During the 2008 presidential election, Barack Obama was asked if he would favor a higher capital gains tax rate, even if the government received less revenue as a result. His answer: Yes.
When you stop to think about it, that's a remarkable answer. By hypothesis, everyone is worse off. The owners of capital are worse off. The government is worse off. Poor people who depend on government are worse off.
Yet Obama's answer wasn't remarked upon. It was generally ignored. The reason: I think most people in the mainstream media took it as aberration. Maybe even a misstatement. And that is because the mainstream media doesn't take the president seriously when he says he is against inequality — an understandable attitude, given that the first family just finished a 17 day, $4 million vacation in Hawaii.
But I have it on good authority that the president repeated that answer to the very same question in private fund raisers. So I'm willing to entertain the idea that he really means it. That implies that for Barrack Obama equality is a serious value — one that should be pursued even if it requires the destruction of wealth, less revenue for government, less welfare for the poor and compromising on other things that are also of value. Not only am I willing to take Barack Obama seriously, I'm willing to give the benefit of the doubt to Paul Krugman, Joe Stiglitz, Robert Reich and others.
Let's admit it folks. Maybe these guys aren't the hypocrites many of you think they are. Maybe they are really serious.
OK. So what does that imply?
Let's take expatriation. After John Templeton renounced his citizenship and moved to Nassau (where there is no income tax), the federal government imposed penalties — to discourage other wealthy people from doing the same thing. That was because the government wants to tax them. But when a wealthy person expatriates, the distribution of income and wealth becomes more equal. Should we reverse course and encourage the John Templetons of this world to get out of town. If equality is a serious goal, we should at least relax the penalties.
At the other end of the income ladder, consider poor immigrants. Every time one comes to our shore, the distribution of income becomes more unequal. But the same could be said if the immigrant is rich. Any immigrant who isn't earning close to the average income is going to make the distribution less equal as a result of his immigration. If equality is a serious goal, we definitely need a different immigration policy.