Don’t Tax the Rich . . . Thank Them

The rich often get a bum rap. Liberals are incensed when it is suggested that “the rich” get any type of tax reduction even though the top 50% of wage earners pay 96% of all income taxes. Since they spend more money, the rich also pay a disproportionate amount in sales, property, entertainment, and excise taxes. Without the rich, most people would not have jobs. Poor people don’t create jobs. Governments create jobs by force. The rich create jobs by creating things people want.

The first computer my company purchased in mid-1985 cost $7500. It was huge and could only perform a few simple tasks, mostly word processing. The floppy disks were the size of dinner plates and held very little data (360K). Almost overnight, computer prices dropped and performance levels increased dramatically. The IBM PC was born.

The first high performance portable computer was built by Compaq, and it was the size of a sewing machine, but it was a vast improvement over what was then available. The hard disk capacity was 10 megabytes. Today’s laptops have multi-gigabyte drives (terabyte drives are available and needed for backup), super thin monitors, built-in modems, CD/DVD drives that can play music and movies, and much more, all in a 2 to 4 pound package that can be carried and used when you travel.

The first cell phones were the size of a small suitcase. You needed a shoulder strap to carry it. It didn’t take long before the back-pack cell phone became the size of a brick. Now they are smaller than a half-pack of cigarettes and can do extraordinary work that wasn’t even conceived of ten years ago. They are so cheap to own and operate that many people have given up using conventional (land-line) phone service.

What made these performance gains and price reductions possible? People with lots of money purchased the first high-priced machines. They had the financial ability to lay out “excess” capital for what most people would consider luxury items. What used to be luxury devices are now so cheap that even homeless people can afford them.

The research and development costs of any new technology are enormous. That’s why the initial entry of new products into the market is expensive. But over time, when costs are recouped and production increases, costs and prices fall. The first CD players cost hundreds of dollars. They now sell for under $10, if you even need one. Today, music can be purchased online and stored on a device that can hold thousands of songs. DVD players sell for under $50, and the newly developed Blu-ray players are rapidly coming down in price from an initial market price of nearly $1000 that only people with lots of discretionary money were willing to pay. The spending by rich people fueled the market for future goods at lower prices which benefits everybody.

Slamming the rich by contending that they should pay more in taxes to equalize income is the sin of envy. Envy is not the same as jealousy or covetousness. The covetous person says, “I wish I had what he has, and I’m miserable that I don’t have it.” Envy is quantitatively different.  The envier thinks to himself and votes accordingly: “I’d like to have what he has, but I know I can never get it. Nobody should be allowed to have it or at least that much of it. If I can’t have it, neither should anyone, and if I can’t make this happen, I’ll make sure it costs him a lot of money to own it. I’ll work to destroy people who can afford these things. Maybe I can get the government to make it illegal to own or too expensive to keep.” This is why the Bible describes envy as “rottenness of the bones” (Prov. 14:30).

Societies that struggle to exist economically are infected with envy. Prosperity in others infuriates the envier and moves him to destroy what he does not have and will not work to get. Western enviers are sophisticated. Enviers in civilized societies don’t burn a villager’s crops or sabotage his wells. They run for political office or vote for those who do so they can stick it to the rich in the name of “tax fairness” and “social justice.” The long-term result is the destruction of the prosperous man’s ability and incentive to create wealth. In the end, the destroyed crops, the poisoned well, the high taxes hurt all of us. With no discretionary capital, there is no one to buy those initially expensive goods that make life easier for all of us. So, instead of envying the rich man, thank him and work to be like him.

Cain was the first envier. He could have offered a sacrifice equal to that of Abel or offered a sacrifice that was from a pure heart. Instead, he murdered his brother because of his success. It didn’t make Cain any more successful, but I suppose, for the moment, the act gave him satisfaction. Envy appears again in the book of Genesis when the Philistines envied the prosperity of Isaac:

Now Isaac sowed in that land, and reaped in the same year a hundredfold. And the Lord blessed him, and the man became rich, and continued to grow richer until he became very wealthy; for he had possessions of flocks and herds and a great household, so that the Philistines envied him. Now all the wells which his father’s servants had dug in the days of Abraham his father, the Philistines stopped up by filling them with earth (Gen. 26:12–15).

The Philistines could have dug their own wells and inquired of Isaac to learn the methods of success. Instead, they destroyed his property to bring him down to their standard of living. Of course, with Isaac’s wells sabotaged, a drought would affect Isaac and the Philistines equally. But enviers don’t think ahead. They only care about dragging the successful down to their level of incompetence.

Modern-day economic theory feeds off the sin of envy. The first step is to promise the citizenry that they will get some of the largess of the rich. When that only goes so far, legislators will make it more difficult for the prosperous to remain prosperous. Obstacles will be put up to stifle their success, all in the name of equality. We’ve seen it happen before. The Communists had to build a wall around East Berlin to keep the industrious from fleeing the politics of envy.