78-11-A5
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Economics II
TranscriptOn the last broadcast, I suggested that labor leaders were conducting a kind of class warfare using some very questionable economic theory. I'll be right back. On my last commentary I criticized the A.F.L.-C.I.O. California convention for adopting some resolutions which were actually hurtful to the men and women they represent. I spoke specifically on the false idea that business can be made to pay a larger share of the tax burden, thus relieving individuals. The truth of course, is that business taxes are part of the cost of operation and must be paid by the customer in the increased price of the product. But the labor leaders in that California convention made other decisions equally harmful to their rank and file members. For example, they raised the old cry, born of demagoguery, that income taxes should be more progressive making those with higher earnings pay a bigger share of the tax. Well right now, at less than $10,000 a year, and I don't think many union members earn less, you are in the top 50 precent of income earners in the United States, and you pay 94 percent of the total income tax. At a little over $20,000 you're in the top 10 percent and that 10 percent pays half the total tax. And if you're talking of the one half of one percent who earn $50,000 a year and up, go ahead raise their tax to a hundred percent, take every dollar they earn and it will run the government for less than three days. The delegates to that California A.F.L.-C.I.O. convention I'm sure, were well-intentioned but they made it clear they did not want to cut in government spending. They want more tax revenues to pay for that spending and they don't seem to realize the only source of additional revenue is the great working middle class which includes their own members and which works now almost five months a year to pay for the cost of government. Finally, the other proposal the convention made was to gain more revenue from the capital gains tax. The delegates echoed the president's ill-considered charge that a reduced capital gains tax constituted a windfall for millionaires. Frankly speaking, the President was a little off base. It's hard to get great numbers of people excited about the capital gains tax. Very simply it's the tax one pays upon selling for a profit something one owns. It is true it affects mostly those who have savings to invest in stocks, land or some other object. It is also true that capital investment is what fuels our industry and creates jobs. Our competitors in world trade such as Japan and West Germany, even socialist England, have no tax on long-term capital gains, but it isn't true to say it affects only people of wealth. Half of all those reporting capital gains have adjusted gross incomes below $15,000, and more than half of the total amount of capital gains is reported by people with incomes below 25,000. In 1969 we virtually doubled the capital gains tax. In 1970 there were 31 million investors putting up the capital to increase production and create jobs. Today there are fewer than 25 million. I wish today's labor leaders had the statesmanship of the American Federation of Labor leaders in 1942 who demanded that the capital gains tax be reduced, if not eliminated, because it was preventing the investment of capital needed to create jobs for their members. This is Ronald Reagan. Thanks for listening. |
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