Letter to the Editor
Dec. 19, 2010
To the editor:
The oldest and most beloved mantra from the left is “tax cuts for the rich.” The more economic way of looking at it, as economist Thomas Sowell points out, is “tax cuts for the economy,” but that doesn’t have the political pizzazz to fire people up into a populist crusade. Yet, to ignore the economic reality of these issues upon which we all take stances is to let our personal prejudices deceive us.
Sowell wrote in “The Quest for Cosmic Justice,” “To allow any governmental authority to determine how much money individuals shall be permitted to receive from other individuals produces not only a distortion of the economic processes by undermining incentives for efficiency, it is more fundamentally a monumental concentration of political power which reduces everyone to the level of a client of politicians.”
The philosophical argument against this emotional position is that you have the right to own yourself (hence why slavery is immoral) and part of owning yourself is owning the results of what you produce in a free market.
The scientific argument against soaking the rich is that it creates negative incentives that hurt economic prosperity.
Harvard economist Gregory Mankiw said it all in his fantastic column titled “I Can Afford Higher Taxes. But They’ll Make Me Work Less.” Look it up, if you’re open-minded.
Many worry that letting the rich hold large amounts of money leads to economic stagnation because the rich, particularly the super-rich, can only buy so many goods and services. But do they think about the source of investments in new technology, which is the engine of economic growth? How about what affects interest rates, high or low? These directly affect us when trying to take out a loan or using the goods and services of those who rely on credit.
Most Alaskans would not trade their standard of living for mine, to put it lightly. But just because neither I nor anybody I know is rich, doesn’t mean I don’t benefit from what they give society, which is apparently enough to make someone willing to pay them a lot of money.