Why Taxes and Work are not Mutually Exclusive

What happens when a country, when facing enormous amounts of poverty, decides that making the wealthy in the country even more so is the number one priority they should focus on? This is the current state of affairs in America today, especially among the Republican party. Politics is no longer about doing what is just for the entire population as a whole. Instead, lobbyists are actually buying politicians at an ever increasing rate, thanks to the conservative majority of the United States Supreme Court in their Citizens United decision, which allows unlimited amounts of corporate money to be spent in American elections. Oil companies had been donating to both parties at increasing rates before Citizens United, but now one can only hope that America experiences an ideological revolution where money is not what politicians analyze when deciding how to vote on a bill. One example of lobbying that has been incredibly successful in terms of funding think tanks and churning out factory made politicians is the belief that tax cuts for the richest among us creates jobs. There is absolutely no evidence for this. In fact, there is direct evidence to the contrary. And there are also implications to the belief that taxing high end earners will “disincentivize” them. Believing such a claim implies that work has absolutely no value outside of financial reward and that human beings are driven like rats in a maze looking for cheese.

The Myth of the Tax Cut

How often, when one is watching a Republican debate, or give a speech, is there a claim that tax cuts for the rich are the key to economic prosperity. It’s as though they believe that these tax cuts are some sort of magic elixir that will heal all the problems of the American economy. “We just need to institute a flat tax” they often say, or another attempts to claim “the tax code is overly burdensome to ‘small businesses’ and therefore in order to spur hiring we must reduce the burden.” Yet there is no evidence to support these ridiculous assertions! A simple way to examine this would be to do a cross country comparison, and see whether there was significantly more economic growth among countries with much higher tax rates than those with lower. This was done, and the study found that, in the period between 1975 to 2008, “Naturally, cross-country comparisons are bound to be fragile, and the exact results vary with the specification, years, and countries. But by and large, the bottom line is that rich countries have all grown at roughly the same rate over the past 30 years – in spite of huge variations in tax policies. Using our model and mid-range parameter values where the response of top earners to top tax rate cuts is due in part to increased rent-seeking behaviour and in part to increased productive work, we find that the top tax rate could potentially be set as high as 83% – as opposed to 57% in the pure supply-side model. “ If tax policy had a major effect, the way many on the right continually claim, then there is no way any study should find such a situation. The claim has been completely refuted. One can also look at American history and find tax rates were much higher and economic growth still consistently occurred.

Money is not all that Matters

Without the obvious objection that most will use whenever higher taxes are brought up, I will now move on to analyzing an implication of the assertion that higher taxes offer a disincentive for talented individuals to take difficult jobs (even though the study I presented completely refutes the conclusion, I am also going to tease out a logical implication that is an additional mark against it by assuming it’s true and then seeing what follows from that). In order to make this argument work, an assumption needs to be supplied. But what should it be? According to the principle of charity, any assumptions that are not explicitly spelled out but are needed to make an argument work should not be chosen haphazardly. So I will follow this and outline the argument.

1. People only do difficult and serious work, such as being a doctor or CEO, in order to make money.

2. High taxes reduce the amount of money people doing these jobs can make.

3. Therefore, higher taxes lead to people to not take the most important jobs in society.

Reason one is factually false, for there are many people, doctors, nurses, lawyers, and teachers who all volunteer their time without being paid. And many of them are often paid less than the CEOs of America’s major corporations, who are not contributing to society in anywhere near the same capacity as the former are.

The first reason is also an assumption about human nature, that financial success is all that matters. It is claiming that, with a reduction in pay, people will no longer pursue the difficult but high paying occupations they once did. Instead, the argument goes, they will pursue something less strenuous because working hard and trying to get ahead will not lead to any major benefits for them. This view is quite selfish! Teachers are always a great example when it comes to claims like this. They are not paid enough in the United States, and they continue to work at high levels. Many even have to buy their own supplies, and stay late after school working with troubled students. Is it even imaginable that a CEO would walk into her job, only to find out, she would have to buy her own office supplies, and also not have an adequate staff in order to fulfill her responsibilities? It is also absurd to say that just because a CEO will only make 5 million a year instead of 15 million, they will suddenly run for the exit.

There is another type of success and one that is much more fulfilling. Personal success is achieved when one does a job that is absolutely loved, and also helps contribute to making the world a better place. For example, a mechanic that is honest with his customers, does his best on the repairs, and enjoys working on automobiles for a living can said to have achieved personal success. The reward from the job is not simply his 40,000 a year salary. It is also the fact that he is not being cheated out of his productive years by being forced to do a job he hates. He can look forward to going to work, and he is also providing others with a service that they desperately need for a reasonable price.

A Time for Change

Therefore, there is absolutely no reason to not raise taxes on the richest Americans. Millionaires and billionaires should pay a substantially higher amount in income, and this money can help reduce the deficit, implement environmental regulations to curb greenhouse gases, fund medical research, provide universal health care to all, and help ensure that all Americans have access to an affordable college education. The time to act is now, for people are dying every day from diseases that will be cured in the future, and intelligent people are missing out on an opportunity to obtain a degree and find self-fulfillment.