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Don't Hate The Rich


Wealth trickles down, not up.


For those that are calling for higher taxes on the rich, so-called rich and big businesses I suggest watching what happens in New York over the next year. Governor David Patterson has been raising the alarms and shouting for New Yorkers to brace for hard times. In the first fiscal quarter of 2009 New York State received $5.0 million in Wall Street bank tax receipts versus $173.0 million a year earlier. This is going to crush the state.

More importantly, it's going to crush the average New Yorker. If Wall Street bonuses are down as much as 40% to 50% this holiday season, that means fewer trips to restaurants, Broadway plays, auto dealerships, clothing stores and other places where millions of average people work. Doormen are going to get envelopes with half the cash they got a year ago, waiters will see smaller tips and restaurants will need fewer workers. The bigwigs on Wall Street, however, will survive this slowdown easier than most New Yorkers.

With that in mind I'm hopeful this is a just a short-term situation. But what if it were a long term situation? What if higher taxes and increased regulations on Wall Street created an atmosphere that was akin to the current credit crisis?

In my opinion, attacking the rich isn't about fiscal policy but a sense of revenge and taking $125,000 from a person making $250,000 is about redistribution of wealth but, more so, giving that person a come-uppance and knocking them down a peg.

The worrisome part of this is that America, as a nation, appears ready to break down the wealthy and successful out of a need to extract a pound of flesh to assuage our envy. If that is the road we embark upon then I believe it means we've given up on America.

The plan to make the rich pay more and to tax oil companies beyond the 50% they already pay means that we have indeed simply given up on the country.

It's all about taking all the money in the nation and tossing it in a pot regardless of how it was made, what effort went into making it and what efforts didn't go into making it. It's like dissolving a business and giving the person that had the vision and leadership to make a dream become a reality the same percentage of the tally as others that came aboard for the ride.

Are we ready to divvy up America and distribute the spoils in the name of balancing the scales? When businesses are dissolved, plants closes and buildings get boarded up.

Consider the oil companies. If they are taxed more than they're taxed now then they will have to take the following actions:

  • Hire fewer workers
  • Layoff certain workers
  • Cease or decrease exploration
  • Raise prices

If we Americans want our oil companies to be weaker players in the world, where they are already dwarfed by national oil companies, if we want to see fellow Americans lose jobs and if we want to pay higher gasoline, then higher taxes is the correct move.

It goes beyond that, too. In my opinion, when we attack drug companies it means fewer cures, when we attack Wal-Mart (WMT) it means higher prices and fewer jobs, when we attack hedge funds it means they move offshore and pay no taxes. Knee-jerk rules that made it more onerous to be a publicly traded company shifted power from Wall Street to London. The idea that money earned by private enterprise should be returned to the masses sounds a lot more like communism than capitalism and even now global corporate tax rates are more favorable in nations that revere Karl Marx over Adam Smith.

Bootstraps vs. Silver Spoons

There has always been a certain amount of disdain for people born with a so-called silver spoon in their mouths. I understand where that comes from and I've been guilty of that feeling, too.

The crazy thing, though, is that I work for my family. If it weren't for my daughter and my dreams of giving her a better life I couldn't have made it through those extraordinary leans days as a stock broker working on 100% commission. If it wasn't for my dreams of making my son's dreams (right now he wants to make films) come true I know I wouldn't work this hard, although I do love to work. The fact is I'm following a long line of hard workers and I'm really the first person in my family tree that had a chance to make (okay) money. It wasn't the road less traveled, it was the road blocked and bricked up.

According to several economists, about 80% of all millionaires in America are self-made. These self made folks often support their parents and in some cases grandparents and siblings, too. They pay for good schools for their children and put money in college accounts. A lot of times they are divorced (men and women) and pay alimony and child support. They are divorced mostly because they choose success over love.

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