A lot of attention has been given on both sides of the aisle to the issue of taxes. The Democrats think imposing heavy taxes on “big business” and “the rich” will solve all our problems- after all, they can “afford it”. On the other hand, the Republicans (and the Libertarians for that matter) think that cutting taxes is the way to go. So who’s right?

When one ignores all the political jargon the answer is a lot simpler than it may initially seem.

Imagine that you own a home. You’ve been working really hard for quite some time and have managed to amass a nice bit of savings that you intend to use to make upgrades to your home. Sounds great so far, right?

Your next door neighbor also owns a home. His house isn’t quite as nice as yours, and for whatever reason he can’t afford to make any changes to his home. Said neighbor is angry because you have a nicer home than he does and can afford to add some luxuries to it. Your neighbor doesn’t care that in improving YOUR home, you’re also adding to the value of the neighborhood in general. He doesn’t care that you’ve worked hard and saved long to be able to afford your home and the improvements you’re planning. Your neighbor says it’s not “fair” that he can’t afford to live in a home as nice as yours.

So one day this envious neighbor manages to convince the city council that he is justified in his plight and that the only solution is to impose a massive property tax on YOU and give the money to your neighbor in order to “equalize” things between the two of you. Suddenly, you can no longer afford those home improvements. But it’s not enough that you can’t afford to improve your home, because you still live in a nicer house than your neighbor. So the city council continues to hike your taxes until you find that you can no longer afford your home. You eventually have to sell and move into a small apartment.

Now, this example is a very simplified one. But I purposely put it into terms we every day Americans can understand. And I think we can all agree that it’s a serious injustice that the government would take the fruit of your labor (ie, your earnings) and give it to someone else.

There is an anecdote/urban myth that I’m particularly fond of which serves as a good illustration of the same concept. As the story goes, a young woman comes home from college and immediately begins decrying how unfair the world is and that we should be taxing the rich to give to the poor. Her horrified father asks her if she thinks it would be fair for her professors to lower her grades to Cs in order to boost the grades of her friends. The girl is immediately incredulous, noting that she’d worked hard for those grades and her friends didn’t deserve to reap her rewards. The father then tells her “Welcome to the Republican party.”

Again, a simplification of the issue, but the example is in terms we can understand. Regardless of whether it’s your home or your grades or some other tangible concept the moral is the same. Justice is meted out when we concede and abide by the fact that you deserve what you earn and your neighbor has no claim on it. The only portion of your earnings that should be given to others is the portion you CHOOSE to donate.

We’re all very aware of how the left loves to portray conservatives as being “in the pocket” of some business or another. And I will acknowledge that there have been times when this assessment has been dead on. But I ask the following. So what?
The bottom line is that businesses, big and small, are the backbone of our economy. I know it’s really easy for us to fall into the trap of populist rhetoric about the evil rich getting richer on the backs of the poor; but let’s see if we can take off our green-eyed-monster glasses for a few minutes and look at this rationally.

FACT: Businesses- whether they make toys, groceries, clothes or oil; whether they’re in the business of transporting goods and services or offer labor services- are in business to MAKE MONEY. That’s kinda the point.

What qualifies a business as successful? The ability to make money. A business MUST make money to produce its product or service and to provide wages and benefits for its employees. If a business fails to generate a profit, it is a failure and cannot remain in business for long.

So, what happens when the government, via taxes, starts dipping into the profits of a business in order to play Robin Hood? Let’s think it through together, shall we?

1.    Business makes money
2.    Government takes money
3.    Business has less money to cover its overhead (ie, the minimum it must spend on its product  and processes as well as its monetary obligations to its employees)

At this point the business owners/operators must make a decision to either (a) absorb the loss or (b) recoup the loss by passing the cost onto the consumer. Let’s examine the results of both options.

(a)    Absorb the loss

If the owners/operators choose to absorb the loss, it means they no longer have as much money to work with in regards to operating costs. If they can’t make their overhead, they will have to cut back on production and/or employees. Employees are usually the FIRST ones to suffer in this scenario, as it’s easier to scale down your workforce than to scale down your production, especially if you’re mass producing something that’s a hot commodity.

So the workers are the first ones to suffer via cuts in wages and benefits, fewer promotions and hours, and maybe even layoffs- this is a huge factor in negative company morale. If the company is forced to cut too much production could suffer, which in turn cuts into how many units/services are sold, consumer confidence in the company, etc.; hence, additional profit loss at the Point of Sale (ie, the cash register). The company may eventually be forced to close its doors.

Granted potential closing may seem a bit extreme, but when we’re dealing with smaller businesses, especially Mom-and-Pop types, it’s much more likely to occur under this kind of scenario.

(b)    Recoup the loss by passing the cost onto the consumers

Cost of the product goes up, which may bolster profits initially. However if it’s not an essential item (and sometimes even if it is), the cost can only go up so much before it backlashes and the public either cuts back or stops buying the product altogether. The recent gas crisis is proof enough of this. Once the price went higher than most Americans could rationalize as reasonable, we started cutting back. This year we have millions more cars on the road than any year previously, yet we’re also using less gasoline. The correlation between the reduction in fuel consumption and price is hard to miss.

So what happens when consumers are no longer willing to buy the product due to increase in cost? The bottom line is that a business can only pass its costs onto the consumer for so long before we’re back to scenario (a), where the cost to run the business is higher than profits can justify. Workers lose jobs, production slows and in some cases stops. Businesses close.

As my man Fred Thompson correctly noted two nights ago in his address before the RNC, “Now our opponents tell you not to worry about their tax increases. They tell you they are not going to tax your family. No, they're just going to tax "businesses"! So unless you buy something from a "business", like groceries or clothes or gasoline ... or unless you get a paycheck from a big or a small "business", don't worry ... it's not going to affect you.”

The ultimate result of this brand of economics is that in the process of robbing the rich to feed the poor, we unintentionally (hopefully anyway) create more of the poor; hence creating the need for higher revenue to “assistance” programs; hence creating the need for even higher taxes; and on and on and on.

It’s an endless cycle that ultimately results in less production and independence and more reliance on an already bloated government machine; a machine that can’t even be trusted to get you in and out of the DMV in a timely manner; a machine that may or may not get your bills to their destination on time; a machine that is too busy to notice when children under its care go missing (as those of us in FL are amply aware); a machine that is so vast and complex it is rendered incapable of meeting any needs outside of their predetermined check boxes.

Let’s face it folks, the government isn’t exactly known for its efficient and friendly service and it never will be. To quote the famous (and TRUE) words of The Gipper, “The most terrifying words in the English language are: I’m from the government and I’m here to help.”

So why do those on the left insist on instituting this brand of economics, when logically it’s a self-defeating system?

Dear reader, I am beginning to believe that the cycle itself- creating greater dependence upon the government and thereby need for expansion of government programs and POWER- is the reason. It has been said that power corrupts and absolute power corrupts absolutely. Should we trust our lives and our livelihood to people who claim to want to help us, all while increasing their own power and public dependence on them, and in the process cinching their hold on Washington and the American people forever?

This election season, every voter should take a few minutes to remove their green-eyed-monster glasses in order to logically and honestly examine that question. The stakes are high and it is our freedom that we stand to lose.