Sunday, October 2, 2011

Here, let me blow the whistle on these lazy rich folk!

Wonder why they don't want taxes raised? Well, it's because those blowhards on tee vee and radio, take all their income as wages! Thus, if their millions were taxed at pre 90's levels, they'd be hurt badly.

But, otherwise here's the truth:

High tax rates on the biggest earners, forces them to keep their money invested in their companies, because it cost too much for them to simply take money out as wages and bonuses.
That means, to get the money they want and need from the companies they own, they have to get it from "capital gains", better known as sales of stock and dividends. To get money that way, they have to keep the company in good shape, earning good profits, with good long term objectives. Otherwise the stock price falls and their method of collecting money gets hurt.
In short, high taxes on large incomes forces the rich to work hard.

Now, if you lower taxes on large incomes, then the rich company owners, can simply lay back and pay themselves huge salaries and bonuses. This means they can make bundles, regardless of what the companies share price is doing (tanking?), and therefore, what it's performance, has been. Which is why you see, after several seasons of losing money, company heads walk away with millions and millions of dollars in wages, severance pay and bonuses. They couldn't do that if personal income taxes were high, on ordinary income, they'd be forced to rely on stock sales, since each million dollars in severance and other pay, would only yield perhaps 100,000 dollars per million, in the clear.

Now, to keep their companies healthy, if corporate heads were reliant on the stock prices, they would champion gov't initiatives that put more money in the hands of workers, because they need more sales to keep their share prices up. Thus, under higher personal income taxes, the rich become the friend of the worker again. Under lower personal income taxes, they become your enemy, because they don't need you to help them support their stock price, they can simply raid the corporate treasury for money!