“Tax the Rich” has been a mantra of the more radical factions of the left wing for decades. Every Democratic candidate for president in 2020 largely rest their platforms on the notion that taxing the rich will aid the poor. The power brokers love it, but no everyday person values the results. In truth, increases in taxation on the rich is ultimately an increase in taxation on the poor.
To Tax the Rich is to Tax the Poor
Suppose the United States increases the corporate income tax. Suppose a progressive claimed this tax will go toward paying for social programs for the poor. This instance of taxation will inevitably come back to harm the poor. By depriving businesses of the products of their work, they will not be able to provide as high quality of a product for as low of a price anymore. In other words, the businesses will simply offset the costs of this tax to the poor one way or the other.
Suppose the US raises the minimum wage to $15 per hour. If they did that, the businesses will either raise prices, decrease worker hours, or lay off workers they deem unworthy of $15 per hour, cut corners in production, or they will do some combination thereof.
The business itself does not suffer the consequences of this policy. We, the ordinary person, will pay for it. The same goes for taxation. By depriving the wealthy of their resources, they ultimately make it harder to do business, decreasing the quality of life for everyone else.
Taxation and Regulation Freezes Social Mobility
Some may wonder why Walmart and Amazon are actively lobbying for regulations and increased taxes and/or minimum wage increases. The answer is quite simple if you are able to think like a billionaire. You, the extremely powerful corporation, are able to afford these regulations and increased costs of business. Your competition, however, cannot. If you legislate a business’s competition away, that business becomes a monopoly. Monopolies are inherently rent-seekers.
By this, I mean that they seek to provide the lowest possible quality product at the highest possible price to the consumer. Because there is no competition, a monopoly is capable of doing this.
Taxes and regulations ultimately do not hurt the rich. If anything, they help old money stay in their powerful position. This is because the government infringements upon the ability to do business harm newcomers and small businesses far more than it could ever harm big business. Any new tax on the rich will ultimately harm the status quo of the poor while also making upward mobility nearly impossible. The government does not help the poor; rather, it harms them.
For the skeptics, however, consider this. Ron Paul ran for president three times. In those three times, only one billionaire, Peter Thiel, donated to him.
If deregulation and low taxes help the rich and the big businesses, why were the billionaires donating to John McCain, Barack Obama, and Mitt Romney?
Why did they donate to the big government shills instead of the anti-government libertarian like Ron Paul? Freedom does not help corporate oligarchies; instead, big government does by killing their competition. If you “tax the rich,” then only the poor will pay.