Why the Rich should be taxed more
Robert A. Hall
I’m not among “The Rich,” as defined by President Obama during his 2008 campaign. Both my individual income and my family’s collective income is, alas, well below his magic threshold of $250,000 year. And unless that woman who pulls the lotto numbers gets her act together soon, that’s where it will stay.
On the other hand, I’ve never suffered much from class envy. Sure, I wouldn’t mind living in the kind of mansion that Barack Obama has in Chicago, but I couldn’t afford it even with Tony Rezko’s selfless assistance. I’d love to have a yacht like John Kerry that was worth so much I could save half a million dollars in taxes by docking it in another state. But at my income level, I have to settle for keeping my canoe on a rack in the garage.
Given all this, I think I can be fairly objective in my view of the Obama effort to let the Bush tax cuts for people earning over $250,000 expire. Sure, they probably worked long hours for many years to get to that level, sacrificing for success while they earned a lot less. Most big earners start out poor. But now that they earned it, that’s no reason to let them keep it.
The argument is always that the government needs more money to keep the deficit down, but I’m not sure we can count on that. As far as I can see, the Congress, Democrat or Republican, is going to print money to buy votes until they run out of paper. Yes, the Obama deficit is more than the deficits of every president from George Washington through Ronald Reagan combined, but the Republicans were hardly paragons of fiscal sanity before Reid and Pelosi got a hold of the public checkbook four years ago.
And, yes, I’m aware that “The Rich” can relocate their incomes elsewhere, in part or in whole, as Maryland found out when it put a special tax on millionaires and the following year discovered they had a lot fewer millionaires in Maryland. That deprives Maryland of both the taxes and the spending of those millionaires, but so what? Maryland’s a nice state—my favorite cousin and my dad-in-law live there—but their economic and tax problems are not my concern. So let them go.
No, what we really should look at is how “The Rich” might fritter away their money if they were allowed to keep it.
First they might put it in the bank. Then the bank would have more money to lend to people wanting to buy houses, helping the housing market. If they bought a new house, it would mean jobs for carpenters, electricians and plumbers. But they’re mostly union guys, so why should I care about them? The bank might also lend it to people who want to start or expand a small business, which would create more jobs. But I don’t own, and am not likely to start a small business, or need a job at one, so why should I want to encourage that, just so other people could have jobs?
“The Rich” might also invest the money in the stock market, which would then go up, helping the elderly living on their IRAs. Some kids think I’m elderly, but I’m not retired yet, so a stock market increase won’t help me that much. And the companies “The Rich” would buy stock in would then have money to expand, and hire more people. But I already have a good job, so the high unemployment rate doesn’t affect me much. And I get some good bargains at unemployed folks’ yard sales.
Of course, “The Rich” might just spend the money. If they bought a bigger mansion, it would help the housing market and those building trade unionists mentioned above. If they bought a new car, it would help the union workers who make cars. That also helps the poor, as new car sales mean more used cars for poorer folks—they got slammed by “cash for clunkers” which meant there were a lot fewer cheap older cars available for them, driving up the price. “The Rich” might spend their money in restaurants, helping cooks and waiters, but I’m not in the restaurant business, so why should I care about that? There are lots of things that “The Rich” might waste their untaxed money on, which would contribute to the incomes of folks who aren’t, even by President Obama’s generous reckoning, rich. But I’m probably not one of those who would be helped by letting “The Rich” keep their money, so a tax hike for them is no skin off my wallet.
Balancing that spending in the economy by “The Rich,” we have to note that the government would also spend the money, if they took it from “The Rich,” thus also helping the economy. Why, government employees making over $100,000 a year jumped from something like 14% to 19% since the recession started, if I remember rightly, and that kind of spending takes cash. Which is why the SEIU is willing to break heads to stop the Tea Party.
Sure, economists say their studies show that a dollar spent in the private sector has far more impact on the economy than one spent by government, but no one in government can afford to pay much attention to economists, and very few voters know anything about that boring subject. On the other hand, it’s pretty clear the government is going to go on spending it anyway, even if they don’t have it. Unless, of course, those crazy Tea Partiers actually get elected. And if they don’t then become Washington politicians, buying votes with our grandkids’ money.
So, on balance, while letting “The Rich” spend, save or invest the money they earned helps a whole lot of average people who want to have jobs and feed their families, I can’t see where it’s going to help me that much. Not right away, anyway.
Besides, being in favor of taxing “The Rich” helps Democrats get elected to better paying jobs than they would likely hold in the real world. We have to have some compassion for them, too.
Robert A. Hall is a Marine Vietnam veteran who served five terms in the Massachusetts state senate. He has published three books: “CYA: Protecting Yourself in the Modern Jungle,” “Chaos for Breakfast” and “The Good Bits.” He blogs at www.tartanmarine.blogspot.com.