Rebane Refuted

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The Rebane column in The Union this Saturday, http://www.theunion.com/article/20110611/NEWS/110619979&parentprofile=search contains three fatal flaws:

The tax on net income above $250,000 is NOT 100%.

The entrepreneur can invest every cent beyond $250,000 into a business, as long as they do it during the tax year in which it is earned, and they will not be taxed on it. Why does Rebane feel that the entrepreneur needs to save that money up for years? What’s then to keep him from simply selling the business, and keeping all the extra loot, having never added a single employee during his ownership?

Rebane argues with tremendous crocodile tears that the poor entrepreneur works long hours, and can’t afford to add employees, because his net income above $250,000, will be taxed (implying that it would be taxed at 100%). Thus the job creation process will be delayed or wrecked.

Reality check:

Assume that the entrepreneur works 3 times what the average worker does. He is still taxed at the same rate as a wage earner up to $250,000. So, Mr. Rebane feels that the average worker makes $83,333/year? If indeed Mr. Entrepreneur is working that hard, then his wife and kids are being neglected, and the kids will be putting additional stresses on the schools and social services. In real life, the spouse is probably shouldering some of the work load, and a dual income of $250,000 is not too shabby, these days.

Rebane also points out that setting off on one’s own is detrimental to a career as a worker bee. This is true, but not in the way he states. Any future employer will know that here is an individual who just might learn everything possible about the business, and then quit, and then go into direct competition with the prospective employer. They do not teach this in school. Naïve to the ways of business as a younger person, I started working as a skiing photographer in Aspen. I loved the job. The boss loved the images and the sales they made, and seemingly, me too. One day in casual conversation I mentioned that I might want to set up an operation in California. “You’re Fired!” “Get out of here.” Life lesson learned.

Those who espouse no additional taxes on net income above $250,000, are leading the charge to drive the USA into a ditch on the side of the global economic highway. The top one percent of the wealthy in this country have gone from owning 8% of the country in 1980, to owning 20% of the country today. Their lack of leadership is most recently best exemplified by the 4 largest banks, who are sitting on housing inventory, and allowing it to be destroyed through neglect, instead of putting it on the market and allowing their famous "invisible hand of the market" to do a reboot of the USA economy.

Taxing the rich for real money can be done by simply charging a slight sales tax on all stock and commodities sales (AKA trades) At 25 cents per $100 sold, and 40 billion being sold each open market day, it will generate $100,000,000 (one hundred million) each day the markets are open. That's over 30 billion dollars a year. Or you could generate the same amount by taxing each and every man woman and child in the country, $100 each, over and beyond current taxes. 300 million Americans x $100 = $30,000,000 or 30 billion dollars. Good luck, of course, collecting it from the bottom 50% of the country.

Of course, if you want real money, say one third of a trillion per year, you could up the tax to 2.5% on stock and commodities sales, or tax every many woman and child, $1,000 per year. Or try this, only the top ten percent of Amercians, net wealth wise, $10,000 each per year. Or the top one percent, net wealth wise, $100,000 each per year. That would be $500,000 per year for a family of five. Gee, scary, that why we have graduated taxation, instead of sticking everything to the ultra rich.

I think it is no mystery that the markets promote the notion that they do "trades" not sales, as it conceals from the general public what is really going on. Meanwhile they will push for Flat Taxes, and taxes on food. Taxing stock trades is a perfectly logical thing to do.