Last Updated:April 16 @ 11:20 am

Sowell: The Invincible Lie

By Thomas Sowell

Anyone who wants to study the tricks of propaganda rhetoric has a rich source of examples in the statements of President Barack Obama. On Monday, July 9th, for example, he said that Republicans "believe that prosperity comes from the top down, so that if we spend trillions more on tax cuts for the wealthiest Americans, that that will somehow unleash jobs and economic growth."

Let us begin with the word "spend." Is the government "spending" money on people whenever it does not tax them as much as it can? Such convoluted reasoning would never pass muster if the mainstream media were not so determined to see no evil, hear no evil and speak no evil when it comes to Barack Obama.

Ironically, actual spending by the Obama administration for the benefit of its political allies, such as the teachers' unions, is not called spending but "investment." You can say anything if you have your own private language.

But let's go back to the notion of "spending" money on "the wealthiest Americans." The people he is talking about are not the wealthiest Americans. Income is not wealth -- and the whole tax controversy is about income taxes. Wealth is what you have accumulated, and wealth is not taxed, except when you die and the government collects an inheritance tax from your heirs.

People over 65 years of age have far more wealth than people in their thirties and forties -- but lower incomes. If Obama wants to talk about raising income taxes, let him talk about it, but claiming that he wants to tax "the wealthiest Americans" is a lie and an emotional distraction for propaganda purposes.

The really big lie -- and one that no amount of hard evidence or logic seems to make a dent in -- is that those who oppose raising taxes on higher incomes simply want people with higher incomes to have more money, in hopes that some of their prosperity will "trickle down" to the rest of the people.

Some years ago, a challenge was issued in this column to name any economist, outside of an insane asylum, who had ever said any such thing. Not one example has yet been received, whether among economists or anyone else. Someone is always claiming that somebody else said it, but no one has ever been able to name and quote that somebody else.

Once we have put aside the lies and the convoluted use of words, what are we left with? Not much.

Obama is claiming that the government can get more tax revenue by raising the tax rate on people with higher incomes. It sounds plausible, and that may be enough for some people, but the hard facts make it a very iffy proposition.

This issue has been fought out in the United States in several administrations -- both Democratic and Republican. It has also been fought out in other countries.

What is the real argument of those who want to prevent taxes from rising above a certain percentage, even for people with high incomes? It has nothing to do with making them more prosperous so that their prosperity will "trickle down."

A Democratic president -- John F. Kennedy -- stated the issue plainly. Under the existing tax rates, he explained, investors' "efforts to avoid tax liabilities" made them put their money in tax shelters, because existing tax laws made "certain types of less productive activity more profitable than other more valuable undertakings" for the country.

Ironically, the Obama campaign's attacks on Mitt Romney for putting his money in the Cayman Islands substantiate the point that President Kennedy and others have made, that higher tax rates can drive money into tax shelters, whether tax-exempt municipal bonds or investments in other countries.

In other words, raising tax rates does not automatically raise tax revenues for the government. Higher tax rates have often led to lower tax revenues for states, the federal government and other countries. Conversely, lower tax rates have often led to higher tax revenues. It all depends on the circumstances.

But none of this matters to Barack Obama. If class warfare rhetoric about taxes leads to more votes for him, that is his bottom line, whether the government gets a dime more revenue or not. So long as his lies go unchallenged, a second term will be the end result for him and a lasting calamity for the country.

---

Thomas Sowell is a senior fellow at the Hoover Institution, Stanford University, Stanford, CA 94305. His website is www.tsowell.com.

COPYRIGHT 2012 CREATORS.COM

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21 Comments

  1. jayleighComment by jayleigh
    July 11, 2012 @ 12:06 pm

    The wealthy also create jobs. They do it by directly employing people, owning businesses that employ and utilize goods and services of other companies that employ people and by providing benefits for their employees. Wealthy people also purchase goods and services for themselves – they buy from companies that…employ people, manufacture product or provide a service…wealthy people also travel in automobiles that were made by companies that employ people…or they travel by air transport companies that purchase airplanes and other goods and services from companies that…. need i go on???? This class envy seems to ignore the fact that when the wealthy are taxed an unfair amount simply because they are rich, they reduce the amount of spending they do – especially in business expansion and the purchase of goods and services. That hurts us all! Is the lack of logic a requirement for inclusion in the “elite” society of the class envy movement, ie the Democratic Party?

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    • joereinhartComment by joereinhart
      July 17, 2012 @ 5:43 pm

      I would say only the wealthy create meaningful jobs, that except poor people also “create” jobs.
      It takes some wealth or access to wealth. A valid way to measure “wealth” is the ability to command debt. To organize other people’s investments and increase the wealth of the group. This seems complicated, but it is the way all people and countries grow strong and independent, how they grow into peace and live in harmony with neighbors.

      The wealthy do create jobs. They directly hire others, or they build the system where jobs are available. This is called “investing,” building, manufacturing, what ever you choose, but it is “providing for the needs and demands of the people.”
      It is also what the Occupiers are against. Against the increase of wealth.

      Poor people create jobs, but they are jobs like Social Services Administration. Food Stamp Printing Specialist. Fraud Investigator. Police. Prison Guards. Lawyer. And of course, Liberal Politicians.

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  2. Blu OwenComment by Blu Owen
    July 11, 2012 @ 12:21 pm

    President Obama’s seems to believe that money earned by anyone belongs to the government, hence, the government is paying out money that it does not take in.
    Someone should ask him at a press conference “When someone earns money exactly who does that money belong to?”
    Obama would probably reply “that it is their own except for their “fair share” of taxes owed.”
    The next logical followup would be “Where in the Constitution does it state that the President should decide what “fair share” should mean?”
    The song and dance from him from that point on would be hilarious!

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    • wolfComment by wolf
      July 11, 2012 @ 1:52 pm

      Or simply ask him what percentage would be a fair share? NONE of the liberals want to have an exact precentage number because they would never be able to raise it again…because they would have already determined what a fair share is. THAT’s the question that should really be asked to stump these liberal idiots once and for all.
      The follow-up question then would be…IF you got that percentage from every single person in the USA….would it eliminate the debt? Hahahahaha

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    • bna42Comment by bna42
      July 11, 2012 @ 2:23 pm

      “. . .if we spend trillions more on tax cuts for the wealthiest Americans”

      Obama as well as all Democrats believe that all wealth belongs to the government, so when they allow people to keep more of what they earned, it is regarded as the government “spending” on those people.

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  3. librabobComment by librabob
    July 11, 2012 @ 12:30 pm

    Thank you Mr. Sowell for your outstanding article on Obama’s tax the rich political scheme. I only wish the mainstream media would publish it so liberals could be better informed!

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    • christopolousComment by christopolous
      July 11, 2012 @ 3:43 pm

      Sadly, the liberals only view one thing, and that alone, namely that their cash cow of entitlements and special compensations is tied to voting for Democrats. It has always been about what is given to them by their benefactor, the government. Facts are of little consequence to the brainwashed.

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  4. JDZComment by JDZ
    July 11, 2012 @ 1:19 pm

    And, if we extend the Bush tax cuts (still not being referred to as the existing federal tax rates approved by Congress 10 years ago), according to the Obama administration, it will cost the federal government trillions of dollars looking ahead. IT WILL COST THE FEDERAL GOVERNMENT. So, in the liberal mind, the money that the government does not conviscate from the wage earners in this country is a cost to the federal government. So, the way their backward mind works is that all of the money earned by Americans (wage, capital gains, inherited, etc ) belongs to the government, and they ALLOW us to keep some percentage of it. So, if the tax rates are reduced, that is costing the federal government. Get it?

    It is amazing…and somehow the liberal mindset sees no issue with this kind of thinking.

    Oh, and by the way, I just listened to the Romney speech to the NAACP conference in Houston this morning, and he got booed when he mentioned he wanted to repeal and replace Obamacare. To say the least, they were not the best audience for him to speak to about just about anything. They are going to vote for Obama and are in denial of the poor performance of this administration and no one is going to change their mind.

    Unfortunately, the African American and Hispanic communities for self serving and racially based reasons, are mostly going to vote for Obama, and Mitt and his team can keep trying, but it isn’t going to help much. Even with the highest unemployment level of any ethnic group in the country, the Blacks are going to give Obama a pass because he is Black in their eyes.

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  5. 49bobComment by 49bob
    July 11, 2012 @ 1:40 pm

    Of course Mr. Sowell is right he is almost always right. Thank God he is on our side.

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  6. wolfComment by wolf
    July 11, 2012 @ 1:47 pm

    Another excellent article, Dr. Sowell. One that won’t be read by the many that could use the education.
    Unfortunately…Obama’s rhetoric is exactly the type of sound bites that 50% of the voting population want to hear, so they can continue their life without paying taxes. Obama is not stupid. He knows if he can rally the 50% of people in this country that don’t pay taxes, to get out and vote…he’ll be able to have 4 more years to completely trash our country.

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  7. FlaJimComment by FlaJim
    July 11, 2012 @ 2:56 pm

    The ‘progressive’ tax rate has been a bad joke for nearly a century. Do high wage earners have better government services than the rest of us? Hardly, when they’re pilloried by every populist that comes along and urges more taxes believed on them as well as general scorn.

    Government, particularly the Dem version, has always been on the wrong side of the tax equation and common sense. In the fifties, the Feds bet on the movie industry to thrive and instituted a surtax on theater receipts. In addition, marginal income tax rates jumped to an astonishing 90%. Now you know why so many movies were made overseas in the 50s.

    When Reagan convinced Congress to pass his tax cuts, the increased tax revenues were astonishing. Why? Because it made no sense to avoid or evade taxes for high income earners. It was a win-win situation for both sides. Of course, the idiot Dems couldn’t use the revenues to pay down the debt; they spent it. Unstatisfied with that, they then proceeded to inch tax rates up again. Guess you’ve got to be a special kind of stupid to be a Dem.

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  8. winstonsmithComment by winstonsmith
    July 11, 2012 @ 6:28 pm

    There was a “concrete” example of this whole idea a back in the early 60’s: the Sarasota Bay Bridge between Sarasota and Bradenton FL. When it was built they intended to have it pay for itself by the way of Tolls set at 50¢ each way and be paid off in a given number of years. After just a few months it was found that, despite saving motorists the MANY miles they would have to drive AROUND Sarasota Bay without the bridge, the amortization was falling quite behind schedule. The City Council panicked and raised the Tolls first to 75¢ then $1.00 each way! With each INCREASE in Tolls the payoff fell further and further BEHIND!
    Finally, the Mayor stepped in and REDUCED the Toll to 25¢! The bridge was PAID OFF YEARS EARLY!
    Paraphrasing Luke Skywalker (Star Wars, A new Hope) “The tighter you squeeze the more [money] will slip through your fingers!”

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    • canada3dayerComment by canada3dayer
      July 12, 2012 @ 5:17 am

      actually it was Princess Leia (to Grand Moff Tarkin), and the quote was “The more you tighten your grip, Tarkin, the more star systems will slip through your fingers.” but I get the analogy and it’s very apt.

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  9. CharlieComment by vietnamvet
    July 11, 2012 @ 6:46 pm

    “If class warfare rhetoric about taxes leads to more votes for him, that is his bottom line, whether the government gets a dime more revenue or not.”

    And that is the real story for Barack Obama.
    He doesn’t care if the government gets more or less money, and he doesn’t care if citizens get more or fewer jobs.

    He simply is not interested in making anything ‘better’.
    As a matter of fact he is working as hard as he can to make things as bad as possible.

    Only if the country fails totally, and is reconstructed according his version of ‘correct’ will he feel he has succeeded.

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    • bna42Comment by bna42
      July 11, 2012 @ 7:49 pm

      “He doesn’t care if the government gets more or less money. . .”

      He publicly admitted this when he was being interviewed by George Stephanolous during the last tax debate. George said it has been proven several times that when you lower tax rates the government takes in more money, but Obama said that didn’t really matter. He said the wealthy should pay more taxes as a matter of “fairness”.

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    • nickster99Comment by nickster99
      July 12, 2012 @ 7:07 am

      You hit the nail on the head. He has only one goal and that is to destroy this country’s economy and change it into a European style economy. And he does not care how it gets done! But he need 4 more years to do it in and he must be stopped in November!

      He cares nothing about the people or this country! Remember he said in his speech when he won. ” Finally change has come to America” but not the change all the lemmings thought they were getting!

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  10. itallmattersComment by itallmatters
    July 11, 2012 @ 7:19 pm

    Pa-Leeeez – we MUST get enough fire in our belly to VOTE this uncharming guy out of our WHITEHOUSE. Ruining this country on a daily is NOT what the President of the United States is supposed to be doing. Class warfare, racism spued from his speeches is all BAD for this country. Passing more entitlements to GET MORE VOTES. VOTE HIM OUT or else we have no chance of survival.

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  11. thecitizenComment by thecitizen
    July 12, 2012 @ 1:06 pm

    I agree with Mr. Sowell (and history): Tax rates and tax revenue are inverse.

    I certainly agree with those posting here who think BO – MUST – be replaced.

    However, I strongly beseech all to keep in the very front of your mind that ESPECIALLY the Senate and the House (which is SUPPOSED to control the purse strings) also need urgent attention and turnover.

    Even with all the ‘new’ members to the House their focus seems to be on spending more money TODAY, collecting more taxes TODAY, but … forecasting a ‘reduction in the increase in spending’ FIVE AND TEN YEARS down the road.

    You may think with the GOP majority the in House there is a measure of comfort there. But let me remind you that with an overwhelming GOP majority (and Boehner’s leadership + the RINOS)the CAP and TRADE Bill passed both houses and was signed into law by BO. If you think Obamacrap is bad for all Americans (which it truly is) just wait a few years and see what a DAILY dollars and cents travesty is wrought on all Americans by C&T. Which of course means even less money is available to buy consumer goods, or, to pay taxes.

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    • bna42Comment by bna42
      July 12, 2012 @ 1:33 pm

      “. . .the CAP and TRADE Bill passed both houses and was signed into law by BO.”

      thecitizen, you are either confused or deliberately trying to mislead. The “cap and trade bill” was never passed by Congress and therefore was never signed into law by Obama. Since Obama didn’t get this bill pushed through, he decided to try to put this in force by EPA regulations, and they are being investigated by Congress currently.

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  12. thecitizenComment by thecitizen
    July 12, 2012 @ 9:48 pm

    @bna42: Re Cap & Trade, I have double, triple and quadruple checked and … “You are right, I was wrong.”

    My apologies to all.

    On the one hand I am most, most chagrined.

    On the other hand, in this instance, I am most, most VERY happy and relieved to be wrong! So, thanks you much and kindly for that!

    That said, I stand by the rest of my comments. Especially the Senate, and the House, need urgent attention and turnover.

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    • canada3dayerComment by canada3dayer
      July 12, 2012 @ 10:29 pm

      every last one of those buggers in DC needs TERM LIMITS. if 2 4-year terms is good enough for the president, it damn well should be good enough for Congress and the Senate. but since THEY have to vote to allow US to vote on it, it’ll never happen. the “career politician” shoud not exist.

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