I confess that the incomes of the super rich is astounding. By super rich I mean those with consistent salaries and incomes above $5,000,000 per year and liquid assets of at least $50,000,000. My blog- my definition.
It is easy to get distracted by the growth among the super wealthy. Regardless of the reasons and the merit for their wealth, the push to be more fair is fraught with difficulties.
First is the frank admission that there are relatively few of these people and even substantially raising their taxes will yield very little revenue relative to the enormous deficit. The proposal floating would reduce the deficit less that ½ of 1%.
The very rich are truly global in their scope and have many more opportunities to avoid taxes than the rest of us. States and countries that have sought to soak the rich have often seen a decline in revenues as they simply move elsewhere. There is a global competition for capital that places a very real cap on what you can tax and collect.
The Buffet Rule may double the rate on capital gains and become a strong incentive to invest elsewhere. Where the capital goes the jobs go.
The Buffet Rule is based on a myth that the very rich pay less than the lower income. This is true in only the most isolated cases. Most working rich pay substantially higher income taxes than the lower income.
Does this administration seriously propose to limit the tax free treatment of municipal bonds? This will increase the borrowing costs of municipal projects such as sewers and utilities. Does he seriously expect to equalize the treatment of capital gains with earned income? I doubt that few Democrats would agree with either position.
If he does not propose either of these then he is at the minimum being very disingenuous about this class warfare nonsense. If he is serious about either proposal then he is an economic fool.
But most important is that there is not a widespread agreement on what is fair. To many taxpayers it is unfair that half the taxpayers pay so little. It is unfair to speak of millionaires and then use that to raise taxes on those who make $200,000. It is unfair to work and save and then see fellow capable and healthy citizens draw unemployment for 99 weeks.
Stephen Moore wrote an excellent piece in the Wall Street Journal which many more people can relate to than the Buffet Rule Ruse:
In A Fairness Quiz for the President (read the whole thing- please) Moore noted:
Is it fair that the richest 10% of Americans shoulder a higher share of their country’s income-tax burden than do the richest 10% in every other industrialized nation, including socialist Sweden?
Is it fair that those who work full-time jobs (and sometimes more) to make ends meet have to pay taxes to support up to 99 weeks of unemployment benefits for those who don’t work?
Is it fair that federal employees receive benefits that are nearly 50% higher than those of private-sector workers whose taxes pay their salaries, according to the Congressional Budget Office?
Is it fair that nearly four out of 10 American households now pay no federal income tax at all—a number that has risen every year under Mr. Obama?
Is it fair that the three counties with America’s highest median family income just happen to be located in the Washington, D.C., metro area?
Does the president really want to have a conversation about fairness? If he does then he should start to address these questions. They will probably be on the mind of more voters that the tax rates of Warren Buffet and his secretary.
If he really wants to address fairness here is another place to start:
36 Obama aides owe $833,000 in back taxes