In a speech in New York Hillary Clinton slammed the Sanders “free college for all” plan because it would mean that even Donald Trump’s children would have their college costs covered. How terrible that these evil, sinful, malevolent people might have their college costs paid for. Their crime? Their parents make too much money.
I am not one of the top 1% of income earners, but I think this tax day we should give those who are a huge, “Thank you.” I am sick of seeing the people who create the engines that create most of the products we use and who provide jobs for the majority of people be demonized. I am equally tired of seeing the people who pay for most of the government services we enjoy being scorned. “How dare they get to have their children go to college using some of the money they paid in taxes. They must be punished for their deeds.”
I’m in the process of filing my taxes. I’m only in the 25% bracket, but I hate to seeing $250 taken from each additional $1,000 I earn. If I work over and earn some extra money, I need to work a quarter of the time for free. I can’t imagine seeing 40% of my time spent working to pay taxes and only seeing 60% of my time result in additional income.
I can understand how Ronald Reagan said that if he had already made a movie or two during a year, he might pass up the chance to do the next one. This was when rates were extremely high for the top earners – approaching 90% – so it really didn’t make sense for him to leave the poolside and spend several weeks working long hours to make another movie. He would only get paid for 10% of his time. Would you make a third movie if you got paid $100,000 for that one but got paid $1,000,000 for each of the first two? And when he didn’t make the movie, it meant all of the supporting actors, crew, and caterers didn’t work either. This is why the economy took off after he cut back the top tax rates – productive people were spending more of their time working, which in turn meant other people were working as well.
So before you complain that the rich aren’t paying “their fair share,” imagine writing a check for $400,000 to the government for your taxes this year. Think about the home they could have bought with that money. Think of the early mornings they arrived at the office and the late hours they spent finishing up the work needed to build the company at which you now work. Think of the years they spent without a paycheck and borrowing from relatives to get their company off of the ground. Sure, there are a few trust fund babies that live off of record royalties or the work of their parents, but most of the people paying those top rates spent a lot of time and effort building the machine needed to make that income, and they probably lifted a lot of other people up with them along the way.
So this tax day, thank a high earner. Thank her for your job. Thank him for paying for the train you ride. Thank her for the school your children attend. Thank him for helping to pay to keep your family safe. If you aren’t thankful, then send in more in taxes until you pay out 30-35% of your income. I guarantee the IRS will accept the extra money. There’s even a space on the form.
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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.