Tag Archives: tax the rich

Bring On The Class Warfare

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On Wednesday, Issues & Insights posted an article about tax-the-rich idea to end the federal deficit.

The article reports:

The theater kids who have taken over the Democratic Party have brought to the forefront the long-held proposition of the left to tax the rich to pay for a utopian future. Even before the DSA surge, the party insisted there is plenty of money out there, all the government had to do was grab it and problems would be solved. It’s nonsense of course. An even more draconian tax structure than the one we have now wouldn’t fund the federal government for even a year.

Washington, now facing a $40 trillion debt, spent more than $7 trillion in fiscal 2025, doling out an average of almost $21,000 per person. Democrats have always argued that if they could just tax the rich hard enough, they could erase all of society’s ills while eliminating deficits and debt. Either they know better and can’t help but lie, which is an organizational foundation of communism, or their math is below grade-school level.

Using IRS data to make its case, the Cato Institute says that if the federal government in 2023 “had confiscated every dollar earned over half a million dollars, it still would have run a budget deficit.”

If that won’t work, then try harder, right? Go after the villains, the billionaires. So what if Washington seized every asset they owned, not just their annual income, but “every home, property, business, investment, car, and yacht, right down to their kids’ teddy bears — and sold it all for full market value?” asks researcher Jessica Riedl.

Wouldn’t that get the job done? Nope.

“That would raise enough revenue to finance the federal government for nine months,” she says. But not nine months every year. Nine months one time only. “Then, with no billionaires left to pillage, it’s gone — as is your 401(k), because most of that wealth would’ve been liquidated out of the stock market.”

It has been stated before–the problem is not the revenue–it’s the spending. These wonderful ideas of confiscating wealth fail to take into consideration that the wealthy have tax attorneys, places offshore to move valuables to, and other ways to avoid wealth confiscation. Also, why are you taking away the incentive to be successful just to fund an inefficient government that is rife with fraud and waste? It would make more sense to eliminate the fraud and waste.

Inflation And Taxes

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On Wednesday, Steven Hayward posted an article at Power Line Blog about President Biden’s tax proposal that would only ‘tax the rich.’ Taxing the rich has never been a really good idea–the ‘rich’ have tax accountants to limit their tax liability. Generally speaking, the middle-class does not have tax accountants and gets stuck paying the taxes that were for the ‘rich.’

The article reports:

Everyone is familiar with the two great lies of modern times: the check is in the mail, and “Of course I’ll still respect you in the morning.” To which should be added a third: “wealth taxes” will only affect the very rich—the middle class has nothing to fear. When you hear Democrats say this, reach for your wallet.

This needs to be kept in mind with thinking about President Biden’s new proposed “wealth tax,” which would impose a 20 percent tax on unrealized gains of liquid assets (i.e., stocks and bonds) for households with a net worth of more than $100 million. The Biden Administration claims this proposed tax will only hit the top 0.01 percent of taxpayers, with most of the incidence of the tax falling on billionaires.

Of course, this is what liberals told us about the Alternative Minimum Tax (AMT) back in the late 1960s, when the left created a scandal around the fact that 155 people with adjusted gross income above $200,000 paid zero income tax on their 1967 tax returns. (Adjusted for inflation, that would be around $1.5 million today.) As the internet clickbait headlines like to say, “You’ll never guess what happened next!” Of course you don’t need to guess: by 2017, before the Trump tax cut finally scaled back the AMT (but only temporarily because of our strange budget rules), 5.2 million households were caught up in it, a far cry from the few hundred originally targeted in 1969.

The same thing will surely happen with any “wealth tax” targeted at the super rich, and for the same reasons: inflation, and the insatiable appetite of liberals for revenue, which can only come in sufficient amounts by taxing the middle class. Devices like the AMT or a “wealth tax” are gimmicks to disguise this fact.

The article notes:

Thomas Hoenig of the Mercatus Center at George Mason University (and former president of the Federal Reserve Bank of Kansas City) warns in Barron’s:

The proposal sounds so simple. Report income and unrealized gains in liquid assets and tax them at a minimum of 20%—the assumption being that only the richest experience significant increases in asset values. However, the truth is that in a period of persistent asset inflation, which we have had now for decades, such a tax eventually would apply to an ever-larger proportion of the population, notably the middle class.

The income tax is a good example of how a tax on the wealthy becomes a tax on the middle class. In 1913, Congress passed the first income tax under the newly passed 16th Amendment to the Constitution, which topped out at 7% for income above $500,000. After a temporary, significant tax increase to pay for World War I, tax rates settled in at 25% on incomes above $100,000. It was only a matter of time before the politicians forgot about the “wealthy” part.

Taxing the rich is one of those ideas that sounds really good but never actually works!

When The Facts Are Not On Your Side, Paint Your Dress

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The pictures of the dress that Representative Alexandria Ocasio-Cortez wore to the Met Gala went viral. In case you haven’t seen it, the white dress had “tax the rich” written in big red letters on the back. I guess Representative Ocasio-Cortez is not aware that we are already doing that.

The following chart is from the National Taxpayers Union Foundation:

An article posted at Townhall today reports:

Despite perceptions, the highest-income strata of taxpayers are the only ones who pay a larger share of taxes than their share of income. In 2018, the top 1% of income earners made nearly 21% of all income but paid 40% of all federal income taxes. The top 10% earned 48% of the income and paid 71% of all federal income taxes.

On the other hand, in 2021, Americans making less than $75,000 are projected to have, on average, no tax liability after deductions and credits. The average income-tax rate for those making between $75,000 and $100,000 is expected to be 1.8%. More than 61% of Americans — around 107 million households — owed zero federal income taxes for the year 2020.

You don’t have to agree with me that (over)taxing the wealthy undermines job creation and growth, or that a tax system that relies so heavily on the fortunes of the few creates more cronyism in Washington and more volatility everywhere else. But the idea that the rich don’t pay their “fair share” is absurd.

The article at Townhall concludes:

No, progressive taxation isn’t socialism. But the policy justifications made for tax hikes these days certainly are. Ocasio-Cortez is a fraud, of course, but it’s her retrograde economic theorizing that’s the real problem. And in this age of populism, increasing numbers of Americans are accepting Marxist conceptions of American life, in which the successful are parasites and everyone else is a victim of their greed.

The reality is that no politician is going to advocate raising middle-class income taxes, despite the ever-increasing cost of government. There is only the rich to tax. Consequently, it’s become easier to pass massive expansions of the state. Everyone expects someone else to foot the bill — either future generations or their wealthier neighbors. Meanwhile, taxation has gone from being a means of funding communal needs and projects to a means of technocratic wealth reallocation. This is no way to run a country.

We need to do a better job of teaching economics in our schools.

It’s Embarrassing When You Don’t Practice What You Preach

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2010-07-21 G550 NetJets CS-DKE EDDF 02

Image via Wikipedia

Yesterday Bloomberg.com posted a story about Warren Buffett. It seems that despite his recent statements to the contrary, he hates to pay taxes as much as the rest of us.

The article reports:

NetJets Inc., the private-plane company owned by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), was countersued by the U.S. over $366 million in taxes and penalties.

NetJets in November sued the U.S., saying the federal government had wrongly imposed taxes, interest and penalties totaling more than $642.7 million.

…NetJets Aviation Inc. owes more than $302.1 million, and another unit, NetJets International, is liable for $52.9 million, the U.S. said. Executive Jet Management Inc. owes $10 million while NetJets Large Aircraft owes $1.19 million, the U.S. claimed.

“NetJets doesn’t comment on pending litigation,” General Counsel Colleen Nissl said in a statement e-mailed to Bloomberg News.

I have no problem with a corporation legally cutting its tax bill, but I do find it ironic that the man who raised such a ruckus about the wealthy paying ‘their fair share’ of income taxes doesn’t necessarily think that statement applies to him.

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