It’s September, and election season is under way. Marching to the tune of President Obama’s class-based political rhetoric, some candidates for Congress are campaigning on promises to raise taxes significantly on electorally safe targets.
This year’s list of victims includes “the rich,” Wall Street and America’s oil companies.
Those three groups are in Washington’s cross hairs because politicians need ways to generate more revenue—without spoiling their chances at the polls—to pay for the spending spree they have been on since at least the administration of George W. Bush.
According to the Congressional Budget Office, baseline federal outlays have risen by $4.4 trillion (yes, trillion!) in just the past 31 months.
The rich and Wall Street are both easy targets. Wealth sparks images of Hollywood and corporate excess. Paris Hilton and Bernie Madoff, like Marie Antoinette, would probably advise us to eat cake. In contrast, most Americans cheer genuine economic achievement.
Individual tales of riches based on hard work and innovation rarely make headlines, however.
So when we hear that Washington is considering allowing the Bush-era tax cuts to expire at year-end, raising the burden on households earning more than $250,000, many think: “Why not?”
But the evidence shows that the top 5% of earners now contribute over 50% of the total income taxes collected by the IRS.
Households reporting incomes exceeding $1 million also contribute more than half of all the money donated to charitable organizations.
Moreover, those same rich Americans often start or run the companies that fuel economic growth. We love a good “Horatio Alger” story—individuals willing to take risks, start new businesses, create employment opportunities and reap profits if they succeed. The process is admired, but Washington now wants to punish the results.
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