over $388,350, or a taxable excess of $111,650. Thus, under the current tax system, your cousin would pay a total of $105,062+($111,650*.35)= or a total of $144,136.50. That means that under the current system Rick pays 28.8% of his gross income out in taxes

Under the Equality of Taxes Bill (brought up by middle class Americans, like all of us), your cousin Rick would pay a blanket 10% of his gross income, just like you do.

You, making $65,000 a year would pay $6,500 in taxes (what a deal!), and your cousin Rick would pay $50,000 in taxes. Sounds like a lot right? Well, when you're looking to reduce a national debt in the trillions tax reductions across the board is not the way to go. "but that's not what I meant!" you exclaim. Okay, well let's look at it the other way.

Scenario 2: Equalization to the Highest

You are a die-hard red, white and blue blooded American who wants nothing more than to enjoy those six packs while fireworks shoot in the sky and your pants are made in America. You're willing to do what ever would make your country great again. So, when the legislature announces their new Equalization of Taxes Law, you jump at the chance to participate as much as your rich neighbor. You and your wife make a nice amount of money to fuel your multiple vehicles and recreational vehicles, a sizable $90,000; slightly above average. Your rich cousin, Gerald Maygood, owner and CEO of Maygood Enterprises, makes $1,000,000 (yes, one million, a good paying job!). Under this new tax law equal taxes has been placed at 35%, the tax level for those who make more than $388,350 a year.

Come April, however, your initiative in this great patriotic pursuit of yours falters when you see the government take its just dues, a whopping $31,500! Under the normal system you would only pay $9,735+($19,300*.25)= $14,560. You're not as big a fan of this tax plan as you thought you were when you see more than a third of your income go out the door. Soon those recreational vehicles are on craigslist and those gas guzzling made in America SUVs are gone, replaced with Vespa scooters for the pair of you. Your cousin on the other hand is paying his 35% on his $1,000,000, or $350,000, his lifestyle doesn't change.

Now you're lying there on your cardboard box and newspapers because you couldn't afford the Equalization of Taxes Bill in the latter, or you're enjoying your enormous wealth you've gained in the former. Well, until China or whoever calls for the United State's debts (which with the lowered tax rates have rocketed) and then your country has just defaulted on the largest loan in the history of the world.

This is the part where you suspend your disbelief, this is the part where you take a moment and check your premises because I'm about to unload a massive bomb on you.

Scenario 3: True Capitalism

The impossible and far-fetched never happening idea of Capitalism. A system that attempts to maintain two different policies: capitalism for those who can afford it, socialism for those who can't, is doomed to fail at both, especially when the two systems oppose each other. Instead let's try something different for once, check your premises and move past the flawed logic. Instead of trying to restrain growth, instead of enforcing a system that causes those who can afford it to hide their money away in Swiss Bank accounts (OH NO!), give them reason to invest here.

Abolish the tax code. Instead run a country of intellectuals in a new (green) industrial revolution. You there, middle class citizen, what will you do with your money you would otherwise be spending on taxes? Will you travel on an airplane built in America and owned by an American company? Or maybe you will go buy a new car constructed in an American factory and sold by an American salesman working for an American car company.

What will the rich man do with all of his immense wealth? Well, he's going to do what he's been doing before the code was abolished, he's going to be spending his money in order to build his fortune higher. Innovation expands and explodes when the restrictions of capitalism are reduced. He's going to invest in companies and services that will ensure the largest returns. The well-oiled machine that is American industry is, as Obama says, fueled "from the middle out", but the economy is receptive and reactionary. When a ripple is sent from the middle out, the rich must make a decision: 1. follow the trend and invest, or 2. ignore it and hope for the best.

If the middle class, all of a sudden begins to go on trips, the demand for aircraft skyrockets to meet the amount of people wanting to vacation. With demand high, intense and complicated algorithms will be used to project the amount of aircraft that are to be made to meet the demand. But with those aircraft numbers rising to meet the amount of tourists, fuel costs rise as well. Any businessman worth his first million realizes that the best way to gain a profit is to remove factors that reduce that profit. What results is an increase in development of green energy, if for no other reason than to reduce fuel overheads. This technology, taken over by large corporations, "trickles down" to companies that find more interesting uses for it, whether it be putting electric cars on the roads, efficient wind and solar power for homes, or power grids that fuel millions of people with clean energy only dreamed of.

Numerous arguments against such an extreme plan exist, but if you only think of how well you work at your workplace when the foreman is buckling down and watching your every move opposed to when he leaves you alone to do your job as you please, you'll understand what it is I'm arguing. The moment the US becomes a beacon of industry across the world is the moment that our deficit slows, halts, and begins to go down. It won't happen in a day, a year, or probably in my lifetime, but sooner or later the leak of jobs, people, and ideas to foreign areas to avoid restrictions must be stopped.

As a final parting remark, I'll leave you with this video a friend showed me about motivation and drive and how economic gain is not necessarily the reason we decide to do our best. It was eye opening and entertaining, thanks Amanda.