Should Millionaires Pay Higher Taxes?
As part of a package to jump-start job growth, President Barack Obama has proposed the “Buffett Rule” — named for billionaire Warren Buffett — that would raise taxes on people making $1 million a year or more.
Republican critics said the move smacks of “class warfare,” while Obama said it was time for rich citizens to pay their “fair share” of taxes.
Is it time to raise taxes on millionaires? Is American in danger of class warfare? Joel Mathis and Ben Boychuk, the RedBlueAmerica columnists, debate the issue.
Joel Mathis: They can afford it
Should the federal government raise taxes on millionaires? Why not? They’re millionaires! They can afford it! Don’t let all the crocodile tears over “class warfare” persuade you otherwise.
It’s time, in fact, for millionaires to start giving back to their country. While Americans in all income categories saw their tax rates slide slightly from 1979-2007, the top 1 percent of households saw a big drop: From 37 percent to 29.5 percent. The richest 400 households in America got an even better deal, says the Economic Policy Institute: Their average tax rate dropped from 26.4 percent to 16.6 percent — a tax rate nearly 4 percent lower than the average American’s.
The millionaires can afford it.
And the rich are getting richer. EPI also notes that from 1983-2009, the top 5 percent of households accumulated 82 percent of the nation’s wealth gains — half of that went to the top 1 percent — while the bottom 60 percent lost ground during that time. In fact, the Census Bureau reported last week that the poverty rate is the highest measured in 52 years; the median household income declined in 2010 by 2.3 percent from the previous year.
The millionaires can afford it.
Republicans protest that levying such taxes will penalize “job creators” and discourage them from doing the hard work of capitalism. But take a look at the high, sustained unemployment rate. Right now there are four job seekers for every job opening in America. The rich aren’t actually creating jobs right now; they’re sitting on their money. Put that money into President Obama’s jobs program! America’s wealthy are getting wealthier. The rest of us are not. It’s not “penalizing success” to ask millionaires to pay just a little more. But those higher taxes might give many Americans a shot to survive.
The millionaires can afford it.
Ben Boychuk: They already give back
Millionaires don’t give back to their country? They give back plenty.
The richest one percent of Americans earned 22 percent of the nation’s total income in 2007 and paid 40.4 percent of all the taxes. Their effective tax rate that year, according to Congressional Budget Office data, was 29.5 percent — double the rate paid that same year by middle-income earners. As it should be. They can afford it, after all.
But the percentages changed a bit in 2008, when the housing bubble burst, the recession hit and capital gains evaporated. Total U.S. household wealth plunged 18 percent in 2008 — more than $11 trillion simply disappeared.
The economy hasn’t recovered from that trauma, and may be facing another one as growth stagnates and the unemployment rate appears stuck at 9 percent. As President Obama argued in 2009, “the last thing you want to do is raise taxes in the middle of a recession because that would just ... take more demand out of the economy and put business further in a hole.”
If raising taxes in the middle of a recession is “the last thing you want to do,” why in the world would you want to raise taxes on the cusp of a double-dip? Instead of rehearsing tired mantras about the wealthy “paying their fair share,” perhaps the president could surprise us and embrace some of the recommendations of his own bipartisan Simpson-Bowles deficit reduction commission. Overhauling the tax code to lower rates and eliminate loopholes would have a galvanizing effect on the economy and encourage new investment.
Tax reform is only one part of the equation. Cutting government spending across the board is another. Eliminating the uncertainty surrounding a raft of new federal regulations would give businesses reason to stop hoarding cash and start hiring again.
Obama would eliminate loopholes while raising tax rates — a disastrous mix. The question isn’t whether millionaires can afford a tax increase, but rather whether the country can.