RICH, POOR, AND FLAT TAX 富，穷与平裞

Milton Friedman - Redistribution of Wealth 弗里德曼 - 均贫富解析
陈凯博客： www.kaichenblog.blogspot.com

陈凯一语： Kai Chen's Words: 

人为的将人们分为群体并按群褒贬是邪恶的定义。 

Artificially and arbitrarily dividing people into groups and treating them with discrimination and promotion is the very definition of evil.

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RICH, POOR, AND FLAT TAX
富，穷与平裞

- Morals behind Class Division and Tax Code 阶级划分与税收后面的道德 -

By Kai Chen 陈凯 3/21/2006

I often hear people talk about who is rich and who is poor. Yet I have never quite grasped by what standard people decide who is rich and poor. Very seldom I hear people talk about how and why someone gets rich and how and why someone becomes poor. Nonetheless, BEING rich or poor has almost universally become the preoccupation of most people among most countries, even here in America.

Once when I attended a party in my neighborhood, someone started to complain about how unfair things are because he works his butt off eight hours a day and only make a tiny fraction of someone like Michael Jordan who only dribbles a ball on the court. When I was in China where Marxist ideas permeated among the masses, people and the communist authorities always attacked America as being exploitative against the so called Third World, making them poorer. It seems from ordinary individuals to the governments, people have bought into the concept of class division, (being rich and poor) without ever asking themselves or questioning the authorities about the standard by which to judge and categorize such class division. And many wars are fought and many revolutions are started and millions people died because of conflict based on such a class division, sadly without ever knowing why and how such class division is defined and started.

To dwell deeper into the meaning and definition of such a class division, one can easily find that it is not always easy to decide who is rich and who is poor. And the arbitrary and artificial division of such classes by people in power, by governments, by force of guns is often blurred, unscientific, subjective, misleading and disastrous. $10,000 a year income is definitely categorized as being poor in America today, but would be categorized as rich in America 50 years ago or very rich even today if the standard is applied to some other countries. During China’s land reform, people in the north with three mules could be categorized as landlord and hauled away after a mass rally to be shot, while people in the south with four horses could be categorized as poor or middle class peasants and hence benefit politically under the communist rule. In America, because of the current progressive tax code, one dollar difference in income will prompt you into a distinct tax bracket by which you have to pay a higher percentage of income as tax. The damaging effect of such a lack of objective standard has never been adequately addressed and corrected. People continue to be artificially, arbitrarily and UNFAIRLY categorized into classes today.

Such an unfair practice to categorize people into classes has lasting negative effect on a society’s psyche. First, material wealth of a person has somehow been artificially/irrationally connected with morality. Viewing rich people as bad and poor people as good has always been the rhetoric of the left and they formulate their policies according to such man-made morality, often branding themselves as somehow morally superior and the savior of the poor people and the world. Communist regimes around the world are built upon the Marxist class theory and economic formula of zero-sum game. In China and elsewhere dominated by socialism/communism, people have been brainwashed into a frenzy to rid of rich people. They are told if you want to be rich, the quickest way is to kill the rich and put their wealth into your own pockets, and they believe this assertion because they believe they are poor because the rich has somehow, in an insidious and mysterious way, robbed them what should have been theirs in the first place. This rhetoric is not uncommon today in American liberal left. Corporations are always evil, the wage-earners are always good, and the government is the savior for the poor and the unfortunate.

Moral perversion is not the only negative by-product of such class division. Outright dishonesty/hypocrisy has become a must if someone wants to keep a little more what should have been theirs in the first place. They have to cook the book, find tax shelters, and manufacture business expenses…. Even Clinton’s pajama had been deliberately checked in the tax form to get some tax benefit, while he in public continued to demonize the corporations for their “greed”.

Another casualty is the poor themselves, often brainwashed by the left into a moral stupor, they are cautious about working hard to become rich, for they don’t want to be branded bad. Being poor somehow give them a false sense of moral superiority, so they can always curse the rich to hell. It is fun, safe and entertaining to engage in such hatred and venom-venting. It is not so safe to engage in such activity once one becomes rich. My English teacher used to be my friend when I lived in a single-bed room apartment. After he learned that I now lived in a five-bedroom mini-mansion, he was enraged and called me all kind of names. I told him my family was doing well and hoped to have his blessing. But somehow in his mind I had become a moral degenerate and he somehow always remained pure and poor with a illusory sense of self-righteousness. Thus the poor has no incentive to learn to become rich and better their material lives.

Logically we have to ask who gives anybody, any government, any authorities the right to categorize people like that, to divide them according to their incomes. Does God or Heaven give them the right, simply because they have majority? Or simply because they have guns? Or simply because they have manufactured some popular culture and artificial moral code? Where does their moral authority come from?

Zero-sum game in economic arrangement is fundamental to Marx’s theory, and the basis of modern liberal left in their theory of class struggle/class envy. Somehow Marx viewed productive force and human potential as finite. Market somehow is also a finite concept, according to Marx. It is based on these misconceptions and misinterpretations of reality, the communists/socialists and liberal left formulate their theory of class struggle and solidify their power base – the weakness and helplessness of the ignorant masses. They exploit the dark-side of human psyche and use it to gain power. As all the dialectic materialists, they view human beings as primarily physical beings, and their productive forces only from their muscles. Yet the reality tells us a different story about human beings. We have found that primary productive force is not from human muscles but from human mind with freedom to initiate. We have found that human creativity and ingenuity is infinite, the market potential is infinite, the resource from which humans can explore/employ and produce material wealth is not just physical, it is mental and spiritual. Therefore, the resource is infinite as well. Capital, the word itself, has a connotation of mind, head, primary means. It is not just money and material things.

In viewing world history, all conflicts, be they class, religious, racial, ethnic, gender…, erupt by an obsession with zero-sum game, with a concept of finite entities. Once we realize the existence of a none zero-sum game, with a concept of infinite resource and infinite outcome, the man-made conflicts, along with the man-eating power elite, will finally diminish and disappear.

I now illustrate this case with my own investment, hoping to shed a little more light onto this issue.

In 1992, Los Angeles had a riot due to the Rodney King incident. At the time I lived right in the middle of this riot – Mid City Los Angeles. The following year after the riot, the LA housing market reached a new low. Many people moved out of LA, because of their concern for their own safety and security. Having grasped the new reality that now was a buyers’ market, I made a very low offer on a magnificent mini-mansion near our house and got it, a little to my surprise. We moved into the mini-mansion but were unable to sell our own house for the desired price. We decided to lease it out to wait for a better time. 10 years later, our mini-mansion, purchased at a very low price, was worth many times the original price. And because the market turned into a sellers’ market, we were able to sell our original house with a good price. We re-invested the proceed into a multi-unit apartment building.

I and our family are now most definitely into another category – into the class of rich. In deep analysis of my investment history, we now can expose the zero-sum theoreticians and their fallacies.

According to Marxist theory, I can never become rich without being exploitative toward the poor. Yet in this scenario of my investment, I fail to see where/how I have exploited people/the poor. The seller was motivated and willing to sell, while I was also motivated and willing to buy. Where is the exploitation?

According to modern liberal leftists, someone must have been unfortunate or unlucky and made mistakes, so shrewd capitalists like me are able to exploit people’s misfortune and mistakes to have made themselves rich. This also is dubious explanation to say the least. There has been no evidence that the people who sold their house to us and moved out of LA lead miserable and unhappy lives. And hence there cannot be assertion that they had made any mistakes by selling. We might have both benefited from this transaction, and there is no way to tell and measure objectively who benefited more than the other for there is only subjective satisfaction by either party. Market exists not according to people’s right and wrong choices and decisions, though these choices and decisions may create opportunities. Market exists because people simply have different priorities. The people who sold their mini-mansion to us right after the riot might simply view safety and security as their priority, rather than investment opportunity. They might have had less confidence in LA’s future economy than I had. Does this mean they had made a big mistake and should have kept the house to wait for better time? No. It only means that they are not willing to take the risk I am willing to take. Should risk-taking be awarded or be punished, by some unfair tax code? All creative and inventive activities by humans imply risk-taking. To punish risk-taking is to punish human creativity and impulse to invent, which is our(human) distinction from lower creatures. To punish risk-taking is to punish us as human beings, to make us just like animals, living with only flesh and blood, not mind and souls.

I refuse to apologize to others, be it the poor or the government or the liberal left, for I came to America precisely because I want to be a real human being to realize to the fullest extent, my potential. I left China because I was treated as a tool and lackey for the collective machine – the Party-State, because I was treated not as a creative mind, an independent thinker, but only as some lower being with only body cavities and biological functions. Even that was viewed as a burden on the collective and the government. I could not see and feel my very own existence and could not fulfill the innermost, intense yearning for freedom and happiness. I now not only have dreamt an American dream, I am living in this dream. I am fulfilled not just as a material being, but as an intellectual and spiritual being. If this is not the most moral longing and behavior a human individual can have, I don’t know what is.

Flat tax, that is, imposing a fair levy on the citizens by its elected government, is the only way to ensure the meaningful limited government, and to avoid moral degradation and degeneration of human beings. It is not difficult, especially with today’s modern technology, to calculate a fair and flat tax level, to ensure the adequate and minimum funding of the government. With flat tax, every one is viewed as equal participant in a moral society, regardless how much and how little they have. It fosters human dignity and motivates people to do better as time passes. It is congruent with American spirit of risk-taking, creative endeavors, and fulfilling each individual’s potentials.

With American spirit alive and well, with each individual strives to be his or her best and not holding back, with a fair tax code – the flat tax, only sky is the limit.