Why the “Rich” Deserve a “Tax Cut”

We got a comment from “Patrick…”  on our blog entry  Austin Goolsbee Breaks Down the “Tax Cut” Issue–Incorrectly, of course.

Patrick said: “What’s not expensive about spending 700 billion dollars, on a 3% tax cut for our wealthiest?”

I began to respond to him in the comments box under that post, but since this is turning into something much longer than I expected, it might as well be a full post.

First of all, Patrick, this would not be a tax cut.

It would be a tax increase. If you charge someone an additional 3% or whatever that number is, it’s an “increase,” not a “cut.” (By the way, if you’ve never taken an economics course, you might want to do so, preferably not at Harvard,, or Yale, where some of the most bone-headed economists seem to hail from (although Dartmouth, sadly, has its share.)

As someone who works for a small business and whose family owns another small business, I can tell you that the policies of this administration, including the tax “cut” you mention, is making small business owners unwilling to spend and hire. Who knows what’s coming next month or next year?

This type of uncertainty from this administration is extending the recession, because for small business owners who make $200,000 or more (and with income flowing through a Sub-S Corp, that’s not hard to do–but it doesn’t mean you are “rich”) a 3% increase in taxes in a recession is not something they can afford. From personal experience, I can tell you that the small businesses I’m aware of are busy enough to hire. They are just unwilling to do so because they don’t know if they’ll have to lay those same people off in a few months, or if they’ll have the money to pay them. Or, if they’ll have money to pay increased health care costs, etc.

And, if you think the “rich” isn’t paying their fair share, I would invite you to look NCPA (National Center for Policy Analysis.

http://taxesandgrowth.ncpa.org/news/do-the-rich-and-businesses-pay-their-fair-share

From their site:

According to data from the IRS, the bottom 50 percent of income earners pay approximately 4 percent of income taxes.

The top 25 percent of income earners pay nearly 83 percent of the income tax burden.

The top 10 percent pay 65 percent.

The top 1 percent of income earners pay almost 35 percent of all income taxes.

The top 400 richest Americans paid 1.58 of total income taxes in 2000.

What’s “unfair” about this, Patrick, is that 50% of our population pays almost no income taxes. That means they have no vested interest in how high taxes go. Unfortunately, that 50% also aren’t the people who are creating things, wealth, and jobs. They are sucking off the other 50%.

To my mind, it’s expensive AND UNFAIR to keep an already grossly skewed tax code the same, or burden the people who are already paying most of the taxes even more. The tax code needs to be simplified, and EVERYONE in the country should have to pay some income taxes, however minimal, to have a vested interest in the country.

aln

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2 Responses to “Why the “Rich” Deserve a “Tax Cut””

  1. Gloria Says:

    Why is it that Warren Buffett is in favor of removing the Bush tax freeze for those in the highest category? Surely, it cannot be because he is using tax money for philanthropy? He says it is because he feels the taxes are too low for the wealthiest amongst us. Explain, please

    • thomasjeffersonclubblog Says:

      Well, Gloria, since I cannot get into Warren Buffet’s head, I can’t answer your question with any certainty. I will say that when some people amass vast wealth, they feel guilt, and that they should somehow atone for their good fortune. (I think this is may be one reason so many actors and actresses are liberals.)

      There are only a few people with wealth of Buffet’s magnitude, and they certainly can afford to give away vast amounts (as both Buffet and Bill Gates have) without feeling it personally.

      That is NOT the case, however, for those making $250,000 or $300,000, who President Obama also deem wealthy. People in this category have mortgages and kids in college (and colleges aren’t too interested in giving financial aid to those they deem “wealthy” either, so figure $50,000 a year out of pocket or in loans if your child goes to a private college.) They have businesses and work hard.

      I might also remind you–and Buffet–that you always have the option of paying more than your due in taxes. I find it interesting that people like Buffet says that other “rich” folks should pay more in taxes, but are they sending in an extra check for thousands–or millions???

      If Buffet thinks the government can spend his money better and more wisely than he can, he should put his money where his mouth is, and give more to the government and less to the Gates Foundation, or wherever else he puts it.

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