President Obama and the Democrats are finally happy. Liberated from thoughts of compromise with Republicans, they can fully indulge their most lascivious pleasure -- trashing rich people. "We simply cannot afford these special lower rates for the wealthy," President Obama declared in his Rose Garden message Monday.
"Give 'em hell, Barry," cheered Hendrik Hertzberg of The New Yorker. Hertzberg was chipper. Not so of Paul Krugman from The New York Times, the Democratic Party's choleric scold: "The rage of the rich has been building ever since Mr. Obama took office," he glowered. ". . .And among the undeniably rich, a belligerent sense of entitlement has taken hold: It's their money, and they have the right to keep it." Imagine.
The president, brimming with indignation, asserts that hedge fund managers are paying taxes at a lower rate than teachers and firefighters. "How can you defend that?" he demands.
You don't have to defend that, because it isn't true. This synthetic outrage about the taxes paid by the super-rich -- the so-called Buffett Rule -- is the greatest waste of political time and energy in recent memory.
As Stephen Moore, an economics writer for The Wall Street Journal, has observed, we cannot know with certainty what Warren Buffett paid in taxes. (And he is certainly free to write a larger check to the IRS.) But "according to the Congressional Budget Office, middle-class families in 2007, earning between $34,000 and $50,000, paid an effective 14.3 percent of their income in all federal taxes. The top 5 percent of income earners paid 27.9 percent and the top 1 percent paid 29.5 percent. And what about the highest earners? Americans with annual incomes above $2 million paid an average 32 percent of their income in federal taxes in 2005 (the most recent year for which data are available)."
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In 2008, Charlie Gibson questioned President Obama about his desire to raise the capital gains tax. Gibson reminded candidate Obama that presidents Clinton and Bush had reduced the capital gains tax rate. "And in each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?"
"Well Charlie," Obama replied, "What I've said is that I would look at raising the capital gains tax for purposes of fairness."
So it isn't a matter of raising revenue -- and by most estimates, the amount raised by a millionaires surtax would be trifling compared with the size of the national debt -- it's a matter of sticking it to those guys with the "belligerent sense of entitlement" towards their right to own property.
Well, I'm for the rich, and not just because the top 1 percent of earners in America paid 38 percent of income taxes in 2008. And not just because I suspect that attempting to tax the rich more will only lead to more tax avoidance, not more tax revenues for the federal government. I'm for the rich because, with some exceptions, they've earned their money. A Prince and Associates study found that only 10 percent of multimillionaires had inherited their wealth.
In the process of earning their wealth, the rich have created products, services and whole industries that have dramatically improved my work life, my family life and my health. I'm so grateful to them for the GPS, iPads, non-drowsy antihistamines, smartphones, XM radio and The Teaching Company courses -- to name only a few advances of the past decade or two.
I'm for the rich because nearly all of the rich people I've met are extremely public-spirited. They volunteer. They form committees to improve things in their communities. And they are incredibly generous with their money. As Arthur C. Brooks of the American Enterprise Institute notes, "The top 10 percent of households in income are responsible for at least a quarter of all the money contributed to charity, and households with total wealth exceeding $1 million give about half of all charitable donations." In general, I think they probably make wiser choices in their charitable giving than the federal government would make if it took their money and spent it.
I'm for the rich because they create the dynamism and energy of a growing economy. The rich create businesses and hire people. A wealthy person gave me my first job. And I'll bet the same is true of you.
I'm for the rich and for all the people who simply want an opportunity to become rich -- opportunities that are becoming scarcer with every passing day of Obama's presidency.
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