Investing in the Government of America

Why is losing an Olympic gold medal by a tenth of a second so much more painful than ? Or why is watching an NBA championship slip through your fingers as a last-second shot slip through the net more heart-wrenching than losing 21-19 in a pickup basketball game at the local park? Though losing a job anytime hurt, why is it more wrenching to see a business you founded go under than be laid off from a 9-5 job?

Simple: the more you effort you expend on something, the more valuable it becomes to you. And it also applies to government.

According to IRS statistics, in 2006 about 1/3 of all tax filers owed nothing in taxes. This sobering statistic doesn’t even include people who don’t bother to file taxes, or those who don’t make enough to have to file a return. During this year’s presidential election, Obama and McCain promoted tax cut that would increase that number to 44% and 43%, respectively. That means that they pay nothing for the benefits of living in America. No, it’s certainly not a perfect country but we certainly have it better than most. When you’re given something for free, you’re much more likely to take it for granted than if you pay for it. When my parents paid for my TI-89, I took it for granted a lot more than I do my camera equipment that I paid for myself.

In a publically held company, shareholders votes are proportional to the capital they have invested. The person who has 30% of the capital invested gets 30% of the votes. Chances are, that person is pretty involved in making sure the decisions of the company are good ones. The person who only owns a few shares likely votes by proxy – if they even bother to vote at all. What would happen to voting turn out if even a nominal fee – say, $0.50 or $1 – were charged? While I’m guessing that fee wouldn’t even cover the cost of opening poling places and counting the votes, and I know some people wouldn’t vote simply out of protest, I think most people who did vote would spend more time examining the issues and candidates to make sure they got the most bang for their buck. No, the poll tax will not return, nor should it, but how dearly can people treasure a freebee they take for granted?

I am certainly not suggesting we convert to an aristocracy, but what happens when a majority of Americans have no monetary stake in the government?

A political candidate will be able to shout from the podiums-turned-pulpits that if elected, he or she will increase taxes on the wealthiest 49% - or, to ensure victory, just those whose incomes are in the to 30% - and eliminate the tax burden for the rest of the country. At that point, America will turn from a democracy to a tyranny of the majority – at least until the wealthy decide to leave.

As valuable as every person is, those with capital to invest provide the catalyst for the economy. If wealthy individuals and businesses chose to move elsewhere – and, unlike the poor who usually cannot afford to move out of a bad situation, the wealthy could chose to relocate – they will take their investments with them leaving fewer jobs for those already struggling to make ends meet not to mention the decrease in tax revenues

Am I arguing that everyone should pay the same dollar amount, or even the same percentage of their income, in taxes? Certainly not. But to have a skyrocketing percentage of the population that has no stake in ensuring the government spends its money wisely is foolish.