Old Well: UNC Chapel Hill Campus

Monday, April 18, 2011

Let's soak the rich!


Last week, President Obama gave his latest speech on fixing the economy, now racked with trillions in debt.  At its core, the President wants an increase in taxes on those earning more than $200,000 a year.  This proposal isn’t new.  He has wanted it from the very beginning, only to bump into a fractious Congress, led by the new Republican House majority.  In fact, the Congress, including the Senate,  rolled the Bush tax cuts over into the current budget.

In regard to the President’s position, I grow weary of political manipulation built  on fanning the fires of class resentment. It smacks of the old Liberalism, if not Marxism.  The truth is that those making more than $200,000 annually comprise just 1% of the population. They may be upper middle class, but they aren’t  rich.  This “privileged” segment pays 69% of our federal taxes.  Conversely, some 40% of our population pays no federal tax whatsoever.  In reality, we’d be better curtailing many of the deductions behind this fiasco: income thresholds, mortgage interest, dependents, etc. 

Not only is there a large element that pays no taxes, a good many are granted earned income tax credits each spring that can amount to several thousand in a gargantuan redistribution of wealth.  Increasing taxes on the rich, in any event, amounts to no more than applying a bandage to a hemorrhage when what we need is a tourniquet.

The President, while not mentioning entitlement programs in his speech, namely social security, appears to be leaning towards curbing their costs as the “baby boom” generation now moves into the senior citizenry.  Again, the truth is that social security is a self-paying program.  If its financial base lies in jeopardy, it’s because our government borrows from social security trust funds to help pay its debt.  This shell game needs to stop.

In my view, Congress and the Administration would do well to adopt the following measures:

1.  Curb spending or provide ample tax revenue to pay for programs, i.e, balanced budgets.

2.  Reject borrowing from the Social Security Trust Fund.

3.  Require a minimum tax regardless of income.

4.  Implement price controls on the health industry, which is averaging a 12% increase annually and is a prime factor behind state as well as federal budget short falls.

Not incidentally, the wealthy one percent is more specifically comprised of those earning $360,000 or more, and I would argue that even this segment, at least at this level, isn’t exactly what you would call “rich.”  Those  truly wealthy rather than upper middle class, or making a million or more, comprise a paltry 0.1% of the population.  See Super Rich Americans.   It’s ludicrous to believe that increasing their taxes can meaningfully resolve our budget woes.  Additionally, do you really think the rich simply funnel their money solely into luxury goods and don’t invest capital, ultimately creating jobs for you and me?

I also find such proposals hypocritical.  After all, who was it that bailed out the banks?  And who was it that played a key role in bringing about 2008’s economic debacle: Bush and his cohorts?  Think again.  See Great American Stickup

The ultimate solution is to do away with the IRS and taxes on income altogether at both federal and state levels, replacing them with a progressive national tax based on consumption while allowing rebates for the impoverished.  See Fair Tax