“Falsehood flies and the Truth comes limping after it; so that when Men come to be undeceived, it is too late; the Jest is over, and the Tale has had its Effect.” Jonathan Swift, “The Examiner”, Number 15, London, 1710
Trump’s tax plan was enthusiastically accepted by the Republicans and got rejected by the Democrats. No surprises; the tug of the tax rope is a favorite public activity in Washington.
Trump’s plan is a financial knockdown for states such as California, New York, and New Jersey. These states have a traditional Democrat majority, and consequently, these states have the highest tax rates in the U.S. According to Trump’s plan, the payment of these taxes will not be considered when calculating federal taxes. Americans will have to pay taxes to the states in addition to, not instead of, the federal tax. This will hit hardest, of course, in the states with the highest taxes.
These states are the bastions of leftists in the U.S. and voted against Trump. If Trump’s plan is adopted, these states will be in a stressful financial condition. The mass outflow of population from these states to the states with zero or small taxes (Florida, Texas) will accelerate, and the tax base of leftists will definitely decrease.
The long-term tax legacy in America is as such: the second and third items of the Communist Manifesto of Karl Marx – the progressive tax and the inheritance tax – are fully and legally implemented.
Trump’s plan leaves the second item of the Communist Manifesto intact (a progressive tax with some modifications) but terminates the third item – the tax on inheritance.
Even now, few people think about why the tax rate in America is progressive – the more you earn, the higher the tax rate. Progressive taxes have been around since ancient times, but only the Marxists thought of weaponizing them and making them a tool for the political struggle. Today we use the phrase “progressive democrats” or “progressive humanity.” However, the term “progressive” began from the idea of a progressive tax. It had nothing to do with technological or social progress, but only with taxes.
Progressive taxes in the U.S. have progressed only in one direction – in the direction of increasing the polarization of society. Bill Clinton’s tax reform led to the emergence of a negative tax rate unheard of in American history. Currently, about 40% of Americans receive money from the federal government instead of paying.
As a result, the richest 10% of Americans pay 70% of all federal income taxes. The poorest 50% pay only three percent of all federal taxes. On the surface, a progressive tax on the rich looks like a simple mechanism for wealth redistribution. But in fact, the progressive tax is a mechanism of conscious corruption of the population, which is forced to turn to the state for financial help. It eventually becomes completely dependent – materially and spiritually – on the government.
The extreme level of progressive taxation in the U.S. leads to an artificial division of the nation into two classes: those who pay taxes and those who do not pay taxes.
What for? Divide et impera – divide and conquer – a slogan that has been tested for centuries. The slogan was inherited by the Washington senators from the senators of ancient Rome. The slogan enables Washington to force two groups of Americans to fight each other.
These two artificial groups of Americans are separated by a common Congress.
The idea of the inheritance tax is also borrowed by the “progressive” from ancient Rome. Emperor Augustus introduced this tax to pay pensions to his soldiers. Only the emperor could think of such a thing – to declare the property of a deceased Roman as the property of the state, but with the proviso that the relatives of the deceased can get it back by paying a new tax. As in ancient Rome, today no one calls this tax anything other than a state racket. It is not surprising that Marxists like this tax.
High taxes are also a form of a political state racket.
Politicians in all countries prefer high tax rates to gradually selling out to lobbyists the “exceptions to the rules” and create loopholes in tax legislation for companies or for entire industries. As a result, in the U.S., there are almost no companies who pay a predatory 35% tax on profits. The effective tax rate for most companies is much lower – about 20%. It is the 20% tax on companies’ profits that is contained in Trump’s tax plan, which in addition to the lower tax rate eliminates all loopholes without exception. The Trump concept leaves, of course, the Washington political election campaigns without its main source of corrupt financing.
This, in fact, is Trump’s strategic tax plan. His plan eliminates one of the most odious and Marxist-favored taxes: the inheritance tax. It leaves the progressive personal income tax to the delight of Marxist “progressive humanity.” In return, it demands significantly lower corporate tax.
Trump’s plan is unlikely to radically improve the tax burden for most American citizens, but it will substantially revitalize the American economy and make it aggressively competitive on the global market. The complete abolition of the tax loopholes will shrink the army of lobbyists and tax lawyers. There is nothing catastrophic in this. Taxes were lowered by Coolidge, Kennedy, Reagan, and Bush. Each and every time, the American economy stood to win.
The progressive income tax has existed in our country for more than 100 years. There is no one alive today who remembers what America was like without an income tax. Four generations of Americans have grown up in the conditions of progressive taxation, and they do not even realize that the tax burden can be different.
The lie is that “the rich should bear the main burden of taxes.”
The truth is in Reagan’s wise words: “If you want more of something, subsidize it; if you want less of something, tax it.”
Increasing the tax on the rich means closing businesses and mass layoffs. On the other hand, reducing the tax on the rich means increasing investment in production; reducing unemployment; increasing the tax base; and, as a result, increasing tax revenues.
What does America want?
If we want to eliminate the rich, then it is necessary to increase taxes. But the number of poor people will not decrease. On the contrary, it will increase until the entire population turns poor. This is the path chosen by the former Democratic (now the Socialistic) Party of America. The Soviet Union, Venezuela, Cuba, North Korea, and many other countries have already gone down this path.
There is another way. Four generations of Americans have heard nothing about alternative solutions, as they suffer from “tax amnesia.” To many, this idea may seem revolutionary and even crazy.
How about leaving the rich alone and “eliminating” the poor?