October 6, 2011 by Mike Landry
In the news recently President Obama discussed a tax code that reflected billionaire Warren Buffett’s suggestion that people making more than $1 million a year should pay a tax rate that is a least the same percentage of their earnings as a middle-class taxpayer. Is taxing the rich a good idea or not?
The nation’s debt is too high. Therefore “the rich” need to pay their “fair share” of taxes, says President Obama.
Right now, those rich people the President loves to deride are already carrying much of the load. The top one percent of income earners underwrite 38 percent of government spending, according to the National Taxpayers Union.
But those people in the top one percent, they all make a gazillion dollars anyway, right? Hitting them with a higher tax rate doesn’t make much difference, does it?
It depends on who these top one percent gazillionares are. The IRS says they’re the people who have an adjusted gross income of at least $380,000 per year. That’s 380 thousand, not million.
That means there are many people who have good, comfortable incomes who don’t live lifestyles that fit the image of the truly wealthy.
They’re the entrepreneurs who worked day and night for years, putting most everything they earned back into their struggling businesses. At long last it began to pay off. Now they still work hard but some financial reward is starting to come their way. Now they can finally get rid of the old car they rattled around in, finally take a nice vacation or two, finally be able to get their kids to the orthodontist.
Or they’re the former medical or dental student, who racked up six-figure student loans to get to where they are now. And they, too, are often small businesses people, struggling to launch a practice and to make big payments on all that student debt.
Go down the scale a bit. The top five percent of income-earners carry most of the tax load: they pay nearly 59 percent of taxes. And they make at least $160,000. To be sure, that’s a great income for semi-rural Northwest Arkansas. But go to either coast and try to live in San Francisco or New York City on that kind of money and while you’ll probably do okay, you won’t feel very wealthy.
So what do “the rich” do when they’re subjected to the cheap darts of demagoguery and more taxes?
Some hunker down, don’t take as much risk any more, don’t expand their businesses, don’t buy as many things.
That means the new jobs in those lost business expansions are never created. And when the truly rich reduce consumption, there’s often a tragic ripple-down effect. Witness the ill-advised 10 percent luxury tax placed on yachts some 20 years ago. Sales collapsed and boat builders and their suppliers closed, throwing people out of work.
So let’s do what the President says: Tax all the rich people – the people he has defined as making at least $250,000 – to pay down the national debt.
In fact, go all the way — tax them 100 percent.
At that rate, says economist Walter Williams, we won’t even raise enough money to run the government for 150 days.
“The rich” are not the problem.
A Washingotn County resident, Mike Landry is professor of business administration at Northeastern State University in Tahlequah, Okla. He co-hosts “Tea Time in America,” sponsored by the Washington County Tea Party, 9.30 a.m. – 10.a.m., Thursdays on KURM 790 AM and 100.3 FM. He also blogs at wildcatcreekreview.blogspot.com
Click here to read Richard Drake’s response, a view from the Left