Taxes on the Wealthy Hurt Middle Class Most
From two people who should know better but apparently don’t, Warren Buffett and Scott Burns, come the latest appeal for increasing taxes on those, in Buffett’s case making more than a million dollars per year, and in Burn’s case, making more than the current social security wage base maximum (currently $106,800).
These two opinions, while seemingly quite well informed, really aren’t. First, after reading Buffett’s biography Snow Ball, you come away with the understanding Warren hasn’t worked a real job since he left his employment at the family’s grocery store sometime before college. His capital does his work and he benefitted from the low tax rates in all of the years prior to now. (I suppose he could have then and certainly could now, voluntarily send in more taxes if he wanted “personal” rates to rise). Burns is a newspaper columnist (not known as the world’s best paying job) who probably never made much more than the social security wage base maximum based on what he has said in his columns over the years. Neither Warren nor Scott has much personal experience with what it means to pay an additional income tax an increased productivity, but there is a man who does have this experience.
The third news item is an opinion piece in today’s USA Today about the contrast between the failed Obama stimulus and the highly successful Reagan stimulus signed on August 13, 1981. Ronald Reagan knew first hand the tragic affects of taxing higher wage earners at higher income tax rates, and he viewed it as creeping socialism.
“In the 1940’s, the so-called ‘B’ movie actor was one of the top box office draws at Warner Bros. Then a democrat, Reagan saw no incentive in continuing to work – that is, make more movies – once his income hit the top rate. He also realized who suffered from [his] choice. It wasn’t Reagan; he was wealthy. It was the custodians, cafeteria ladies, camera crew and working folks on the studio lot. THEY lost work.”
The fourth media piece was a rerun of a 60 Minutes interview with John Chambers, CEO of Cisco. In it, Chambers admits that Cisco, just one of the Fortune 500, has some $40 Billion tied up overseas escaping the high rates of US corporate income taxation. The reason the money (and the jobs it produces) are overseas, is because the corporate income tax rates in the U.S. are the highest of any developed nation, save one – Japan. Seems like no coincidence Japan has had a faltering national economy for almost 20 years now.
It may seem counterintuitive to those who don’t earn high incomes or who just don’t work much at all, that raising income taxes on the wealthy and most productive really doesn’t hurt the wealthy – those folks just spend more time having fun. The ones hurt the most seem the farthest away from the issue; it’s a dad in Pennsylvania who can’t take his kids on a summer vacation because he hasn’t had a job in two years. That dad is out of work, at some substantial level, because of high corporate and personal income taxes.