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Bill Sargent, Mark Mansius and John Gay are writing columns on important issues for today.



Taxing the "Wealthy"
Affects All of Us


March 3, 2014

To understand taxation we should first have a basic understanding of money and the concept of wealth.  Money is something paid for a good or service. Wealth is the accumulation of money above our expenses.  A wise man once said, "if you have no debt and $1,000, you are wealthy!"  

Inflation occurs when too many people are being paid more than the value of their labor (such as when there is an arbitrary increase of minimum wage) or when extra money is printed and put into the money supply without a corresponding increase in productivity.

Everybody of sound body and mind has a skill ("God given gift") to enable them to serve others.  Zig Ziegler said, "You can have whatever you want if you help enough other people get what they want."  In other words, if we want wealth we must learn to use our gifts and talents to serve others.  With the wise application of our gifts most people have the ability to gain some degree of wealth. 

What is business?  When a group of people come together and pool their talents and resources they can produce more than what each could do individually (e.g. the whole is greater than the sum of its parts).  Many corporations exist because of small investors -- everyday people who invest their savings in order to allow their small nest eggs to grow.  When corporations are penalized, these small investors suffer.   When we encourage companies – like we have here in Texas through low tax rates – they can become profitable and grow into large corporations which are wealthy and stable.  

Corporations make money by selling goods and services that are in demand by their customers. When they are taxed this cost is added to the price of the goods and services they provide.  We’ve heard much about taxing “Big Business,” but doing so can have unintended consequences.  As taxes increase so do prices (e.g., gas, eggs and milk) hurting the poor most of all.  If people won’t pay these higher prices the corporations start looking for ways to reduce costs.  They may cut hours (like they are doing to avoid ObamaCare expenses).  They may fire less productive employees or they may decide to move overseas where the tax burden is less. Their only other option is going out of business. 

Reducing the corporate tax rate actually stimulates business and has the effect of creating jobs and drawing investment back to the U.S.  The U.S. has one of the highest corporate tax rates in the world. But consider Canada, which used to have similar high rates.  They decided to cut their corporate tax and ended up with increased overall tax revenues because doing so helped jump start their economy and encourage domestic investment.

There are those – political leaders – who would put the burden of paying for our Federal government’s voracious appetite to spend and borrow money on the shoulders of what they term the “wealthy.”  But keep in mind; many of those with wealth are the very people who are creating the jobs for those of us who are less fortunate.  Targeting those who have worked hard and taken the risks in order to gain wealth can result in hurting, not helping, those who need a helping hand. 

John, Bill and Mark

 

 

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