Why Not Soak the Rich?
Victor Davis Hanson
For the last two years,
But what exactly is "rich"? Zillionaires such as
Is annual income a good gauge of wealth? Who is richer -- the architect in
By the same token, what exactly is "poor" in a globalized world of cheap imported TVs, cell phones and high-tech gadgetry available to most Americans at
How do we define tax "cuts"? Were the George W. Bush income tax rates really "cuts" for the rich? Or were they across-the-board cuts only in comparison to the higher Clinton rates? In turn, were the Clinton rates actually "hikes" on top of the George H.W. Bush "hikes"? Both upped the lower Reagan rates, which in turn had been "cuts" from the higher Carter rates. In fact, every president's newly adjusted income tax rate is derided mostly on partisan political grounds as either a counterproductive hike that "kills small business" or an unfair "trickle down" cut.
Income taxes don't occur in a vacuum. That the "rich" should pay 39.5 percent on their income might seem justified in isolation. But what about property, state income, payroll and other taxes that together can take up to 65 percent of some incomes in high-tax states?
In addition, income taxes are already graduated, as one pays a higher percentage on income the more one makes. Yet 50 percent of Americans pay no income taxes, while 5 percent of taxpayers pay nearly 60 percent of the total collected. The result is that half of Americans are likely to favor both higher entitlements that they may well receive and higher income taxes that they most certainly will not pay.
Did the staggering annual national deficit arise from a lack of revenue or out-of-control spending?
Income levels are not static. Belonging to the upper brackets is not always a matter of privilege or inheritance. Some Americans go in and out of the top tax brackets depending on the economy. Others are "rich" only for a few years in their 50s and 60s -- making far less before and after.
If we prefer high rates, we will see either more tax avoidance or a certain reluctance to work an extra day, buy new equipment or hire a new employee -- given than any additional income will be mostly eaten up in taxes. Those who make over
Finally, if the goal is to increase federal revenue, then it is wisest to keep taxes as they are. That encourages Americans to make as much as they can, hire and buy, and thereby enrich the nation at large. But if the aim is instead to ensure that we mostly end up about the same, then raising taxes on the already highly taxed might make us more equal -- and collectively all poorer as well.
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Why Not Soak the Rich? | Politics
(c) 2010 Victor Davis Hanson. TRIBUNE MEDIA SERVICES, INC.