That’s the bureaucrat-unionista solution for all our fiscal problems. Like most populist solutions, it’s short, simple, and wrong! In other words, it’s a perfect fit for the Liberal-Regressive psyche (see The Progressive Übermensch for a discussion of the Regressive mindset). Typical of Liberalism, it is based on false assumptions (or outright lies)–primarily that the rich aren’t being taxed and that they have enough money to pay all our bills.
The standard conservative response is to point out that we already do tax the rich. Whether that response is correct depends in large part on how you define “the rich.” As is usually the case with liberal-regressives, they don’t even know what they mean by the term. “Tax” is usually a reference to the income tax, individual or corporate. “Rich” is ambiguous at best. Since they’re talking about income taxes, it is natural to assume that “rich” means “high-income.” However, when they talk about the rich, they seem to be referring to people who don’t “work” (a Marxist term based on lies) at all; they merely take and sit around counting their wealth.
The first false assumption is that high income signifies wealth. It does not. Income is one what to acquire wealth, but it does not follow that the wealthy will always have high incomes. In fact, many of the wealthiest people do not have the highest incomes–many of the wealthiest no longer have to work to produce a significant income. Income is a measure of productivity, not wealth. The income tax targets productivity, not wealth. If you want to target the rich for taxation, the income tax is a poorly suited tool for your task.
If they were serious about taxing the rich, what would the trust fund babies (Barbara Boxer) and heirs (John Kerry-Heinz) actually do? The closest thing to a tax on the wealthy that is being proposed today is the Fair Tax. It is essentially a national sales tax, which is a consumption tax. In other words, it taxes based on the extravagance of a person’s lifestyle. Tax avoidance under such a system is easy–spend your money prudently and with restraint. The current income tax system penalizes productivity and encourages wasteful and expensive tax avoidance (or evasion) efforts. The Fair Tax encourages savings and investment. There are flaws with current Fair Tax proposals, and the claim that they would abolish the IRS isn’t entirely true since a tax collection agency would still exist, but it would be a big improvement over the current system and would more fairly distribute the tax burden across the economic spectrum. Leer jet liberals, like Al Gore, decry “materialism” from their mansions, but they will never give up their wealth, privileges, and comforts. That’s just for us plebeians.
There are other ways to tax wealth. One that we already use at the state and local level is property taxes. If you live in a mansion, you pay more property taxes than someone in the same taxing district who lives in a more modest home. To truly tax the wealthy, the property tax would have to cover more than just real property. For example, stock portfolios would be taxed at an assessed value. A system of personal property taxation–a Wealth Tax–could become difficult to administer as politicians of all stripes inevitably create credits and deductions for social engineering. However, it would target the rich far better than any the Left’s beloved income tax. It would incentivize work and productivity by the wealthy, who would need to continue creating wealth just to “break even” on taxes. It would also do a better job of “redistributing” wealth from lazy heirs than the estate tax, as it would inexorably drain that inheritance away unless the heir works and invests to preserve it. Why don’t the people who claim to want to accomplish “social justice” support policies that might actually accomplish them without killing the economy and the creation of wealth? If you can’t answer that question, you must be naive enough to believe their stated motives. Do you think billionaires like Bill Gates and Warren Buffet would still support Barack Obama and his allies (or cronies) if he actually planned on taxing their wealth? If you do, I’ve got a bridge in Brooklyn you should consider buying.
The sign demands that we tax corporations. There are two underlying false assumptions. The first is that we don’t tax corporation, or tax them enough. The truth is that America has the highest corporate tax rate of any nation. Regressives usually counter by stating, correctly, that the effective tax rate is lower. Of course, this ignores the high, wasted costs of tax avoidance. It also ignores the fact that not all corporations have the capability to achieve significant tax avoidance, and that the companies paying the highest tax rates are generally small businesses. The truth is that Democrats love big business, especially if it’s unionized. Big Business and Big Labor make the biggest political donations. Big Labor donates almost exclusively to Democrats. So does Wall Street! (Obama got more Wall Street money in 2008 than all Republican candidates for President, Senate, and House combined.) Big business tends to favor the party in power, but over the past several decades has shown a clear preference for Democrats (maybe because most large corporations are run by liberal Ivy League elites?).
The current Regressive vogue is to cite the example of GE, which made billions in profits, but paid no corporate income taxes. The irony, and hypocrisy, of a Democrat citing GE’s tax return is rich. They like to bring it up whenever reducing the corporate tax rate is proposed. I’d like to see one of them explain how GE’s tax return is a reason to maintain the status quo. If GE can shelter all of its profits from corporate taxes, what difference does it make how high or low the nominal tax rate is. Yet, current proposals to lower the corporate tax rate and eliminate loopholes to make the change revenue neutral are met with vitriolic howls from the Regressive-Liberals. Of course, it’s just a coincidence that GE is run by an Obama supporter.
The second false assumption is that corporations pay taxes. The seeming contradiction with the first false assumption is purely superficial. Corporations don’t pay taxes; they collect them. Corporate taxes of any kind (e.g., income taxes, gasoline taxes, etc.) are paid by the ultimate consumers of the goods or products they provide in the form of higher prices. All taxes are paid by individuals! Consumers, not corporations, pay corporate taxes. Renters, not landlords, pay property taxes. Ignorant liberal voters clamor for higher taxes on the rich and corporations thinking that they can avoid paying their own way by pushing the costs off on others, but they’ll never get the last laugh. The wealthy and connected (to Democrats) can avoid income tax liability and corporations are merely collection agencies. The unionistas with their ridiculous signs end up footing the bill with what’s left of their paycheck after paying their unions for the chance to receive a paycheck.
If the Left was serious about taxing the rich, and everybody else, fairly based on wealth, they’d find a lot of support on the Right. Instead, they want to pander to class envy with demagoguery on tax rates and lies about who pays the bulk of income taxes. No decent, honest person would want to have anything to do with that! But we were talking about Regressives…