It’s becoming one of the most clichéd phrases in American politics. Everyone’s saying it. Just the other day, Michael Bloomberg, the Mayor of New York City, agreed with it. And, it’s pretty hard not to agree with him. The rich must pay their fair share of taxes. But, what does that actually mean? No one really says. It’s pretty much whatever politicians want it to mean at a given time. That works for them, of course. They never want to be pinned down on anything. But, what about for the rest of us?
Not so much. The politicized notion of the rich paying their fair share is bogus times three and hurts everyone. The first part of the fakery is the illusion that the rich are our social welfare safety net. We don’t have to cut spending, we just have to cut deeper into their bank accounts. So, for example, Obama’s debt reduction plan pins 25% of the projected decrease on grabbing more from households with incomes exceeding $250,000 annually.
Sound great? Not if you think beyond the emotional “us-against-them” appeal inherent in the fair share con. The amount of Obama’s latest proposed tax increase won’t put a pea-sized dent in the debt. In fact, we can take all of their money and still not satisfy the enormous entitlement appetite our politicians have been whetting for decades. The fair share sales job has put us where we are today, in the debt throes of a fiscal disaster. And still, politicians play that card.
Even worse is the fact that taking more from the taxpayers Obama has targeted stunts economic growth. They are the builders of a robust economy. Their businesses create jobs. Their spending expands economic opportunity for all of us. It’s an elementary school lesson that many of us have forgotten over the years. Using these folks as our revenue punching bag won’t be cutting off our noses to spite our faces. It will be shooting ourselves in the head.
The next ingredient of the fair share hustle is that the taxman’s super-sized ammo will never hit us, the non-rich. But, of course, we’re wrong about that, too. Even now a bigger gun is turning in our direction. After all, those making more than $250,000 aren’t really rich. No question, they’re well off. But, statistically, they’re no closer to Warren Buffet’s $50 billion net worth than the 47% of Americans who pay no federal income tax at all. Unless we make Ryan-deep cuts in our spending, we’ll all be hit with much bigger tax bullets. The arithmetic doesn’t add up any other way.
The final piece of the fair share shakedown is the way in which “fair” is calculated. For example, Obama’s determination of which taxpayers to hit with hikes is not based on an objective assessment the value of the benefits they receive. It’s a function of the amount he needs to keep his spending agenda on track and the size of the increase he can sell. It’s a purely political reckoning, an end run across the expediency goal line. That’s very scary because it’s a subjective technique that can be used to justify any action against any group.
If we use a cost-benefits approach to determine fairness, taxes would be lowered for the rich and raised for everyone else. That is, we’d end up with a flat tax because the rich don’t benefit anymore than we do from government services. In fact, they benefit less. We all share equally from national defense, public safety, infrastructure and education expenditures. But, the rich miss out on most of the government’s largesse.
Obama does offer a fairness argument of sorts. The rich owe more to repay all this country has given them, as if it made the money and throw it on their doorsteps. The biggest thing the country really did was create opportunity and get out of the way. That’d be nice for the rest of us, too.
See you on the left-side.