by Frank Ryan | February 05, 2019

Newly elected Representative Alexandria Ocasio-Cortez suggested a tax rate of perhaps 70% to fund her “Green New Deal”.  The congressperson acknowledged that it was an ambitious goal and would require a great deal of change rapidly.

There are Democrat socialists who believe that income redistribution is the panacea for the world and the solution to most of our problems.

Such perspectives are gaining ground in the United States and we would be naïve not to acknowledge it. I would encourage all of us to take this debate seriously and to not engage in smear tactics ridiculing the person making such a statement. Argument ad hominem’s distract from the core issue. For instance, attacking Congressperson Ocasio-Cortez on her college dance video to attempt to discredit her is counterproductive. Attack the idea not the person. We may find that there are more people in this country who believe that such tax rates and taxing the wealthy make sense.

Even Bernie Sanders, a recent presidential contender, advocated for higher taxes on the wealthy. His plans included higher tax rates, closing loopholes, and changing the estate tax laws.

The economic implications to a society of such tax rates are catastrophic!

This debate centers on the very foundation and fabric of our society and the consequences of losing this battle are profound.

Concurrently, there has been a great deal of discussion about wealth inequality in the United States.  The fallacy of attempting to solve a “wealth inequity” problem through income redistribution of higher tax rates is due to the sheer complexity of the tax code which makes the discussion for the average person mind numbing at best.

Confusing income with wealth is one of the cornerstones of the illogic of the Democrat socialist movement.  It is just inaccurate because of the complexity of the tax code in the United States.

All of us must understand that NO political body or government passed the laws of supply and demand.  Natural laws supersede any political initiative and attempts to interfere with the free movement of capital and goods is always disastrous.

In the 1960s when the tax rates at that time were much higher, Democrat socialists today compare those tax rates with what they are proposing today. Democrat socialists do not seem to recall what happened in the early ‘60’s. President Kennedy reduced the tax rates with Congress because of the stifling effect those tax rates were having in the nation.  The president was trying to get a nation moving again and he succeeded.

In the 1970s, there was massive inflation during the Carter administration and heading into the Nixon administration. The Council on Wage and Price Stability was created to curb inflation. Drastic efforts were perceived to be needed to be done in this economic attempt in interfering with a market was undertaken. Shortly after this effort, the economy entered into a fairly major recession. Dr. Alan Greenspan writes in his book “The Age of Turbulence” about the difficulties in the economy and the turbulence in the economies of the world thereafter.

Other efforts such as changing the minimum wage, guaranteed incomes, unrestrained growth of social programs without looking at the economic implications of those proposals is foolhardy.

When I first saw the increasing tax rate proposals from Bernie Sanders I was somewhat surprised by the number of extremely wealthy people who were supporting the effort.

Initially I found it strange that extremely wealthy people seemed to favor tax policies encouraging “wealth redistribution”.   It seemed illogical that the super rich would favor wealth redistribution since it would adversely affect them.  But then natural laws and the perspective of self interest comes to play almost immediately.  In reality, taxing income has little effect on the wealthy since income would be taxed and not wealth.  Self interest of the wealthy reinforces the fallacy of attempting to interfere with markets other than creating a rule of law for which people and organizations can operate.

The difficulty with all of this analysis is that it is complicated. It is easier to explain to people that it is income that is creating the problem of inequity versus wealth. As a result of this difficulty the super wealthy are extraordinarily willing to jump on the income redistribution bandwagon and to use Democrat socialists to do it because it, quite candidly, does not affect them.

The Democrat socialist agenda must be taken very seriously because the consequences of ignoring it are fatal.

Efforts to interfere with markets always cause people to find their self interest to survive. It is natural that people do that. Efforts to increase tax rates without considering the consequences of doing it may have the exact opposite effect as to what people expect.

In my time in the Marine Corps, I have seen nations collapse in Eastern Europe and in the Caribbean as well as in the Middle East. Interfere with an economic market at your own peril.

Take the Democrat socialist agenda seriously and defend our system of commerce. If we fail at this battle the consequences will be felt for decades to come.

Frank Ryan, CPA, USMCR (Ret) represents the 101st District in the PA House of Representatives.  He is a retired Marine Reserve Colonel, a CPA and specializes in corporate restructuring.  He has served on numerous boards of publicly traded and non-profit organizations.  He can be reached at [email protected]