The Daily Southerner, Tarboro, NC

December 26, 2012

A goldilocks tax rate

Bob Harper

TARBORO — Maybe what we need is a Goldilocks tax rate.  Let's remember the story of Goldilocks.  Once upon a time, there was a little girl named Goldilocks.

She went for a walk in the woods and came upon a house.  She knocked on the door, but there was no answer.  The door was not locked so Goldilocks walked on in.

At a table in the kitchen, she found there were three bowls of porridge.

Being very hungry Goldilocks tasted the porridge from the first bowl.

"This porridge is too hot!" she exclaimed.

So she tasted the porridge from the second bowl.

"This porridge is too cold," she said.

Then she tasted the porridge from the last bowl of porridge.

"Ahhh, this porridge is just right," she said happily and she ate it all up.

After Goldilocks had eaten the three bears' breakfast she decided she was feeling a little tired. So, she walked into the living room where she saw three chairs.  Goldilocks sat in the first chair to rest her feet.

"This chair is too big!" she exclaimed.

So she sat in the second chair.

"This chair is too big, too!" she whined.

So she tried the last and smallest chair.

"Ahhh, this chair is just right." She sighed.  But just as she settled down into the chair to rest, it broke into pieces!

Point is can we really have a tax rate that will suit everyone. We can't have a rate that would please the Democrats, the Republicans, and the people and still keep our economy from going under.  Some people seem the think that there's no limit to how much we should tax the rich.  Then we have to define the "rich.” What is rich and what is not.

Actually, by most measures, if we taxed the rich out of existence it would only run the government but for a few months.  The amount of funds needed to run our government calls for the middle class to bear the brunt of the burden.  It has always been that way, and always will.

Often we have to illustrate a point by going to extremes.   For example; suppose we said, "Let's tax everyone, on their income at a rate of 40 percent."

"Are you nuts," would come the reply.  "A rate that high would bring on a depression worse than the one in the 1930's.  And, of course, that would be the case.  Alright, let's tax everyone at a rate of 5%.  That certainly wouldn't work. A five percent tax rate wouldn't run the government for five days, even if we did away with the military all together, along with just about every other government program.

Perhaps the best thing to do is to look back at history to see what has worked in the past and what hasn't worked.  I mean looking at the economic history of our nation and that of other nations, too.

Back during the Great Depression in the 1930's, when this nation was suffering greatly with unemployment in double digits and citizens lining up in soup lines to get a bite to eat, President Franklin Roosevelt blamed the rich for our problems and decided taxing the rich could bring us out of the Depression.

Of course, the rich weren't as rich as they had been and there were not enough of them, with enough money, to accomplish anything like this.  Plus, the funds that came from such taxes had to be pulled out of the private sector, thereby causing unemployment to increase.  In fact the depression became worse.

FDR still blamed the wealthy for our economic predicament, so he virtually declared war on business and what few wealthy people we had were heavily taxed until the idea of private investing in building a stronger economy was impossible.  We reached the point where we had the highest tax rate in the world.  Actually we didn't emerge from the Great Depression until the country started mobilizing for World War II.

So, is the tax rate porridge too hot (too high), too cold (too low) or just right?  I doubt that our tax rate has ever been, or will ever be, just right.  How do you tell when that level is reached?  Obama has been for raising taxes on small business owners who would have to cut back on employees in order to pay these taxes.

It does look like we may be getting closer to an agreement between Obama and the Republicans that will have enough logic in it to avoid the Fiscal Cliff and move the nation's economy, in 2013, on a smoother course.  Let's hope so.

Finally, I would like to wish that all the readers have had a wonderful Christmas, remembering the true meaning of Christmas, and what occurred over 2,000 years ago that made this holiday so special.  Also, I certainly hope that 2013 will be a prosperous and a safe year for this country and all her citizens.

(Bob Harper is a Tarboro resident who writes a column of general interest.)