Tuesday, September 27, 2016

Comparing Trump and Clinton: Economy - Taxes

I created a blog back in 2008 during the first Obama election, which I affectionately called Sensible Conservatism.  The meaning of the name was just this: that while I view all issues through the prism of conservative principles, I am not so pig-headed that I automatically reject something a liberal might say just because they’re liberal.  A wise person will listen to all positions and make his decisions off of all the information. Does that make me right all the time?  Goodness no.  But when sensibility is applied to these discussions, I believe right answers and solutions are found far more often. 

I had pretty much abandoned this blog in 2014 leading up to the last midterms.  But I think this is the right time to bring it back out.
Having been a trained debater, I have to tell you that watching the first presidential debate was torturous.  It was so painful because I could tell that Clinton was the more trained debater.  And yet, having researched the issues so thoroughly, it was even more painful because I knew the right way to respond to her plethora of lies and assertions and yet Trump was, for the most part, not responding well.

That being said, I found it quite intriguing that virtually every snap poll showed Trump winning the debate.  After the surprise and relief subsided I began to wonder how he won so decisively.  And it came down to two issues.  One, that Hillary Clinton is an icon of all that we voters have come to despise about Washington D.C.  And two, that despite her better presentation skills, she still can’t sell her ideas to us.

So I have decided that I wanted to start a process whereby we can study the differences between Trump and Clinton on many of the issues. After all, there are still some people on the fence and we have six weeks to bring them onto our side of the fence.

Let’s begin with the economy.  This subject would include such issues as jobs, taxes, trade, the deficit and the debt.

Let’s be clear about one thing first.  Both candidates…for that matter, all of us…have to accept that the rich have the money and our common goal is for us to find ways to get them to distribute that money to the rest of us.  The difference between Clinton and Trump is in how to get them to distribute it.

To be clear, let me just point out that there are really only three fundamental ways to get money from the rich: 1) they invest it in something like their own business, other businesses, the stock market, whatever…and thus that money is injected into the economy.  Even investing it into a bank, injects it into the economy. 2) they spend it.  In spending it, even on what you or I would consider a luxury item like a yacht, they are injecting it into the middle class.  The person who sold them the yacht.  The company who many the yacht hired employees.  The companies that made the parts that make the yacht hire employees.  The company that transports the yachts hires people.  The companies that repair the yachts hires people. And so on.  3) Its either taken from them or they give it away.  They can donate it to charities and in that case, it gets to the people who need it with few middle men or someone takes it like a thief.  And I would venture to say that we’ve become numb to the idea that even taxation is little more than legalized theft.

To Clinton and the leftists like her, the best way to get the rich to distribute money to the rest of us is to have the government take it from them and let the government decide how to best distribute it to us.  That’s nice, but it has several negative effects.  First, the rich, as any of us would do if the government tried to confiscate our money, will try every means of preventing the government from taking their money.
They will find loopholes in tax laws.  They will move their money to other countries where the tax laws are less intrusive. They’ll set up trusts and foundations.  There are hundreds, if not thousands of ways to shelter their money from the government.  Why do they do that?  The obvious reason is that they, like the rest of us, don’t want anyone just taking their money.  And if someone does take their money, they’d like some say so in where it goes.

The end result of this is that it stifles job growth…except for jobs that the government pays, or helps pay, for.  Any growth in the economy occurs where the government wants it to grow…not necessarily where we want it to grow or where it should grow.

Second, when the government gets involved in controlling more and more of the economy, that’s when these artificial bubbles develop and when they burst, we’re all hurt.  And what happens when they burst?  The government steps in as some sort of faux white knight to rescue us and ends up taking more control over even more of our lives.

From my experience, the government does this through three means: 1) economic disasters, 2) wars, and 3) health crises. And we keep falling for it.
Trump, on the other hand, advocates what those on the left have disparagingly called “trickle down economics”.  It is what is more technically known as “supply side economics”.  The basis of all capitalism is supply and demand.  And that’s what Trump advocates for.

In his plan, he lowers taxes on businesses primarily.  Why?  Because when taxes (and regulations) are lowered on businesses, their cost of doing business lowers.  The Hillary’s of the world will suggest that’s bad because they fear that business owners will greedily take that extra cash and hoard it and keep it for themselves.  And perhaps some will.

But the theories of supply side economics suggest that a vast majority of those business owners will re-invest that cash back into their business.  There is a simple reason most people go into business for themselves.  They know that the simple rules of economics suggest that if they can successfully leverage other people’s labor, cash and assets, that they can exponentially grow their own wealth.

The Hillary’s of the world think that’s just evil.  Ironically, that’s exactly what government does as well.  But somehow it’s evil when individuals do it for business purposes, but not evil when the government does it. 

But when individuals and businesses do this, it creates jobs.  And every new job creates more demand…for one product/service or another.  Which creates more jobs and more demand. And what happens with every demand?  A purchase and a local tax is paid.  And what happens with every new job?  Taxes are paid to the state and the feds. And when those businesses successfully leverage other people’s labor and cash and assets, what happens?  They make more profits, which are, of course, TAXED.

So, in the end, the money that the wealthy possessed STILL ends up in the government’s hands.  Except instead of the government simply confiscating it, it goes through millions upon millions of middle class hands on its way to the government. 

There is the appearance that the burden was upon the middle class to pay those taxes.  But who really paid them?  The money still came from the rich.  But instead of running those sticky government hands first, it goes through our hands first before it gets to the government.

Simple question…which would you prefer?

But I’m not done, nor is Trump’s plan.  Once money gets into the hands of individuals, there are individual taxes to pay.  In Trump’s plan, he lowers the overall rate of taxation down to three brackets.  In addition, he raises the threshold on how much someone can earn and NOT pay taxes (aside from FICA). 

The part of this that Hillary attacks is the lower tax bracket for the wealthy.  There’s only one problem with her complaint.  In lowered the bracket, Trump is proposing virtually eliminating tax loopholes for the wealthy.  Without the loopholes, there’s no game of hide and seek played by the wealthy with their money.  They earned money?  Here’s the tax rate for it. 

Tomorrow, I will address trade and its effect on jobs and the economy.  If there is a subject you wish to read about, let me know. 

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