Tags: wealth | economy | taxes | john tamny

Economic Adviser John Tamny: It's 'Disastrous' for Wealthy to 'Hand Their Money Over to Government'

By    |   Wednesday, 22 Apr 2015 05:52 PM


Understanding how the world's economy works may seem daunting, but in reality, it's as easy as knowing the facts and figures of sports, rock 'n roll and even Paris Hilton, John Tamny, who covers economics and politics for Forbes.com and is editor-in-chief of RealClearMarkets.com, told Newsmax TV.

"The idea behind the book was that economic growth is so simple and everyone knows it, that’s because they know the world around them," Tamny — author of "Popular Economics: What the Rolling Stones, Downton Abbey, and LeBron James can Teach You About Economics," published by Regnery — told "The Steve Malzberg Show" on Newsmax TV.

A prime example: LeBron James, the 6-foot-8 small forward for the Cleveland Cavaliers.

"If you want to understand free trade, Lebron James is a very good example of it. He is the best basketball player in the world. That’s how he can create the most wealth for himself," Tamny said.

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"But it is said by football players that he can also be a tight end in the NFL. So I make the argument, if he did so, that would be a disaster because it would be at the expense of him being the best basketball player … It actually reduce his income if he did both.

"Free trade is no different. It’s entirely possible that you’re the best chef and the best tailor and the best builder in the world, but if you were to do all three of those things, it would be at the expense of doing what you’re best at which is being the host of a TV show."

Tamny — also a senior economic advisor to the Fresno, California-based Toreador Research & Trading — said since individuals all trade freely, "we let others do things they’re good at and we concentrate on what we’re best at — because that allows us to command the most in the economy."

Tamny said he believes giving money to the government the worst thing that can be done in growing the economy.

"It’s a disaster for the economy and it’s particularly disastrous when the rich hand their money over to the government rather than holding on to it," he said.

"The reason for this is basic, when Paris Hilton gets $100,000 to deejay a show in Las Vegas, she puts that money into the bank. In short, her wealth is immediately redistributed to those who are not Paris Hilton and that’s why we want the rich to hold onto their wealth.

"They put it in the bank, it’s lent to someone who needs a car loan or needs a college tuition or who needs a small business loan. If they invest it in the stock market they’re providing capital to businesses."

With the other option, "we know [the government is going to consume it," Tamny said. "At least when the rich hold onto it, they redistribute it to us."

But what choice do individuals have when it comes time to pay taxes?

"That’s the problem … When government is taxing us, it is robbing us of future ESPNs, future Intels, Googles, all these great companies," Tamny explained.

"That’s what we’re missing out on when government is taking too much of our money."

That's where the beloved rock 'n roll band The Rolling Stones — whose members Mick Jagger, Keith Richards and Charlie Watts have been together since 1962 and are touring the United States this summer — come in.

"In the 1970s the top tax rate in England was 83 percent. Well, as Keith Richards pointed out, that was the equivalent of being told to leave the country," Tamny said.

"Guess what? That’s what they did. They made 'Exile on Main Street' in France, one of their best albums ever. Now, the Stones were able to move. They were rich. They could escape the tax.

"But what about all the sound engineers, all the caterers, all the people who work on the creation of the album? They didn’t have the means to go with the Stones. So it’s the poor and the middle class who pay for the high income tax rates levied on the rich."

Another example, according to Tamny, is the oil fortune belonging to the fabulously wealthy Getty family.

"In the 1950s, [J. Paul] Getty was the richest American in the world. He left behind a fortune worth billions of dollars. Thank goodness he was able to leave that to his heirs, because guess what they did?" Tamny said.

"While the government would’ve consumed it on any number of things, among other things the Gettys invested $10 million in what was then a [fledgling] network we now know as ESPN, the most valuable sports property in the world.

"This is what happens when government is not able to consume the wealth we create."

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Understanding how the world's economy works may seem daunting, but in reality, it's as easy as knowing the facts and figures of sports, rock 'n roll and even Paris Hilton, John Tamny, who covers economics and politics for Forbes.com and is editor-in-chief of RealClearMarkets.com, told Newsmax TV.
wealth, economy, taxes, john tamny
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2015-52-22
Wednesday, 22 Apr 2015 05:52 PM
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