By Celia Bigelow, YAF chapter chairman at Hillsdale College
The Obama administration’s everyone-should-pay-their-fair-share policy proposals are anything but fair to young American’s trying to start their life. The administration’s class warfare tactics of heavy taxation and wealth distribution will only squander—not help—the up-and-coming generation of entrepreneurs.
Not only do high taxes punish the businesspeople who hire young people, these vicious attacks on profits by the administration will morph the “Pursuit of Happiness” into a trivial pursuit.
Creative young people are the future entrepreneurs who will fuel this economy, and America cannot afford a government or a culture which punishes their profit and success.
A Basic Economics Lesson
The Obama administration doesn’t seem to understand the primary fundamental principle of the free market system: consumer choice. Entrepreneurs are profit-driven and must ultimately provide goods and services to consumers who willing to pay for them. If consumers aren’t happy, the entrepreneur loses.
Profits drive individuals to expend time and energy in developing new products and services that consumers demand. Without the reward of profits, entrepreneurs have no incentive to embark on such tasks, and society as a whole suffers.
The beautiful thing about the free market system is that anyone—especially young, fresh newcomers—can be successful if they create an item that people want. Ludwig Von Mises, a prominent figure in the Austrian School of Economics, explained in his book Human Action:
“Every ingenious man is free to start new business projects. He may be poor, his funds may be modest and most of them may be borrowed. But if he fills the wants of consumers in the best and cheapest way, he will succeed by means of ‘excessive’ profits.”
This has been the case for many young entrepreneurs. Steve Jobs, a young entrepreneur and college dropout, started a computer company in 1976 at age 21.
How We Get the Next Steve Jobs
Today, Steve Jobs is globally known for operating one of the most successful companies the world has ever known. Capitalism and the free-market paved the way to the global success of Steve Jobs and Apple.
Mises explained that excessive taxation—or the redistribution of wealth—makes it much harder for entrepreneurs like Steve Jobs to enter the competitive market: “…[T]axes often absorb the greater part of the newcomer’s ‘excessive’ profits. He cannot accumulate capital; he cannot expand his own business; he will never become big business and a match for the vested interests.”
Bigger, more established businesses (who the administration calls “fat cats”) are actually in a much better position to adjust costs to prepare for a Washington-induced tax-maggeden. But, these extra taxes will doom many young entrepreneurs with less capital who are already dealing with high start-up costs.
Theft Isn’t Fair
The Obama administration’s “fairness” plan—or the Buffet Rule—will take the fresh wind out of our economy’s sails. According to the White House:
“Anyone who does well for themselves should do their fair share in return, so that more people have the opportunity to get ahead—not just a few. And at time when we need to pay down our deficit and invest in the things that help our economy grow and keep our country safe—education, research and technology, a strong military, Medicare and Social Security—giving tax breaks to millionaires simply doesn’t make sense.”
Well, it does make sense. Confiscating a large portion of property—the hard-earned money of the entrepreneurs—creates a disincentive for new entrepreneurs to enter the market. This ultimately leads to less competition, technological growth, and job creation, all three of which America desperately needs.
To move the country into the 21st century, we will need new inventors and new entrepreneurs—the next class of job creators. To get these job creators, we need profit.
Celia Bigelow is a graduating economics major at Hillsdale College and a chapter chairman for Young Americans for Freedom.