Many current political campaigns that advocate wealth taxes for the “rich” do not grasp the underlying economics, but instead cry “fairness.” They fail to see the difference between income and wealth.
Perhaps an agricultural analogy would help. Imagine a foolish farmer who harvests his corn crop, consumes everything against all advice, and starves the next year when he has no seed to plant.
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And those who have it should keep it for themselves and let the others starve?
This writer's analogy is simplistic and entirely beside the point. Imagine a farm owner who hires 5 laborers to plant his corn crop and 5 other laborers to harvest it. He pays each of the laborers $10000 dollars. After investing about 100,000 dollars in the farm, he profits 250,000 dollars in "investment" income and pays 15% taxes on it. He ends up with $215,000 dollars to feed, clothe, shelter, and provide health care for himself and his family. The government taxes the laborers at 7.5% as wage earners, leaving them with 9,250 dollars, which is not quite enough to feed, clothe, and shelter their families, and they don't even think about health care. Later, the farmer runs for president and derides the laborers for not paying income taxes and says they should pay for their own health care out of their "savings" from the 9,250 dollars.
And what if you don't own a farm?
Dear Mr. Hartke: I read your interesting analogy but would like to flesh it out a bit. Now instead of each farmer being on the same piece of land, one has his farm located on bottom land where the rockless soil is rich and fertile and the other is on a rocky hill where it takes years just to clear the land to plant. The farmer with the rich land is going to be doing a lot better than the rocky hill farmer, no? That is more like the story of the rich and poor in this country. Some people start out with some rich farm land, like the Republican nominee and some, like President Obama, have to clear a lot of land of obstacles just to farm, let alone overcome poor soil. Wealth is not just good planning, but also good fortune. It's not simple, that one person is smart bc he saved and other stupid because he did not. It is a complex society where poverty, education, parenting all play a part. Our job is to raise up those without and have those with wealth help with that with a progressive tax system where the wealthy help those who are on the rocky sloped farm. Why? Because it is good for our country overall...where the common good is more important than the wealth of some.