Five days after President Obama was re-elected, Weekly Standard editor Bill Kristol dropped this bombshell concerning tax increases on millionaires during an appearance on Fox News Sunday:
Really? The Republican Party is going to fall on its sword to defend a bunch of millionaires, half of whom voted Democratic and half of them live in Hollywood? It won't kill the country if we raise taxes a little bit on millionaires. It really won't, I don't think. I don't really understand why Republicans don't take Obama's offer.
Shortly after Kristol made his remarks, House Republicans appeared amenable to supporting a millionaires' tax while Republicans Senators like Saxby Chambliss and Bob Corker are expressing second thoughts about Grover Norquist's pledge not to increase taxes. It is now entirely conceivable the GOP could support the end of the Bush tax cuts for the wealthiest Americans.
But let's look at the essence of Kristol's argument. He argues that we should support tax increases on millionaires because half of them voted Democratic. Well, a lot of people who aren't millionaires also voted Democratic. By that logic, Kristol should support increasing their taxes as well.
As for Hollywood, it's no skin off my nose if George Clooney has to pay more in income tax. But why are we determining tax policy based on whether we dislike someone for their profession or their politics? That's straight out of President Obama's playbook and Kristol shouldn't be taking a page from it.
Simply put, Kristol's argument for increasing taxes on millionaires is political, not economic, and the same can be said for President Obama. How often did we hear Obama say on the campaign trail that millionaires and billionaires were "getting tax breaks they don't need"? (Who is Obama to decide what people need and don't need, anyhow?) Or how often did we hear him say the wealthiest Americans "should pay a little more" to reduce our deficit? Of course, even if the wealthiest Americans paid 100% in taxes, it wouldn't sustain the federal government for more than a few months. But what else can we expect of a President who did not reduce the deficit by a penny in his first term in office? Obama's tax increase proposal for the wealthy is intended to be punitive and rests on a foundation of envy and resentment which he successfully mobilized during his re-election campaign. While it might make perfect political sense to raise taxes on the wealthy, it makes no economic sense to do so at this time.
Earlier this month, I attended The American Spectator's 45th anniversary dinner in Washington, D.C. Amongst the guest speakers was oil and gas industrialist T. Boone Pickens. He stated that over the past decade he had paid $665 million in taxes. Pickens said if he had the opportunity to speak with President Obama he would ask him, "What is my fair share?"
In my socialist days, I used to think that if you imposed heavy taxes on the wealthy and on large corporations then all of our economic problems would be solved. Of course, I have come to realize that life is never that simple. All measures, great and small, have unintended consequences. Increase taxes on the wealthy too much and the wealthy move their money off shore. Increase taxes on large corporations too steeply and those extra costs get passed on to the consumer.
This isn't to say I'm not open to persuasion on increasing taxes on the wealthiest Americans. But I need more of an argument than the wealthy vote Democratic and live in Hollywood. Are these increased levies going to pay down the deficit or to pay for Obamacare and other programs? Let's remember that last year the national debt exceeded 100% of our GDP. We must choose wisely but unfortunately government seldom does.
Are these levies going back to the Clinton era or are we headed for a 75% tax rate that is being put forward by new French President François Hollande? Or what about the 98% tax levied by the British in the late 1960s and early 1970s? After all, if taxes are increased to Clinton-era levels, what is to prevent Congress and the President from increasing these rates further? Given that our current economic growth rate is at less than 2%, how will these tax increases promote economic growth?
Until Bill Kristol puts forth a more satisfactory argument as to why Republicans should take Mr. Obama's offer, the GOP would be wise to reject it.