Teach Me a Lesson

A substantial number of Americans disagree with raising taxes on rich people. Why?

It may seem to many of my readers that I am some kind of know-it-all. It is true that 84 years give one a lot of time to read, learn, experience and get in trouble, but I confess that lots of things still puzzle me. One of them is this:  Why is it that there is so much resistance to increasing taxes on the very wealthy, especially at a time when the wealthiest Americans, the top 1 percent, own approximately 50 percent of the total wealth in America?

I am not here to persuade you one way or the other. As has often been said, a person is entitled to his or her own opinion but not his or her own facts. The facts are that prior to the recent election, the pollsters reported that well over a majority of Americans were in favor of increasing the tax on the income of the wealthiest people (and perhaps increasing their estate taxes). After the election, exit polls reported that the number of Americans in favor of increasing taxes on the rich has expanded. However, it is certainly true that a substantial number of Americans disagree with raising taxes on rich people. Why?

To me, the kind of hard times that we are suffering now make it incredible that someone should take the minority view. During the campaign there were various Republican defenses against raising the tax on the rich. Among them were that the very wealthy are a source of capital for the economy, that spending by the rich trickles down to help the economy (Republicans generally avoid the term “trickle down,” but that is what it is), that the rich have earned their fortunes by hard work and thereby fulfilled the American dream, and, finally, that allowing great wealth to accumulate greatly is in the nature of capital.

Another theory is that taxing the wealthy is a large step towards socialism. Socialism has become the bugaboo of our political system. But it seems to me that we are not on the road to socialism merely because we do tax the rich, or care for the needy and provide universal health care as almost every civilized country in the world has done. Socialism is defined in Miriam-Webster as “any of the various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods.” We are no more on the path to socialism under Obama as president than we are on the road to dictatorship.

One other thought, before I open the question: prior to and during the campaign the Republicans attempted to use the taxation question as leverage to ensure that the Democrats would agree to make cuts in the budget to eliminate various social programs. Obamacare, for instance, should be eliminated in favor of vouchers. I don’t mean to get into a debate about the wisdom of doing this, although I think it unwise, but it does seem that budget-cutting should be examined independently. The rigid insistence on both sides has led us to "the fiscal cliff," which, if allowed to go into operation on Jan. 1, is virtually sure to lead to a great depression.

Help me, please. Instruct me on why the very wealthy should not be asked to pay a larger share of the tax burden.

Allan Bach November 09, 2012 at 12:06 PM
Joel, I cannot write words that would convince you of the "why" the wealthy should be taxed. No matter how eloquent my writing or factually based my paragraphs, you will hold your opinion that the wealthy should be taxed at a higher rate - and that is fine for you to believe. I would rather ask the question, "Why does this great country have such a huge deficit for the subject of higher taxes on the wealthy to be asked?" I believe that for anyone to be in overwhelming debt, they have had to borrow or spend more than they are capable of earning and paying back. Our government borrows and spends vast amounts of taxpayer money, then, when it realizes it cannot afford to pay the debt, looks to the same taxpayer for more. And that, my friend, is my opinion on why the question of increased taxes is asked . I cannot provide an answer to your question, for I don't understand fiscal mismanagement. I do believe it is not a Democrat or Republican problem. I think it is a greed problem, both for the government and the people who have an insatiable desire to have more .
Hugh Gallagher November 09, 2012 at 12:43 PM
Joel the concept is simple. Tax the other guy but not me.
Walter November 09, 2012 at 01:05 PM
Can it not be one percentage for all?
charles hampton November 09, 2012 at 01:42 PM
Walter, that would be fat to simple, and put many lawyers and accountants out of work. Nice thought, though!
andrew November 09, 2012 at 02:35 PM
After the bailout, US government still owns about 25% of General Motors stock. Socialism?
Momofthree November 09, 2012 at 02:37 PM
Everyone should pay the same percentage and in the end the rich would pay more. 1% on $1,000,000 is much higher than 1% on $50,000.
Danielle November 09, 2012 at 03:48 PM
It may be that for some but that is not the way I see it at all. This is the reason why I believe it needs to happen and its completely fair.. "...the top 1 percent, own approximately 50 percent of the total wealth in America?" The income inequality in this country is a big issue. Our wages have not gone up. I am part of the first generation of Americans that as a whole are expected to earn less then our parents. The share of wealth we have to be taxed on is ridiculously small. But there are people that are doing well because of this. They are profiting from taking away jobs, and lowered wages. They are concentrating the wealth to such a degree that there is no other option to make up the lost revenue of a shrinking middle class.
Danielle November 09, 2012 at 03:51 PM
At first glance I'd agree with a flat tax, the problem is that it actually ends being more taxes on lower and middle income earners due to sales tax. Since people on that end of the spectrum tend to spend more of their income then save they actually end up paying a higher tax rate proportionally.
Walter November 09, 2012 at 04:08 PM
Sorry Danielle, but, I call BS.
Danielle November 09, 2012 at 04:36 PM
Unless you repeal consumption taxes at the same time as introducing a flat tax (as some proponants would like) its really simple to see it is a very regressive form of taxation, with the lower earners paying more proportionally. If that is what your suggesting, then I agree it would be a fairer system. But as long is there is sales taxes, gas taxes, ect..it is what it is. call it what you like. i gotta get some sleep before work now so have a nice day:-)
Walter November 09, 2012 at 05:00 PM
Good God, they need to bring back Economics and Civics to the classrooms!
Hugh Gallagher November 09, 2012 at 08:02 PM
Danielle, how about a flat tax for everyone except you??
Danielle November 09, 2012 at 10:08 PM
Maybe we should bring the tax rates back to where they were in the 30s-60s? How does 50 to 90% percent sound to you? I mean our country did some pretty great things in that era. Fought wars we actually won and paid for at the same time, went to the moon, built the infrastructure of highways that let companies like walmart exsist. And we had a pretty great public education system to boot! If you don't understand the issue that have stated about flat taxes being regressissive, you simply have not read that much about them.
GdB November 10, 2012 at 04:02 AM
I understand that people want the very wealthy to carry an even higher portion of the load, but I pose another view. Lets say we do raise taxes on the extremely wealthy. Say 5, 10 or even 30%. Now assume things go okay for sometime. Local and state budgets function as normal etc. Now assume another slow down, money to governments begins to slow etc. And the cycle continues. Tax the rich again? Where will it stop? As typical the middle class will be paying a higher portion b/c of the mass amount of population in that class. Scale back spending and make cuts to help our debt problems. Or if we must tax the rich and middle class, have a tax that puts all revenues directly on our national debt.
Jim Siverly November 11, 2012 at 05:53 AM
Mr. Katz, it shouldn't be hard for you to understand why the majority wants to tax the rich more. Most people aren't rich; therefore they mistakenly think it wouldn't cost them anything to increase taxes on the rich. The problem with this simplistic analysis is the unintended consequences. Trickle down economics, like gravity, is a force--not just a government program like welfare that you can repeal or marginal tax rates that you can manipulate. The failure of the fruits of one’s labor to trickle down is an unintended consequence of government overreach. Excessive corporate taxes make jobs trickle down and out to China. Excessive federal energy regulation makes the oil that fuels our economy slow to a trickle. Excessive income taxes make eating out or buying a jet trickle down. If you don’t understand economic principles, you should stop bloviating about them. Why stop at increasing taxes on the rich? Why not just confiscate all their wealth and redistribute it?


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