The Economy, Taxes, and Wealth Redistribution

I'm kind of loving Mark Perry's blog Carpe Diem. A couple of things he posted this week that I thought were quite interesting. This one about the effects of the corporate taxes:

Most people think that corporate income taxes are paid by wealthy, anonymous companies," said Scott Hodge, President of the Tax Foundation. "But as economists have been teaching for years, people bear the burden of corporate taxes, not companies."

Research from the Congressional Budget Office shows that in a global economy where capital is highly mobile but workers can't easily move abroad, workers end up bearing the brunt of corporate taxes. In 2007, Economist William Randolph found that 70% of corporate tax burdens fall on employees through lower wages and productivity, while the remaining 30% fall on company shareholders. A recent Tax Foundation study shows the federal corporate income tax alone collected $370 billion in 2007. That's an average household burden of $3,190 per year - more than the average household spends on restaurant food, gasoline or home electricity in a year.

And then Ben Stein wrote this article earlier this week. I kind of love Ben Stein. He's funny, but the guy is a realist and a conservative and I love that about him. In the article he says:

You have been -- you are now -- bombarded every day with TV shows, radio news, and newspapers telling you of this government support plan and that government support plan and how they are going to rescue you. To which I can only say, when you hear the word ‘government,' in your mind, substitute the words ‘Department of Motor Vehicles.' When was the last time they rescued you? When was the last time they bailed you out of anything at all?

To expect that ‘government' is a fairy godmother who will rescue you from your problems over any long period is just fantasy. Here's the good news: This country will be rescued by each of us doing what we can do in our own individual sphere of action as government works in its sphere of action. There are roughly 142 million men and women in the labor force. Their ingenuity, flexibility, energy, and confidence will make more difference than anything government does on an individual basis -- which is not to take away a thing from the effects of good policy. In the free society, we rescue ourselves.

If you spend the day reading about how bad things are, you will never get out of bed. If you put down the paper and get to work, and then work twice as hard and twice as smart as you used to, and maybe take less pay right up front, you will get ahead. In every economic era, there is always a shortage of talented, creative, well-educated workers. Be one of those workers.

Imagination, hard work, and persistence can conquer any phase of the business cycle. Let other people get depressed by the headlines. Let other people wait around for Mr. Obama to rescue them. You go out and go to work, using every resource of energy and imagination you have. The DMV is not going to bail you out. By and large, and with a few exceptions, you have to bail yourself out. Get to work.

The emphases are my own. I wish Obama were taking more of this kind of approach rather than talking about how "dire" everything is, or that we're in crisis mode, or however else he likes describing the current condition of our country. Seriously...wasn't he elected on a platform of "hope"? Why do I feel like the sky is falling every time he opens his mouth?

And then this was posted in The Corner at NRO. What is the key number to remember? 9625. That was where the DOW was at the night he was elected. The post talks about the idea of wealth redistribution, but not from the perspective of massive tax increases on the rich and giving to the poor, but leveling the playing field altogether by destroying wealth. Here are a couple of key paragraphs:

It's easy to find reasons for the continuation of the equity market sell-off since the inauguration — the Fed shrank its balance sheet and stopped offsetting the credit freeze, devastatingly bad fiscal policies, the accounting system's assertion of nationwide insolvencies (though almost all loans are being paid and banks, households, and insurance companies have huge cash balances), and the four-month technical selling cycle into mid-March graphed in our earlier pieces.

A dark side of the sell-off is the buzz (surely false) that the Administration sees lower equity prices as part of its wealth-redistribution goal. Equity ownership is very progressive (ownership goes up with incomes), so the equity sell-off is rapidly narrowing the wealth gap between rich and poor (and the geographic wealth gap between New York and Washington.)

Just thought those were interesting.