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How to Be a Patriotic Millionaire, Even if You're Not Rich


It's not enough for you to call for more taxes; you need also to pledge that you will work the same amount at the same rate, accepting the lower after-tax income cheerfully.

The importance of this cannot be overstated, as this is your major contribution to the people who want to raise taxes. Mainstream economists admit the economic principles above, and so have to debate the level and type of taxation that actually will fall on the rich and actually will result in increased revenue. This is complicated and sometimes professional principles conflict with political desires. You are in a position to offer cover as you understand you and all the rich people you know will not respond to economic incentives at all. A mainstream economist would be embarrassed to claim this, but you have no professional credentials to impair. In fact, you should be careful to claim that you have no understanding of economics as it is the only way to make your assertions credible.

Leftist economists see the world differently. They tend to regard income of rich people as the result of fraud, cronyism, or monopoly, and they do not believe the world would be worse off if you provided less of your services. A monopolist sets price and quantity to maximize profit; the government taking a bigger slice does not affect that decision. From the leftist view, saying you won't charge more or work less if taxes go up is an admission of your parasite status. If you refuse to do this, you need reeducation and will get no credit for your misguided counter-revolutionary appeasement attempts.

We're halfway home, but we now have to consider the expenditure side of the ledger. You have to claim that you will end up with less money after the tax increase, for the reasons above. You can do three things with money you make-you can spend it, invest it, or give it away. If you have less money, you have to cut at least one of those three.

Funding government overspending by robbing charities is not a popular position. It's also not efficient; in many cases, reduced private giving requires increased government expenditure. Reducing investment makes no economic sense. If you invest a dollar, it is spent, and the government collects a share in taxes. You also believe it will return more than a dollar to you in risk-adjusted net present value, generating more taxes from you, and from all the employees and suppliers of the business. If the government extracts a dollar from you that you would otherwise invest, it hurts you, it hurts the economy, and the government ends up with fewer dollars in the end. It's just another form of borrowing, and a particularly expensive and destructive one.

The whole point of your proposal is to increase government revenue and not government expenses. The only way to do that is to reduce your spending. Of course, that cuts government revenue as well, since any money you spend is taxable income or profit to someone else, and state and local governments collect sales taxes, but the net effect of paying money in taxes instead of spending it is still more money for the government. So you have to pledge to cut your spending by the amount of your increased taxes.

Unfortunately, we've created a dilemma. Tax-and-spend liberals have no problem-you spend less, the government spends more. But patriotic millionaires call for spending cuts and entitlement reform in addition to tax increases. You plan to work and invest the same amount, which means you need the same total economic demand, but you are spending less and the government is spending less. Who will spend more to make up the difference? The middle class? They'll have to borrow the money to do it, recreating the problem that led to the financial crisis. Moreover the effect will be for the government to reduce the deficit by converting it to personal debt of middle class taxpayers. This plan will win you no friends in the blue states.

You could hope for foreigners to increase their imports from the United States, but no one seems to know how to manage that. Increasing taxes to force up the cost of production in the US will work in the opposite direction. Also, if the US cut spending and raised taxes it would increase the value of the US dollar, which means we would likely see more net supply from foreign countries, not more net demand.

There is only one time-tested solution for this problem: War. War increases spending and creates opportunities for colonialism, in which you force people in other countries to buy your goods. You don't actually have to fight; you can just stir up trouble in other places and then sell weapons. History has many examples of successful prosecution of the war strategy. Unfortunately, this is also unpopular in liberal circles.
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