First: You are not “taxing” the rich person.
Consider the typical rich person. His income is derived from his wealth, that is to say his investments and/or his business assets. A percentage of this wealth he takes out in yearly income to maintain his personal lifestyle and his family’s needs. The rest of his wealth he uses to invest, to add to his business in the way of maintenance, expansion or innovation. He must do this in order to maintain his competitive position and sustain his productivity.
Now you tell me, if you increase taxes on this rich person by 10 percent, 20 percent — go ahead and wipe him out with an 80 percent increase — is that money going to come from his personal income? Maybe so, eventually. But, before a dime comes out of his personal income you can bet he will first take it out of his investments or his business. The net effect will be to cripple growth, productivity and job creation — everything we want to avoid.
Bottom line? You are not taxing the rich person, you are taking money from his business or someone else’s business that utilizes his invested wealth. And this just might be a business that supplies you or your neighbor with needed products, services — or a job.
Secondly, you are not “taxing” a corporation.
To a corporation, be it large or small, a new tax constitutes an increase in the cost of doing business. The corporation must then choose among three major options to remain viable: increase the price charged for its goods or services, pay its employees less, or pay fewer employees,
So you see, the wage earner or the consumer ends up with the tab any way you look at it. They incur decreased wages, increased cost of living — or worse, lose jobs. This model assumes adequately competitive situations where the freedom of a corporation to take profits or absorb losses is restricted by unencumbered, competitive market forces.
All costs of government, all taxes, duties, levies of any kind, no matter their purpose, intent or upon whom they are initially levied are borne by wage earners and consumers.
Please do not interpret preceding paragraphs as arguments against “taxing the rich” or against the concept of a progressive tax. My only purpose is to point out the need for all of us to comprehend the economic consequences of tax policy.
The global effect of any tax is always the same: to remove money or capital from those who earn it (rich or poor), those who enhance its productivity, and then redirect it toward government purposes, which may or may not be so productive. Of course, many government purposes are productive and absolutely essential. Perspective on this sometimes depends upon whether or not you are at the receiving end of government expenditures — to be truthful, all of us are. The important thing to remember is that the wage earner and the consumer are always at the giving end.
From retired U.S. Navy Cmdr. Bob Wymer, San Antonio, Texas
Renewable-energy tax incentives are crucial
It’s incredibly important that we maintain renewable energy tax incentives. The Hill’s June 30 article commenting on recent ethanol subsidy cuts (“Clean-energy advocates on alert after Senate vote to kill ethanol subsidies”) states that 80 percent of the country’s energy is produced from fossil fuels, but three-fourths of the energy subsidies are given to “green sector,” as if that’s the great travesty of the government’s current budget woes. What is important is incubating renewable industries because fossil fuel supplies are not only circling the drain, they are harming our environment to a point that if we do not work to reverse the damage now, the consequences will be irreparable. In addition, fossil-fuel prices will only continue to rise as they become scarcer. The world hit peak oil in 2006 and we’re on the downward slope. Energy from wind or sun, for example, is not subject to sharp price fluctuations because it’s self-regenerating. How can an economy mend itself when the backbone — its energy source — is slipping away and choking our pockets?
The long-term vitality of the economy is not the only reason to hold up green industry tax incentives. Our air and quality of living are being adversely affected by traditional energy production. Citizens ask the government to act on what’s best for our well-being. That’s what the administration is doing when it defends laws like the Clean Air Act and invests in renewable energy. According to the EPA, 160,000 lives were saved in 2010 alone from the Clean Air Act, more than a million cases of asthma were prevented and an estimated $20 trillion in economic benefits will be cashed by 2020. Sure there may be jobs on an oil rig now, but when the fossil-fuel supply runs out and we have no energy safety net, then we’ll understand what real unemployment means.
From Ellen Watlington, volunteer at the Environmental Defense Fund, Washington, D.C.