Billionaires are good

Although the media has rallied behind Warren, luxuriating in her many bad plans and running interference for her history of lying about her background, they’ve taken to Bernie’s various calls to arms. The pattern is simple.

First, Bernie writes up a new bumper sticker:

Then some willing sheep in the media turns it into a think piece:

Repeat as necessary until desired effects are seen.

This works just as well with his policy proposals, which are all contingent on demanding a punitive system of taxation.

On Oct. 9:

Then 48 hours later:

And scene.

But now that the media’s begun taking the socialist ramblings of a septuagenarian Soviet-wannabe seriously, it’s worth asking these two inextricably linked questions in earnest: Are billionaires really failing to pay their fair share, and do they even have the right to exist?

The first question is far more straightforward, and the falsehood purveyed by Sanders’ lackeys is even easier to debunk.

The New York Times piece, written by two economists at the University of California, Berkeley, determines the tax burden of income percentile intervals using six forms of taxation: consumption, payroll, residential property, corporate and business property, estate, and income taxes.

Predictably, for all but the top tenth of earners, consumption and payroll taxes comprise the overwhelming majority of taxation. Consumption, payroll, and mostly insignificant residential property taxes are regressive. Income taxes take fewer than 5% of the earnings of the bottom 50%. Regressive taxes still outpace income taxation for the middle class, with income taxation only taking over for the top 10%.

By the article’s own admission, its total calculated tax rates per income percentile increase in a progressive manner. But even the calculation itself ignores economic realities to paint a dishonest narrative.

For starters, payroll taxes are not supposed to be explicitly redistributive, even if their output manifests itself in means-tested benefits as well as straightforward entitlements, meaning that they’re regressive by design. Social Security’s most vocal supporters defend it by claiming that it simply pays you back your money, even though in practice we know it’s an effective generational wealth transfer.

It logically follows that if lower-income earners often pay zero in their effective income tax rates while the wealthy pay double digit percentage points, the payroll tax burden will be greater in relation to total income for lower-income earners. The same goes for consumption taxes, not by design in terms of a specific program, but by virtue of lower-income earners spending a greater percentage of their income on consumer goods than higher-income earners.

Transactional taxes such as standard consumption taxes and VAT taxes are good for the economy because they encourage wealthier Americans to invest and save more rather than spend irresponsibly. Furthermore, no serious economist is looking at taxes not even reported to the IRS as evidence of a markedly increased tax burden.

By Bill Marsh/The New York Times | Source: Emmanuel Saez and Gabriel Zucman, University of California, Berkeley; adults in analysis are age 20 and older.

Now, look at the graph published by the New York Times, mentally erase the red bars, and consider whether the central thesis still applies. In fact, don’t take my word for it. Just listen to Jason Furman, former chairman of President Barack Obama’s Council of Economic Advisers.

Moreover, as Michael Strain notes at Bloomberg, tax burden estimates by the nonpartisan Congressional Budget Office found that the U.S. tax code is highly progressive. Whereas the much-hated “1%” pays 33% of their total annual earnings as federal taxes, the lowest one-fifth of income earners pay a measly 2% in federal taxes. If anything, the state and local tax deduction cap in the 2017 tax reform law made the combined state and federal tax burdens even more progressive.

Clearly millionaires (including Sanders) and billionaires are paying their fair share. But should they even exist?

Let’s ignore the moral case that the state ought not steal from its own citizens with neither the consent of the governed nor any intention other than income redistribution guided by government greed. Does the existence of billionaires improve the bottom line of American prosperity?

Yes, individual greed is good, and yes, billionaires are good.

Thomas Piketty laid the groundwork for the rallying cry of the pseudo-intellectual left in his assertion that returns on capital tend to outpace returns on labor. Even though this concept is taught in the first few weeks of most high school economics classes, the Piketty cry to eat the rich for the crime of having a more efficient factor of production comes at the detriment of all earning classes.

The only real factors that grow economies, other than legal or political shifts to ease trade or relax burdensome regulations, are investment, entrepreneurship, technological and scientific advances, and increasing the labor force. (This last factor is a large reason why nations that oppress women from joining the workforce hinder their own economic growth.)

If you’re into Rawlsian liberalism with the end goal of increasing the bottom line, it makes sense to encourage a VAT tax, as Andrew Yang wants to use to fund a universal basic income. VAT taxes discourage the wealthy from wasting their money through consumption (which doesn’t really grow the economy) and instead invest (which absolutely helps grow the economy). It’s why we want a capital gains tax that’s lower than other forms of income taxes, and the same Wall Street investors that supported Hillary Clinton in droves balk in fear of an Elizabeth Warren presidency threatening to punish investment and thus, crash the economy as a whole.

When we let billionaires become billionaires, they employ hundreds of thousands of people and create trillions of dollars of wealth for the economy overall. When we let billionaires stay billionaires, even the most undeserving of them keep gobs of cash in investments, growing the economy for everyone as they sleep.

Billionaires are paying their fair share, and billionaires are good. Don’t be bitter that you aren’t one. Be thankful you benefit from the returns on their wealth.