I have been carrying on a running debate on Facebook about Senator Bernie Sanders of Vermont. It has been frustrating because using logic with those who are illogical is like trying to drain a lake using a teaspoon. Sanders is fond of making outrageous statements displaying contempt for the wealthy, corporations, and anyone that is not of a socialist mindset. He seems intent on stimulating class envy and class warfare demanding, among other things, a raise of the minimum wage, elimination of corporate tax breaks, an increase to the inheritance tax, and a constitutional amendment that would allow Congress to disallow corporate giving to political campaigns.
Bernie Sanders’ statements seem to have a lot of populist appeal, according to the responses I see on facebook. In my view, much of what he says is disingenuous when you look at his background and political donors.
Firt, Sanders, by his own admission, is a socialist. That automatically establishes his mindset. His ideological rhetoric sounds like it is taken directly from the works of Karl Marx. Sanders biography shows that he was involved in the anti-establishment protests of the sixties, and his mindset has never progressed beyond that. Regardless of what the facts may be, Sanders’ mindset will find a way to be anti-establishment, even if it means skewing the facts into half truths.
Secondly, Sanders’ biography indicates that Sanders has never run a business or even worked in a business. Therefore he has no comprehension of what it costs to run a business and be successful. Yet, he is constantly railing against corporate tax breaks and corporate profits. He rails against things he does not understand and never will understand.
Third, Sanders’ financial disclosures indicate a net worth of around $100k. His assets are modest as is his debt. Being 73 years old with such low net worth, it appears that Sanders railings against the wealthy and corporations are out of envy and jealousy. He is bitter because he is nearing his “golden years” which are not “golden.” Sanders’ salary as a U.S. Senator is likely the biggest paycheck he has ever earned. And, he will have a nice retirement income paid for by taxpayers.
Fourth, Sanders’ railings against tax breaks for large corporations, especially big oil companies shows a tremendous lack of understanding the tax code that he wishes to reform. Big oil tax breaks are not any different than those of other corporations. The tax code allows business to recoup expenses before calculating profit and paying taxes. Since it costs several tens of billions of dollars of investment to get an oil project going, there is no profit until those expenses are recouped. The average profit per dollar for Oil companies is about .07. That is about two cents less than the average for corporations of other industries. The anger at big oil is misplaced.
Another misconception about taxes that Sanders speaks out against is the 20% capital gains tax on dividends. What he does not understand is that the effective tax rate on dividends is around 50%. The reason is that the dividend is paid out of profit to the stockholder. But that dividend, as part of profit, was taxed as several levels before being distributed as a dividend. So the stockholder, as an owner of the corporation, was paying tax on the profit, before that profit was distributed, and then again had to pay tax as an individual on that dividend. Again, half-truths, make good populist appeal.
Fifth, Sanders makes a big pitch for raising the minimum wage. It seems like he cares for the little guy. However, Sanders’ top 20 contributors to his campaign are all labor unions. In most, if not all, labor union contracts, wages are indexed to the minimum wage. If the minimum wage goes up, all wages in all unionized companies in the nation will go up as well. The unions have a vested interest in trying to get the minimum wage raised and have invested heavily in Bernie Sanders. Sanders’ railings against wealthy people, like the Koch brothers, buying elections rings empty when he appears to have been bought by the labor unions.