Given that the president does not wish to return to the Clinton-Gingrich spending cuts, or even the Clinton-Gingrich tax hikes across the board, and given that he does not wish to embrace his own Simpson-Bowles commission’s recommendation, and given that he wishes to tax only those who make over $250,000 to reduce the deficit by 7% — and has no real plan to find the other 93% other than through new capital gains hikes, estate taxes, and commercial taxes, then all the other wisdom about making and saving goes out the window.
Why would one farmer scrimp and save to pay off debt or bypass a new tractor or pickup to ensure that one day his heirs receive his 80 acres free and clear — only to have his survivors pay 55% of any value over $1 million to the more deserving government? Would it be all that much worse to live it up, spend, enjoy life, and leave them a farm tax-free, with a $500,000 bank debt on it? Is the man of debt morally preferable to the man of capital — the former a noble victim with the right non-monetary values, the other a suspect Scrooge hell-bent on private lucre? Will my grandchildren one day brag, “I thank my ancestors that I had no inheritance and now have zero net worth, and I thank God that I managed to keep my income under $250,000”?
Why would anyone get another degree at night school, work weekends for another $20,000 a year, add 30 more patients, or seek to expand a sales route if it put you over the dreaded us/them limit of $250,000? Or, conversely, why would anyone on unemployment or disability or food stamps go out to find an entry-level job that paid less than government receivables?
As I understand the Obama message, it goes something like the logic of illegal immigration: The free market quite illogically and wrongly sets salary levels. Education levels, specialized skills, experience, hard work, character, luck, accidents, good health — and all the other criteria that arbitrarily factor into one man making $250,000 and another $50,000 — are just too random and unfair.
Therefore, a well-educated Ivy league technocracy, with lofty moral intentions, can fix what the market broke. Simply tax those who make too much at a level where they live about like those who unfortunately make too little and pay no federal income taxes. That way everyone but the technocracy can live about the same, and the economy will not be dragged down by all those unnecessary things that too much disposable income buys — from private swimming pools and assault rifles to jet skis, crew cab pickups, and Hummers. Why, though, do we not stop tax breaks for Hollywood, or have a 70% surtax on incomes over $5 million (per picture), or tax incomes of those in government who go into the private sector at 80% for the first two years of the revolving door?
In any case, I hope there are enough Volts, Solyndra-like jobs, loan forgiveness programs, and new Fannie and Freddie mortgages to go around. I also hope that enough self-employed Californians of the despised group stay around who will soon pay 39.5% on large portions of federal income, 15.3% in SECA taxes, and from 10.3% to 12.3% in state taxes, as well as the regular sales and property taxes and assorted “user fees.” Let us hope that our schools, freeways, courts, and parks are exceptional enough for them to offset the cost of remaining a Californian.