Greg Autry

Fighting for space, not over it.

Picking Apples on the Road to Serfdom

photo credit: Greg Autry

photo credit: Greg Autry

An article on HuffPo reports that taxes on the wealthy have reached a 30 year high while the middle class and poor are now paying diddly squat (that’s a technical term in economics). Tax inequality is no less immoral that income inequality and punishing the most successful for their very success while disincentivizing production is a non-sustainable model, no matter how smugly satisfying it may seem. Talent and capital invariably flee such a regime – see Cuba, Soviet Europe, Argentina, etc.

While the left anxiously ruminates about equality, the right is obsessed with growth at any cost. Equality without growth is equality in poverty. See Lady Thatcher’s powerful argument on that point. However, growth without equality invariably leads to resentment, in a democracy that means welfare and populist demagoguery which kills the growth. This is followed by the rise of an idiot like Hugo Chavez and deepening poverty. Two voyages to the same terrible destination.

Ironically, its the capitalist, captains of industry that charted our course to socialist misery by creating a society that would make Karl Marx salivate – one in which returns to capital are ever increasing and returns to labor dwindle. Stocks roar and wages fall. It’s full speed ahead for the 1%; America’s future and American values be damned! Let the rest of us save up our pennies and send our kids to Stanford so they can ALL design the next iPhone – sure.

The path to both sustainable growth and increased social equality will NOT be found in taxes and transfer payments. The solution both the left and right must embrace is the creation of a policy environment that that motivates businesses to invest in America and to hire American workers. We must do that even if it is a bit less efficient than our current model of funding Chinese communism in exchange for raping their environment and borrowing their slave labor. This means instituting a more competitive tax and regulatory environment, but doing so with an absolute refusal to join a “race to the bottom” in civilized standards of living for our citizens.

Consider Apple’s $140billion+ cash hoard. Most of it is overseas avoiding the US corporate tax (highest in the world). Very little of what is in the US is invested in creating good American jobs (sorry dudes in blue shirts). Our current political plan appears to be: tax the hell out of Apple and its wealthy shareholders and give that money to the chronically unemployed so they can sit at home and play video games on their Chinese made iPads.

Instead, we could abandon harsh ideology and simply make it fairly painful for Apple to invest further in China by penalizing them for the very benefits they gain via China’s illegal subsidies, currency manipulation, and environmental abuse. We should also throw in the cost of defending ourselves from the Chinese hacking, countering China’s massive military build up and dealing with the escalating regional tension in Asia that Apple is indirectly funding.

I propose that we cut Apple’s domestic taxes and then forward the bill for extended unemployment payments, our West Coast missile defense system, and Obama’s “Asian Pivot” directly to CEO, Tim Cook – with postage due.

Greg Autry serves as Senior Economist with the American Jobs Alliance, Economist with theCoalition for a Prosperous America and is co-author (with Peter Navarro) of Death by China: Confronting the Dragon – a Global Call to Action. He blogs regularly at: http://www.gregautry.us/blog  and on the Huffington Post.

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