The Left’s favorite mantra justifying income redistribution is
“excessive benefit from Bush policies.” The liberal illogic goes
that “the wealthy” have been receiving too much and paying too
little and should now make it up with higher taxes. The flaws in
this slanted reasoning are many. The danger in it is even
greater.
For those who missed it, let’s recount what “the wealthy’s
excessive benefit” was. For one thing, they got to pay a top
federal tax rate of 35 percent. That means the federal government
got to take over a third of everything they earned. In reality,
it means “the wealthy” got to keep well less than 65 cents of
every dollar they made, once state and local taxes are added to
the federal tax rate.
This “too-low” top rate means that “the wealthy” paid taxes
at the same federal rate as corporations. Of course, as many
correctly argue, the corporate tax rate is too high to be
globally competitive. The fear is that businesses and investment
will migrate abroad. For some reason, the same concern does not
exist for top individual producers.
If the wealthy’s gains are ill-gotten, then wouldn’t
justice be better and more quickly served to prosecute, rather
than persecute, them? There rightly was no hesitation with Bernie
Madoff. Seeking to tax the wealthy to justice is the least
efficient manner for redressing the Left’s claimed wrong. Unless,
of course, you presume that all the wealthy’s gains are
ill-gotten…
Top earners’ real “crime” is success. What do they do with
their excessive benefits? Invest, save, and start businesses. All
of which employ others and give customers goods at the lowest
possible prices. Criminal.
Who are these insanely wealthy souls? A married couple
making over $374,000 this year would qualify for the top tax
rate. It is impossible to put a face on them though — because
their ranks change every year. As people age, they migrate
through the tax rates — the “wealthy” one year, were likely
“poor” earlier, and will likely return to lower tax rates again
as they reach retirement.
This income migration points out the dangerous but implicit
element of the Left’s redistribution justification. Raising
present taxes in order to penalize past benefits smacks of
retroactivity. As income migration shows, it is a very imprecise
imposition — people who had lower tax rates in the past may no
longer be in the top income group next year, and people in the
top income group next year, may not have been in the top over the
previous decade. No matter to the Left.
The retroactive nature of the Left’s justification should
indeed be a concern to the rest of us though. It is more
dangerous than the taxes themselves. It not only offers an
unlimited rationale for raising future taxes, but leaves neither
amount nor type of income immune from its rearward reach.
By all competent projections, Washington is on an
unsustainable spending path. Generated by entitlements and
inertia, there is no effort on the Left to avoid excessive
spending. Its demand will therefore turn for more and more
revenue. The two largest pots will be in baby-boomer savings and
middle class earnings. If someone’s past success can justify a
reach-back revenue-grab, what makes retirement accounts safe? If
someone can be deemed to have benefitted “excessively,” why does
anyone have comfort that today’s middle class do not become
tomorrow’s wealthy?
We can never rest secure in liberals’ limits because there
is no limit for liberals. The Left thinks in non-economic terms
and acts under anti-economic rules. Under its system, there are
no market forces to align supply to demand. Therefore there are
no means to enforce boundaries on actions. There are only the
Left’s own good intent and the inherent belief that it can order
society better than society and markets can order
themselves.
Thus liberals can not tell us how much “the wealthy” need
pay in taxes. Already those in the top tax bracket pay almost 35
percent of all federal income taxes paid in the U.S. This despite
the fact that they make up less than four percent of federal
taxpayers. How much more a burden should they shoulder? The Left
cannot be more precise than to simply say “more.”
The Left should say what it means. If it believes America
is under-taxed — in whole or in part — it should say so. If it
believes that Washington must have more revenue because spending
cannot be cut — it should make the claim. Of course, it will say
neither, because America would reject both assertions.
For this reason, the Left rarely says what they mean. But
the Left does mean what it says. And often far more. The problem
is America just does not listen.
