Despite education spending that exceeds $23,000 per
pupil, which is a whopping $10,890 higher than the national average, New York
State United Teachers (NYSUT) thinks we should spend more. A lot more.
The teachers’ union launched an ad campaign last
week called “Broken Promises” that says New York schools are underfunded by $4
billion. And, of course, it’s the fault of rich people. The 30-second
commercial spends most of its time highlighting wage inequality, decadence and
the accumulation of wealth.
The NYSUT hopes to use that message to compel
lawmakers to reap revenues from that accumulation. Taking a page from the
playbooks of presidential candidates Bernie Sanders and Elizabeth Warren, they
are calling for a wealth tax.
This is something entirely different than an income
tax, which would still be in play. A wealth tax would focus on the holdings of
the others. Whoever would be considered “ultra-wealthy” at that time would have
to pay a tax on what they own -- a company, properties, stock, cash, anything
designated as an economic asset. It’s a tax upon taxes, as those assets had
paid taxes already based on their productive nature in the form of corporate
income taxes, personal income taxes paid by the owner and the employees, sales
taxes, excise taxes, property taxes and more.
According to a poll of 1,000 New Yorkers
commissioned by the NYSUT, 92 percent support a wealth tax on those with more
than $1 billion in wealth, a new ultramillionaires tax on those with incomes
over $5 million and a pied-à-terre tax (a cute way of saying a tax on second
homes) as a means to close off New York’s budget gap.
I guarantee that whoever responded to the survey
thinks that the billionaires won’t miss their money and that this is just a
temporary and limited fix to a current problem.
They’re wrong on all counts.
If you start penalizing people for accumulating
wealth they will leave, no matter if they have more money than you and I could
spend in a million lifetimes. As mentioned earlier, those billionaires and
their enterprises already pay millions in taxes every year. If you start taxing
them on wealth and not just income, whether or not they made good money that
year, they will find a state that won’t. They’ll go and they’ll likely take
their headquarters, if not all their operations, with them.
Those billionaires made a career, a lifestyle, out
of trying to make money and create productive enterprises; they’re not going to
throw it away to a new, unusual and destructive tax system, especially when you
can be certain it won’t go away: This is New York; the basic law of taxation
physics here is that new taxes can be created but they cannot be destroyed.
And, in such a vacuum, said taxes can always be
expanded.
The NYSUT proposal might currently call for a
wealth tax on billionaires but, after you’ve normalized such behavior, who’s to
say it wouldn’t be extended to millionaires ten, twenty years down the road
when another alleged budget (read: over-spending) crisis comes to the fore? Once
the accumulation of wealth is vilified and people are punished for it,
shouldn’t it hold true for all levels of wealth? After all, that’s what we do
with income taxes – no one but the very poor can escape having to pay for their
exertion of sweat and time.
Once millionaires are pulled into the mix with
wealth taxes it would be a lot more people than you’d believe. It’s not those making
a million dollars every year. It’s regular people who have accumulated assets
in excess of a million dollars.
Millionaires could be those who don’t have a public
pension and are planning for 20 to 30 years of blissful retirement. They’ve
worked their tails off and saved their whole working lives to get to that
point. Because of the forward thinking and sacrifices of such souls there are
now more 401(k) and IRA millionaires than ever before in the US – 233,000 and
208,000, respectively. Many more break the millionaire threshold with what they
have in the bank, their homes and other retirement accounts like mutual funds
and stocks. They have paid and will pay taxes on all of the above, so why
should they be taxed for the very act of ownership, too?
Millionaires could also be small business owners
who are cash poor but asset rich by the essence of owning a business. Consider
farmers, for example. I don’t know any farmer whose personal income would ever
be considered wealthy. As a matter of fact, the ag economy has been so bad in
recent years that farms are closing left and right, some farm families are
using food pantries in winter’s lean months and many farmers have committed
suicide because of financial woes. While they and their business may not be
making money, a tax on multimillionaires would steal cash from them because
they own a business that itself owns millions of dollars in assets in the form
of vast acres of land, heads of cattle and equipment (a single John Deere
combine costs around $400,000). Who in their right mind would stay in business
if a wealth tax added even more to their losses?
Is it right to tax Average Joe retirees and farmers
because they’ve accumulated millions in personal value? No. It’s not right to
do it to billionaires, either. Wealth taxes should not be introduced now or
ever. They punish the American Dream, saving, thrift and investment – all
characteristics that were once, and still should be, considered desirable
personal and professional traits.
From the 17
February 2020 Greater Niagara Newspapers and Batavia Daily News
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