Reasons against taxing the super-rich [Most commented]
President Obama needs to institute an annual wealth tax, argue Yale law professors Bruce Ackerman and Anne Alstott in Tuesday's Op-Ed pages. By that they mean:
We propose a 2% annual wealth tax on households owning more than $7.2 million in net assets. Such a tax would target the 0.5% of Americans at the top of the pyramid, and would yield at least $70 billion a year. This calculation is based on Federal Reserve data that we have updated to take into account the recession's impact on housing and stock prices to 2009. Because we have used very conservative assumptions, the revenue yield could well be higher.
Obama's operational proposal for a "Buffett tax" is vague, so it's hard to predict how much it would raise. But our initiative would generate at least half the $1.5 trillion in deficit reduction that Congress' super-committee is aiming to achieve over the next decade. And the burden would fall on the Americans who have suffered least from the economic downturn.
Readers commenting on our discussion board couldn't disagree more. Among their reasons:
Perspective from a millionaire
Well I am one of those guys with assets over 7.2 million. When I was young, many of my friends were taking cushy government jobs with nice 40 hour work weeks, and were getting married and taking on plenty of debt for big houses, cars, boats, etc. I worked closer to 100 hour work weeks, invested every penny I earned back into my business and waited until I was financially stable to marry and start a family, no big houses or fancy cars. So I guess I am one of those evil rich folks that doesn't pay his fair share? However, my disdain for this President and his absolute lack of understanding as to what it takes to fuel a prosperous economy could not be stronger. Using our tax code to somehow penalize a group of society is nonsensical and simply won't work. Now if he wanted to reverse the job killing policy of NAFTA, signed into law by Clinton, and offer incentives to business that hires here in America, I would support that. If he wanted to tax goods manufactured overseas and shipped into the US, I would support that. If he wanted to tax companies that utilize foreign workers and fine companies that are caught hiring illegal immigrants, I would support that.
but the nonsense in this op-ed is just that, nonsense.
Perspective from a reader whose cousin is a millionaire
What a ridiculous idea. My cousin owns a successful business that's probably worth $20M. He takes very little out for himself because business is tight right now. The available cash is invested back into the business. According to the authors of this article, my cousin would owe $300k in "wealth taxes" EVERY year. He'd have to go deep into debt or sell his business. Over the next ten years he'd have to come up with $3M in cash to pay taxes. That's cash he doesn't have. I'm sure the authors would just tell him to sell his business or go deep into debt. Since they don't work in the real world, what do they care?
Increasing tax rates would threaten small businesses
The top tax bracket for wage earners is 35%. Investment gains are taxed at 17%.
Wealthy individuals derive the lion's share of their wealth from investment gains, yet pay a much lower rate than small business owners.
Why not bump investment gains up by the same percentage they want to drop the tax brackets by?
Those companies that were deemed too big to fail -- the people leading those companies are the folks I'm talking about. Increasing tax rates on wage earners targets small businesses.
Let's cut the garbage and acknowledge reality.
-- trust no one
It would decrease productivity
A rich person buying 5 houses has nothing to do with your inability to buy one house. Get an education, work hard and you can own a home too. Besides the rich person who bought 5 houses also employed dozens of construction workers to build the houses. They employed real estate agents, lending agents and attorneys. They bought products from roofing companies, flooring companies, appliance companies. HVAC companies who employ engineers to create energy savings. THAT is how an economy works and grows.
I'm tired of hearing all the weeping from poor people (and rich progressives) about how dismal it is in the US. I live in China and let me tell you, you have nothing to complain about. The opportunities in the US are endless. Stop whining and complaining and make something of yourself. Stop blaming your problems on the "rich".
Good god what has happened to our country. We used to be a country of self-determination where hard work and sacrifice were rewarded. Reading drivel like yours makes me think that the US really is in decline. "Time to share a little" How about earn something for yourself. And people call the rich greedy......
It would allow government too much power
The question the authors fail to ask is too important to ignore: Why is wealth concentrated in the hands of so few?
Without examining this, any solution is doomed to failure. There is a good reason the wealthy have wealth -- they use the machinery of government to protect and build it. Consequently, asking government to change it is so laughable it hurts. How naive can the skull and bones bozos be?
If government, through the police power of the state, is already bought and sold, then where lies the solution? The courts? Sorry, the Supreme Court has always protected government and those that run it (remember, corporations are citizens now).
The solution lies in the deconstruction of government. By limiting its power, its ability to create debt, to start wars and to eliminate the Federal Reserve.
How much government is too much? That is the discussion for America to have. We could start with simply eliminating the debt creation. Then, we would be paying our bills from revenue. We could cancel the debt held by the Fed and transfer it to the Treasury -- where we would no longer pay interest. That would save us over 200 billion a year.
We could make Congress part time, the military defensive only and close all our international bases -- 100's of billions saved again.
The convenience of government is no longer justified by its cost.
It would turn government into Big Brother
Kiss privacy goodbye if this idiotic idea is ever taken up. Just think, everyone (because how on earth could you know if someone was worth more than $7 million without finding out) gets to tell Big Brother everything they own. And of course getting collectibles, real estate and private company stock appraised each year will be cheap and simple. Then Big Brother gets to tax it again when you die. Then the tax goes to 6% "just to be fair", and we can really start to have fun.
It would the framework for socialism
Now this is the LA Times that I recognize. I am not crying foul here. The point of view expressed in this piece is legitimately labeled opinion, so no problem. That opinion is that the federal structure though its tax code should equalize to some extent equality of incomes. This is pure socialism -- and that is not all bad. Democratic socialism is a legitimate approach to a durable republic. This approach does not resonate with me because I seek a federal structure weakened sufficiently that it cannot play god or king maker with the economy and the citizenry. My problem is the LAT is NOT its socialist stance, but it's absence of disciplined journalism that allows unschooled readers like me to detect it's coloring day to day outside its editorial page.
*Spelling errors in the above comments have been corrected.
Photo credit: Lee Jae-Won / Reuters