Guest Column – The 99% Solution: A Modest Tax Proposal
My friend Ed over at Vox Clamantis in Deserto has a column this week on the subject of the "the rich should pay their fair share of the taxes" Liberal mantra.
It's a great read, and I thought I would share it with you all.
Warren Buffett thinks billionaires like himself aren’t paying their “fair share” in taxes. He famously stated that he pays a lower marginal rate than his secretary. If Buffett believes the problems facing us are the result of his paying too little taxes, who am I to argue?
So he calls for higher income and capital gains tax rates.
Omaha, we have a problem.
It’s often (albeit incorrectly) stated that money is the root of all evil. But Buffett’s (and Obama’s) tax plan does not redress the glaring injustice created by huge disparities of wealth.
Obama (and Buffett apparently) think this a problem; I don’t. But if it is, it’s a problem without a solution. Redistribution does not eliminate income disparities between classes; it creates different ones, destroying real wealth in the process. Income differences exist in every economic system. If you think they don’t exist under Communism, I’ll gladly buy you a one-way ticket to the Worker’s Paradise of your choice.
Since Buffett pays himself only a modest salary relative to his immense wealth, his preferred tax hikes would not require him to pay more in taxes than his secretary, which I thought was the impetus for his crocodile tears. However, they would ensure that the 50% or so of us who actually pay federal income taxes will see a much heavier tax burden.
The Federal Reserve’s rapid expansion of the money supply in recent years makes steep inflation inevitable once that money enters the economy. As Thomas Sowell explains, inflation is a hidden tax that all of us pay, but it disproportionately hurts the poor. Our salaries will lag behind price increases, but they will eventually rise out of sheer necessity. And then we will all face the vast array of taxes Obama seeks for “multi-millionaires and billionaires: (i.e., those with incomes over $200,000 or more per year). If you make less than $200,000 and don’t care about those who do, well you’ll get there soon enough. When hyper-inflation hits, even minimum wage employees will find themselves earning $200,000 per year.
Here is one of Socialism’s dirty little secrets. The higher taxes Buffett and Obama seek to impose on the rest of us do not touch wealth they’ve already accumulated. Higher tax rates do not redistribute or destroy (same thing) existing wealth, but they do make it harder for people not already wealthy to become rich.
For someone who’s earned a reputation for wealth redistribution, Obama is something of a piker. His proposals leave a lot of wealth undistributed on the table, including Buffett’s estimated $40 billion net worth and Obama’s $17 million net worth.
Our Founders understood that the power to tax was the power to destroy. Progressive income tax rates are a proven method to stop others from achieving the same success that Buffett earned and Obama didn’t. Because no matter how ”progressively” you skew income tax rates, the Super Rich will always find ways to avoid paying. And demagogues like Buffett and Obama will increase our tax burden—but not theirs—to ensure that “everybody pays their fair share.”
Incidentally, the actual Biblical injunction warns that the love of money is the root of all evil. If so, then isn’t the love of other people’s money an even greater sin? After all, the Bible clearly states: “Thou shalt not steal,” and “Thou shalt not covet thy neighbor’s goods.”
My 99% solution would remedy the obvious defects with Buffett’s plan and give those “greedy 1%” a little tough love.
It’s ingeniously simple.
Eliminate the income tax altogether and replace it with a “reasonable” wealth tax, say 99% of any amounts over $10 million. With no exceptions.
The combined wealth of the Forbes 400 List totals approximately $1.7 trillion. My proposal would immediately bring in $1.683 trillion in revenue just from the Forbes 400 list, leaving the Forbes 400 with $17 billion or an average of $42.5 million apiece. Actually, they’d get to keep around $52 million apiece, since my modest proposal would not touch anyone with a net worth under $10 million. That’s 99% of us. Do we support the 99% or the greedy 1%?
Unlike Buffettt and Obama, I freely admit that my plan would eliminate my federal income tax bill altogether. But since they say they’re willing to pay a little more and I’ve never said any such thing, unlike their plan, mine actually ensures we both receive the tax treatment we claim to want.
Incidentally, my $10 million exemption will ensure that nearly all small businesses, which create 70 percent of the jobs in this country, aren’t affected. To paraphrase Woody Allen in Annie Hall, I’m a redistributionist, but from the right!
Unfortunately, my proposal will still leave the Obamas with a personal fortune of around $10.07 ill-gotten millions, derived mainly from royalties from books written by terrorists and Democrat operatives (but I repeat myself), payoffs from shady deals from the likes of Tony Rezko, and undeserved Nobel Peace Prize winnings. Leaving the Obamas with $10 million after what they’ve put the country through is an obvious flaw, but no tax plan is perfect.
Mine is much fairer than Obama’s and Buffett’s.
As the community-organizing Constitutional law professor keeps saying: “We live in a Democracy (sic).”
So, shall we put our two plans to a vote?