Seven Reasons Obama's “Tax The Rich” Plan Will Backfire

President Barack Obama now says he will sign no jobs legislation unless “the rich...the millionaires and billionaires...pay their fair share” in higher taxes. “Such class warfare will make America poorer, not richer, for seven reasons,” says author and small business owner Craig R. Smith.

PRWeb
Posted 6:00 PM 10/03/11
Daily Finance

Phoenix, AZ (PRWEB) October 03, 2011

Class warfare will make economy, unemployment and society worse, not better, warns monetary expert.

President Barack Obama now says he will sign no jobs legislation unless “the rich...the millionaires and billionaires...pay their fair share” in higher taxes.

“Mr. Obama's new jobs proposal would impose $15 in tax increases for every dollar in government spending cuts,” says Craig R. Smith, co-author of the widely-praised 2011 book The Inflation Deception: Six Ways Government Tricks Us...And Seven Ways to Stop It!

“This is a road to ruin for our economy and America's future,” warns Smith.

“President Obama has already increased government's 'take' of all the wealth America produces – our Gross Domestic Product (GDP) – by 25 percent. He has enlarged the government by 25 percent in less than three years and wants to take even more from America's producers,” says Smith.

SEVEN REASONS

“Such class warfare will make America poorer, not richer, for seven reasons,” says Smith, the chairman of Swiss America Trading Corporation.

“The richest 3 percent of taxpayers already pay 52 percent of all income taxes – nearly double their share of total national pre-tax income – while the bottom 51 percent of Americans pay no income taxes at all. So who isn't paying their 'fair share' of national defense, highways and other benefits we all enjoy equally?” asks Smith.

“The U.S. Constitution says we're all supposed to have equal protection under the law – except, apparently, the tax laws,” says Smith, who in 2010 co-authored the book Crashing the Dollar: How to Survive a Global Currency Collapse.

“America already has the highest corporate tax rate in the world – 35 percent,” says Smith. “And the top 10 percent of households pay 45 percent of ALL U.S. taxes, which in the words of one U.S. Senator is 'a higher tax burden on upper income earners than any other industrialized nation.'

“We are already the most 'progressive' nation on earth,” says Smith, “yet President Obama seems obsessed with waging war against those who produce the wealth and already pay sky-high taxes....with killing the geese that lay America's golden eggs.”

“Some contribute a lot more to society than others – and not just in taxes,” Smith says, “yet President Obama's tax-the-rich policies will harm such contributors in seven ways.”

“Number One,” says Smith, “is that 65 percent – nearly two-thirds – of Mr. Obama's targeted rich are business owners or investors. If more of their capital is expropriated by government, they will have less to invest in new and expanded businesses. Government will gobble up the seed corn from which future prosperity would have grown.”

“Government, we need to remember, doesn't really produce much of anything,” says Smith. “So where will Mr. Obama get the wealth to 'spread around' after he's taxed to death all those who produce the wealth?”

“Number Two,” says Smith, “is that less private capital to invest will mean less hiring and fewer jobs, especially by the capitalists who create America's small businesses. One study estimates that the new taxes President Obama seeks will destroy up to 1.2 million jobs.”

“Number Three,” says Smith, “is that the rich account for 36 percent of all charitable contributions. President Obama wants to abolish tax-deductible charities so that government gets this money instead, and so people in need will be forced into dependency on government. Unlike charities, however, a welfare-state government has no incentive to make people productive, independent and self-reliant.”

“Number Four,” says Smith, “is that in the long run government won't really get more than 19.5 percent of Gross Domestic Product through higher taxes on the rich, according to research by San Francisco economist William Kurt Hauser. Higher taxes prompt the rich to move overseas, use more tax avoidance techniques or shrink their businesses. According to Hauser's Law, when government exceeds this tax threshhold it makes the economy worse but gains no more revenue for politicians."

"Even if taxing the rich did work," Smith continues, "government getting more and more of its total revenue from fewer and fewer people makes society unstable – like an upside-down pyramid balanced on its tiny peak. If those rich flee the country, or go broke, the loss of this narrow tax base will leave the government in a terrible way – as has happened in California with its 'reverse gold rush' as the rich now rush with their gold to relocate in other states."

Smith goes on to say that, "Maryland imposed a special tax on millionaires, expecting to make billions more in revenue. The taxes it collected instead fell as millionaires fled the state, forcing greedy lawmakers to reconsider and as politicians from Presidents John F. Kennedy to Ronald Reagan demonstrated, the way to increase government revenue is to cut taxes, increase prosperity for all, and thereby harvest more tax money by taking a smaller piece from a much bigger pie."

“Number Five,” says Smith, “is that less revenue from higher taxes will goad government into using the one form of taxation people cannot escape – inflation. Politicians such as Mr. Obama have become addicted to printing paper money out of thin air, which gives the government money by devaluing every dollar Americans have honestly earned and saved.”

“President Obama has already devastated America's economy by spending more than $5 Trillion of such stimulus money,” says Smith. “Then, with the Federal Reserve, Mr. Obama has built a dike of imposed near-zero percent interest rates to hold back the tidal wave of inflation this will cause.”

“This dike is about to break, flooding our economy with devalued dollars and economic devastation,” says Smith's co-author of The Inflation Deception Lowell Ponte, a former think tank futurist.

“Through inflation Mr. Obama has robbed everyone who trusts the U.S. Dollar, both here and abroad,” says Ponte. “Inflation, however, is the cruelest and most regressive of taxes, hurting the poor most of all because they need every dollar they have to retain its purchasing power. President Obama instead chose to rob the poor through inflation to enrich the government.”

Almost everyone – rich, middle class, or poor – has ways to hedge against inflation destroying the value of their savings, as either Smith or Ponte can explain during an interview.

“Number Six,” says Ponte, “is that Mr. Obama is using the old Democratic Party 'Tax Trap.' Almost a century ago politicians promised that an income tax would tax only the rich, and people who envied the rich got suckered into supporting it. Decades ago the politicians promised that the Alternative Minimum Tax (AMT) would tax only those rich folks who weren't 'paying their fair share.'”

“Today nearly half of American families are paying an income tax that was supposed to hit only the rich,” says Ponte, “and Mr. Obama promises, if reelected, to extend the Alternative Minimum Tax to pick the pockets 70 million Americans or more, most of whom earn scarcely more than average income.”

“Wake up and smell the tax trap!” says Ponte, who along with Smith co-authored a major September 2011 White Paper titled Re-Making Money. “With the inflation that's about to flood America, we'll all be making a million dollars or more – but that income will have less real purchasing power than $50,000 in today's dollars.”

“President Obama is setting us ALL up to pay sky-high taxes as if we were rich,” says Ponte. “He's already set in motion the ultra-high inflation that will make this happen. For heaven's sake, open your eyes and see how he's setting America's private-sector workers up for the slaughter!”

“Number Seven,” says Ponte, “is that a house divided against itself cannot stand. President Obama is playing the usual Democratic Party 'divide-and-conquer' politics of pitting people against each other by race and class.

“You cannot build a healthy, prosperous, free society,” says Ponte, “through a politics that violates two of the Bible's Ten Commandments – “Thou Shalt Not Covet Anything That Is Thy Neighbor's,” and “Thou Shalt Not Steal,” even if President Obama is acting as your middle-man promising to take what somebody else has and to give it to you.”

“This politics of envy and class warfare will frighten away investors, both domestic and foreign,” says Ponte. “It is putting our economy into a death spiral that will impoverish everyone who remains in the socialist America Obama is creating – everyone, that is, except a tiny class of political rulers that will eventually devour each and every minority that has anything left to steal.”

“Mr. Obama will cannibalize America's poor as well,” says Ponte. “In his famous Berlin speech Barack Obama described himself as a 'citizen of the world.' As a radical left ideologue he meant this. Even America's poor are rich by world standards, and Mr. Obama will eventually confiscate what the poor here have, too, and redistribute that along with the rest of America's wealth and vanishing prosperity to the world. Every American will be a loser in President Obama's class warfare.”

DEMONIZING THE RICH

“With his popularity plummeting, it's easy to see why President Obama is following his Chicago community-organizer handbook Rules for Radicals by Saul Alinsky – who taught how to demonize your opponents, polarize every difference of opinion into black hats versus white hats, and win by making reasonable compromise impossible by fomenting class warfare,” says Ponte.

“Mr. Obama is desperate to demonize the rich to distract voters from his own failure,” says Ponte.

WHAT IS YOUR “FAIR SHARE” OF TAXES?

“Taxes on the rich will hit Middle Class Americans, too,” says Craig R. Smith. “The rich created and own the companies that make what you buy, and you will wind up paying their higher taxes passed on to you in the form of higher prices.”

“This,” says Smith, “is what South Carolina U.S. Senator Jim DeMint explains in his September 2011 investigation The Folly of 'Taxing the Rich.' Successful businesspeople create the jobs, paychecks, taxes, products and prosperity on which the Middle Class, the government and the poor all depend. Confiscating their investment capital will bring capital punishment down on all of us.”

“No wonder our economy has slowed to almost zero growth. Real unemployment is stuck at Europe-like double digit levels. The reason,” says Smith, “is that President Obama has frightened business owners out of investing and hiring.”

“We need an open, honest political debate over what each taxpayer's 'fair share' should be, and what kind of society we want,” says Smith. “Do we want the free market, small government society that America's Founders set forth in our Constitution, or the sort of Euro-socialist redistribute-the-wealth collectivist governmental system most of our ancestors fled to America to escape?”

CRAIG R. SMITH and Lowell Ponte are available for interview on all or any part of this press release.

To arrange an interview, contact: Bronwin K. Barilla at 1-800-950-2428 or bkbarilla@swissamerica.com.

Sources:

U.S. Senator Jim DeMint (R-South Carolina), “The Folly of 'Taxing the Rich': Why You Can't Soak the Rich without Drying Up the Middle Class.” September 2011.
URL: http://demint.senate.gov/public/?a=Files.Serve&File_id=6e5f8d81-6a2d-4736-95ab-bd4a8c8d357c

“Diving Into the Rich Pool: Imposing Higher Tax Rates on the Wealthy Can Have Unintended Consequences” (Editorial), The Economist, September 24, 2011.
URL: http://www.economist.com/node/21530093/print

“Hunting the Rich: Taxation and Class War...” (Editorial), The Economist, September 24, 2011.
URL: http://www.economist.com/node/21530104/print

Thomas Sowell, "You Can't Tax the Rich," National Review, September 15, 2011.
URL: http://www.nationalreview.com/articles/print/277249

Robert Frank, "The Price of Taxing the Rich," Wall Street Journal, March 26, 2011.
URL: http://online.wsj.com/article/SB10001424052748704604704576220491592684626.html

N. Gregory Mankiw, "I Can Afford Higher Taxes, But They'll Make Me Work Less," The New York Times, October 9, 2010.
URL: http://www.nytimes.com/2010/10/10/business/economy/10view.html

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