TOM WARD - Will we embrace socialism?

TOM WARD - Will we embrace socialism?

Are Americans lurching to the political left-wing as much as the polls are reporting? Maybe. Is it a problem that President Donald Trump is so inept at stating the case for free enterprise? Yes, he has pleased conservatives with his judicial nominations and getting the boot of government off businesses, unleashing a huge wave of job creation, but he’s no “Great Communicator” like Ronald Reagan. And he doesn’t seem worried about the federal deficit, which is a problem for many on the right.

Reported Politico this week, “A plan from Rep. Alexandria Ocasio-Cortez (D-N.Y.) to slap a 70 percent marginal rate on income earned over $10 million clocked in at 59 percent support in a recent Hill/HarrisX poll.

The new Politico/Morning Consult poll, conducted Feb. 1-2, found that 61 percent favor a proposal like the “wealth tax” recently laid out by Sen. Elizabeth Warren (D-Mass.) that would levy a 2 percent tax on those with a net worth over $50 million and 3 percent on those worth over $1 billion. Just 20 percent opposed the idea.”

I can’t say that I’m surprised. There is, in fact, a growing divide between rich and poor. Blame the internet, where the smart ones are able to leverage computer code to rake in millions, and then billions of dollars, without so much as hiring a cashier.

In the world I grew up in, we were at the tail end of an industrial boom in Woonsocket. Seventy years before that, men with means were able to open a mill and harness the power of machines to increase productivity of others who came from Quebec, Ireland, and elsewhere for a better life. That “leverage” of labor made many of them wealthy for their time.

But there was only so much one or two owners could do. A mill could only be so big; the river could provide only so much water. Owners never made more than 10, 20, or 50 times more than their employees.

Contrast that with today, and the power of the internet. In 2013, two Stanford whiz kids, Evan Spiegel and Robert Murphy, were offered $3 billion for their creation, Snapchat. That’s 3,000 million dollars! Spiegel was 23; Murphy was 25. And they rejected the offer. The men had leveraged their knowledge of the web and created a new product with worldwide reach.

That’s capitalism. But to people who will grow old and never earn even a million dollars in a lifetime, is it fair that, had the two men sold Snapchat, they’d have paid only a lower capital gains tax? Should there be a higher tax on that kind of “get-uber-rich-quick” product? (And memo to Ocasio-Cortez, your high 70 percent income tax hike would not touch the Snapchat sellers. It’s the capital gains tax they’d have to pay. Do your homework).

The Snapchat owners are an exception. That doesn’t happen much. For most, business ownership is a long haul over many decades. If owners – the “capitalists” who employ people – have to turn over 70 percent of their pay, and another 5 to 10 percent to their state, will they grow the company? Hell, no, they won’t! Why should they?

I turn again to Ken Langone, the Home Depot founder. In an interview in Saturday’s Barron’s to introduce his book I Love Capitalism!, he takes direct aim at the socialist tax proposals.

“All of these people with their highfalutin’ ideas – be careful you don’t throw out the baby with the bathwater ... what we’re hearing today is draconian.

“If I have a chance to make an investment, if it works, 70 percent of it is going to the government, I’m not going to make that deal.”

And the jobs will never be created. And the income taxes from those jobs never paid.

Continued Langone, “she (Ocasio-Cortez) doesn’t know what the hell she’s talking about. Over $10 million, you pay a 70 percent tax? Why would I want to put up a dollar? I won’t do it. Chill investment in America and watch what happens.”

“These (high tax ideas) all sound good,” said Langone. “They’re all meant to appeal to the masses. Regrettably, the masses don’t understand how the system works until it’s too late.”

Socialist Venezuela is Exhibit A.

Ward is publisher of The Valley Breeze newspapers

Comments

“If I have a chance to make an investment, if it works, 70 percent of it is going to the government, I’m not going to make that deal.”

Ken Langone started Home Depot in 1978 when the marginal tax rate was 70%.

Come on, Tom, both you and Ken Langone are smart enough to know what a marginal tax rate means. I suspect both of you are also knowledgeable enough about US history to be aware that in the "good old days" of the 1950's and 1960's, when the economy was booming, the top marginal tax rate was above 70% (it was 90% in the 1950's) and didn't drop below 70% until 1981. Nobody, then or under any now-proposed plan, was "turning over 70 percent of their pay." You know better.

I like this explanation of marginal tax rates:

If an individual taxpayer earned $150,000 in income, they would owe the following income taxes, as shown below:

10% Bracket: ($9,525 - $0) x 10% = $952.50

12% Bracket: ($38,700 - $9,525) x 12% = $3,501.00

22% Bracket: ($82,500 - $38,700) x 22% = $9,636.00

24% Bracket: ($150,000 - $82,500) x 24% = $16,200.00

32% Bracket: Not applicable

35% Bracket: Not applicable

37% Bracket: Not applicable

If you add these up, the entire tax liability for this family would be $30,289.50.

I think we'd all agree that a family paying 30 grand in federal taxes is paying a "fair share." I don't believe anyone who works for a living would argue that these folks are paying too little, so increasing their tax burden would only serve to lessen their ability to save for retirement, pay tuition for children, etc...

Veritas rightly points out that under the current system, the maximum marginal tax rate for an individual earning $150,000 is 24%, so s/he would be *unaffected* by the proposal Tom is fearmongering about. In fact, the 70% marginal rate that's been in the news would apply to incomes over $10,000,000. What's a "fair share" for someone who earns, say, $15 million per year? Likely more than for someone earning $150,000, no?

Well, if we start to discuss "fair share" we need to examine each person's contribution to society and each person's use of it. So, under the present tax scheme, someone who earns 10 million dollars and is married, filing jointly would owe the federal government 3.718 MILLION dollars. (mortgage calculator.com) I believe that family's taxes are disproportionate to their use of society, for the person who earns 150K pays $15,599. Is it fair that one person pays 37% taxes and the other 10.4%?. I think not. If we had a 5% flat tax rate for all, the person earning 150K would owe 7500.00 and the person earning 10 million would owe 500,000 and again, the amounts are disproportionate to each family's use of society, so going down the "fair share" road is a slippery slope. I'd be content to paying 5% of my income and not having to file tax returns and such, but of course this will never fly, for there are too many folks making a living off collecting taxes and too many politicians making a living by pitting us against each other.

Wow, there is so much wrong in the entire editorial page this week. I'm hoping the answer to that isn't "Well at least people are reading!" Because this type of wrong really should not continue. That comic is extremely misleading and is intentionally so. When a news organization publishes something like that, that comic is "fake news". It's wrong and you knew it. Unless you'd like to claim the lemonade girl has earned over $10 million for the year. Is that what you're implying? I really don't think so.
Second, will we embrace socialism? We already do! I think what you mean is do we want more socialism. We already have socialism. Our bankruptcy laws are socialism. An individual or a business fails and the cost of that failure is spread out among all. How about our schools, roads, police? That cost is spread around. How about social security? We already embrace a degree of socialism. Why are you trying to make it be a bad word? The US is not purely a capitalistic country now. Comparing us to Venezuela? That' just wrong.
I'd also like to call out Mr. Langone's comments as BS. In addition to what was already stated by other commenters, are you really going to tell me that if he makes $9M in a given year and can make an investment that will get him to say $15M for the next year, he won't do that? Of course he will! Second, while he may have built and runs Home Depot, it's a publicly traded company. He may not act solely in his best interest. He must act in the best financial interest of his shareholders. So for him to say that if he sees an investment that will work out but put him into the 70% marginal tax bracket, he won't do it, he's lying. It's his job. It's required of him by the shareholders. What he's saying is completely untrue and more scare tactics.
I also wondered about Arlene's column where she wrote that drunk driving "abounds" in this state. It does? "Abounds"? Meaning you see it a lot? C'mon now with the scare tactics you two. And to make marijuana out to be a big scary thing...let me guess, you never drink alcohol? Marijuana is no worse than alcohol, so put your arguments into the same bucket.
C'mon Valley Breeze, you can be better than this.

Socialism verses the National Debt, which is the more viable threat?

Socialism may be on the horizon, but the National Debt is on the doorstep. Can steep increases in taxes fund both?

Is socialism fearmongering by conservatives a diversion from our ever increasing deficit spending and Statutory Debt Ceiling raising?

If we keep raising the governments Statutory Debt Ceiling, why have a debt ceiling at all?

Stop it!! Just stop it!! You are using the Trumpian/conservative scare tactic by using Rep. Alexandria Ocasio-Cortez (D-N.Y.) as the brown boogie woman that is coming for you! She is gonna take all your money and eat your children!!

She is just one of 435 congress people...she does not have the ability or power to do any of the horrors that you state. Using her is a classic Fox news tactic...she is frequently the top of the news and decried as some crazy Venezuelan socialist. Talk about fake news. Shame on you.

Please leave her alone she is the new Comedy Central. Definitely
rowing with one oar.