February 7, 2011

As a political party independent who has voted for both Republicans and Democrats in the past, I find I no longer have a choice. The Democratic Party has morphed into a party of far left liberals with a mantra "tax the rich" that goes on ad nauseam without any thought to what that actually means to the average American.

Here is my example to explain why they're wrong.

A small country has a population of 8 million people where half are working-age folks with jobs. Their government's annual budget is $40 billion, which means their government spends $5,000 for each man, woman, and child.

That $5,000 has to come from taxes paid by the 4 million people who work for a living.

In order for these 4 million people to have tax-paying jobs, they must produce a product that generates enough income to pay their taxes, compensation and cost of operating their share of the company they work in.

Then a company operating in a country with a much lower standard of living offers the same products at a lower cost. This causes the local business to lose sales which makes them reduce costs by laying off employees so they can compete. The remaining people must make more with less or they too will lose their jobs when their company fails.

So now the government receives less revenue and raises taxes on those who still have jobs. This makes the cost of producing the product go up which makes the market for their products less attractive to buyers, and the business collapses.

Or the government could have facilitated the business by reducing taxes which would make their products more marketable so the business would hire more people to meet the increased demand and thus generate more taxes.

The liberal's approach works only until they run out of other people's money. The capitalist's approach works for everyone willing to work for a living.

Rex A. Hoover