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Begging to Disagree with the Reverend...

by John F. Tamburo, Editor in Chief, Publisher
Originally Posted: 1/3/2006 6:18:10 PM

In the January 3, 2006 edition of the Chicago Sun-Times, Rev. Jesse Jackson writes against a tax cut and also a cut in the guaranteed Student Loan program.  He decries the former as a tax cut mostly for the very wealthy, and the latter he compares to raising tuition so that rich people can pay less taxes.  He decries the "privatization" of college education.  I submit that the Reverend Jackson misses the point.  Read article here.

To begin with, the top 50% of income earners already pay 96.54% of all income taxes.  Therefore, the Rev. Jackson is technically right, because the lower 50% of all income earners pay only 3.45% of taxes.  Only the most productive (don’t say "rich" since the incredibly wealthy are resourceful enough to avoid paying much in taxes) pay taxes now, so any tax cut will benefit those who produce the most income.  Funny thing, however, the super-rich look for tax-sheltered investments, which often takes their money out of the capital markets and into tax-free bonds or foreign investments.  The productive, on the other hand, tend to invest in their own businesses, and also into other businesses via the capital markets.  This produces the fuel for innovation in our economy.  Historically, almost every tax increase on "the winners of life’s Lotto" (John Kerry, 2004), has resulted in economic slowdown.  The only "exception" was engineered by Bill Clinton’s "irrational exuberance" stock bubble, causing a serious recession when it burst in April of 2000.  The market has yet to recover.

"Rev. Jackson, however, decries the tax cut as pandering to the wealthy.  Again, and I cannot stress this enough, the wealthy are those with huge amounts of assets.  They shelter their incomes quite effectively.  The productive are the ones who get hit in the nose by oppressive liberal tax policies."

Rev. Jackson, however, decries the tax cut as pandering to the wealthy.  Again, and I cannot stress this enough, the wealthy are those with huge amounts of assets.  They shelter their incomes quite effectively.  The productive are the ones who get hit in the nose by oppressive liberal tax policies.  Every single time that taxes are cut, the economy roars, and in the end, the government reaps more money.  Does Rev. Jackson understand that small business owners benefit the most from tax cuts?  Does he further understand that these small business hire more people, turning government dependents into taxpayers?  Does he understand that minority taxpayers benefit the most from tax cuts?

The Rev. Jackson writes, "Many students in college have to work long hours to help finance their education. Often that burden is too much for the young to bear. Fifty-three percent of low-income freshmen who work more than 35 hours per week drop out and do not receive a degree. And increasingly, parents, desperate to provide a future for their children, become saddled with college debts as well, even as they face the need to put funds away for their own retirement."  True.  However, that hard work should help those who wish a college education to learn industry and responsibility.  Those traits will be more valuable than the degree itself when it comes to making oneself more productive in society.  If one hasn’t the industry to work a full time job and go to school, how will he or she handle the long and demanding hours sometimes required in the corporate world?  How will he or she handle the even-longer hours required for small business?

"Rev. Jackson then decries that ’[w]e are witnessing the slow privatization of higher education.’  Amen!  Who needs to empower the government to indoctrinate students?"

Rev. Jackson then decries that "[w]e are witnessing the slow privatization of higher education."  Amen!  Who needs to empower the government to indoctrinate students?  And who cares?  Virtually all medium and large business will pay one hundred percent of tuition and books and other fees for any worker who decides to better himself with more education.  Millions of people have had a free ride at college.  Those who excel are eligible for other programs such as scholarships and grants.  The fact is that student loans are not being eliminated, they’re not even being cut.  They are increasing at a smaller rate.  Unfortunately, along with the greater loans will come greater defaults.  There are doctors out there who make hundreds of thousands of dollars per year, yet blow off their student loans, leaving Uncle Sam holding the bag.  They then structure their businesses so that they have little to no tax refund, forcing the government to utilize extremely expensive litigation to collect that which these people should have paid timely.  Admittedly these deadbeats constitute a small fraction of student loan borrowers.

Rev. Jackson continues to argue that the parents of these students need to put away money for retirement, yet he opposes the very Social Security reform that would reduce that need by allowing their Social Security taxes to be invested in the capital markets, where they would conservatively yield triple the present governmental dole.  If that reform were enacted, parents would have more money to fund their children’s education, instead of forcing these kids to start off independent life in debt to a bank with the heave hand of the USA to ensure that they’re paid -- with interest.  What empowers the student more?  To come out of school with a debt monkey on his or her back, or to come out fresh and ready to tackle the world?

Rev. Jackson appears not to have thought through the remefications of increasing taxes, such as reduced capital investment drying up jobs for debt-ridden graduates.  Am I the only one who sees tax increases plus increased student loan guarantees as a recipe for disaster for the young people the plan is intended to help?  Cut the taxes, reform social security.  Parents can then afford to help out their kids, who can also learn hard work and its rewards.  In the end, we’ll all be far better off.