The following story is rooted in Aesop’s Fables and has significant currency today.
Once upon a time, a little red hen scratched about and uncovered some wheat grains. She called her barnyard neighbors and said, “If we work together and plant this wheat, we will have some fine bread. Who will help me plant the wheat?”
“Not I,” said the Cow. “Not I,” said the Duck. “Not I,” said the Goose. “Then I will,” said the Little Red Hen and she did.
After the wheat started growing, the ground turned dry and no rain was in sight. “Who will help me water the wheat?” asked the Little Red Hen.
“Not I,” said the Cow. “Not I,” said the Pig. “Equal rights,” said the Goose. “Then I will,” said the Little Red Hen and she did.
The wheat grew tall and ripened into golden grain. “Who will help me reap the wheat?” asked the Little Red Hen.
“Not I,” said the Duck. “Out of my classification,” said the Pig. “It’s not in my contract,” said the Goose. “Then I will,” said the Little Red Hen and she did.
When it came time to grind the flour, “not I,” said the Cow. “I’d lose my unemployment compensation,” said the Duck. When it came time to bake the bread, “That’s overtime for me,” said the Cow. “If I’m the only one helping, that’s discrimination,” said the Goose.
“Then I will,” said the Little Red Hen and she did. In fact, she baked five loaves of fine bread and held them up for her neighbors to see.
“I want some,” said the Cow. “I want some,” said the Pig. “I demand my share!” said the Goose.
“No,” replied the Little Red Hen. “I will eat the loaves myself.”
“Excess profits!” cried the Cow. “Capitalistic leech!” exclaimed the Duck. “Exploitation!” screamed the Goose and they hurriedly painted picket signs and marched around the Little Red Hen.
The Farmer came to investigate the commotion, he told the Little Red Hen, “You must not be greedy. Look at the oppressed Cow. Look at the disadvantaged Duck. Look at the underprivileged
Pig. Look at the less-fortunate Goose. You’re making second-class citizens of them.”
“But only I earned the bread,” said the Little Red Hen.
“Exactly,” said the “wis”e farmer. “That’s the wonderful free enterprise system; anybody in the barnyard can earn as much as he or she wants. You should be happy to have this freedom; in other barnyards you would have to give all five loaves to the community. Here you only have to give three to your suffering neighbors.”
The Little Red Hen obliged and walked away in silence...
It has been some time since the Farmer’s lecture. The barnyard is now dilapidated, the animals are always hungry, and the Little Red Hen, well, she left some time ago.
Today, we fear the story of the Little Red Hen is becoming a metaphor for the American economy. Cries that the rich and corporations do not pay ‘their fair share’ or that technology is exploiting and undermining the American economy will leave America’s entrepreneurs, “Little Red Hens,” with no choice but to depart, eventually leaving the American economy a dilapidated barnyard.
WHAT IS THEIR FAIR SHARE?
“Pay their fair share” is a practiced mantra in Washington, DC, as politicians routinely claim that the rich are not doing their part and must pay their fair share.
However, the rich pay their fair share and more by any objective standard.
Vice President Harris’ proposed tax plan would increase taxes on corporations and the “ultra-rich” to achieve “equitable outcomes.” She plans to expand the capital gains tax rate from 20% to 28%, the top income tax rate from 37% to 39.6%, the investment income tax from 3.8% to 5%, and the corporate tax rate from 15% to 28%. She also plans to add an unrealized capital gains tax, moving it from 0 to 25%.
Harris also intends to allow the Trump tax cuts to expire in 2025 … even though the average tax rate paid by every category of taxpayer was lower last year compared to the pre-Trump 2017 Tax Cuts and Jobs Act. Like Trump’s, Harris’s plan also lacks significant government spending cuts to reduce our rapidly growing national debt.
Kevin Munoz, senior spokesperson for the Harris campaign, claims the plan will not add to the national debt. Munoz argues that increased costs would be covered by making corporations and the ultra-rich pay their “fair share” via higher income tax rates.
According to the IRS, in 2021, American taxpayers paid $2.193 trillion to the federal government, a 28.4% increase over 2020. The top 1% of taxpayers earned 26.3% of Adjusted Gross Income (AGI) but paid 45.8% of all personal federal income taxes. The top 0.1% of earners paid 24.7%, and the top 5% paid 65.6%.
In contrast, the bottom 50% of taxpayers earned 10.4% of income but paid only 2.3% of total taxes. Over the past 40 years, the rate paid by the bottom 50% has declined from just over 7% to just over 2%, while the top 1% increased from just over 17% to nearly 46% of all individual taxes.
In 2021, the top 1% of taxpayers’ average tax rate was 25.9%, while the bottom 90% averaged tax rates between 3.3% and 10.4%.
AUTOMOBILES OVER BUGGY WHIPS
Machines and technology have long proven beneficial to society, spurring the development of new and better goods and services and a lower cost of living.
Imagine if American buggy manufacturers prevented the introduction and commercialization of the automobile.
In 1908, despite the strong opposition of horse-drawn carts and carriage makers, Henry Ford introduced the Ford Model T for $850 when an average worker’s annual income was $520. Fortunately, the free market prevailed, and America boomed from 1908 when there were 8,000 automobiles, 144 miles of paved road, and a population of just over 88 million. Now, we have over 296 million vehicles ranging from affordable (costing less than half the average annual American income of roughly $59,000) to the exotic. Today’s vehicles are far superior, with features that were only dreamed of in 1908.
TOMORROW?
During their 90-day extension, the International Longshoremen's Association (ILA), like the buggy manufacturers of Ford’s time, wants to prevent the introduction of new technology in America’s ports.
Higher wages and benefits for longshoremen WILL drive up prices for US imports and exports, UNLESS they are offset by lower corporate profits and technology. Don't forget that lower corporate profits affect ALL stockholders, including the rate of return on millions of American pensions and IRAs. Also, thwarting the introduction of new technology in our ports lessens the likelihood that American companies and workers will be building the next generation of high-end, cutting-edge port technology, such as trolleys and cranes sold at home and abroad. While burgeoning American AI entrepreneurs will have one less new market, one less set of new customers to satisfy as we compete to maintain and grow market leadership in this vital new and promising global technology.
We must do our best to keep our “Little Red Hens” at home in America.
About the Authors
Dr. Timothy G. Nash is director of the McNair Center at Northwood University. Mr. James Hop is chair of the Entrepreneurship department and a McNair Fellow at Northwood University. Mr. Anthony Storer is a finance and economics major and a McNair Scholar at Northwood University.