Another Millionaire Falls For The Obama Tax Scam

Novelist Stephen King became the latest rich guy to board the Obama tax-hikes-on-the-rich band wagon with an angry, profanity laced essay at The Daily Beast titled “Tax Me, for F@%&’s Sake!”   It’s a long, rambling screed, based mostly on leftist folklore and tired campaign slogans.  Since the media are likely to turn Mr. King into a perceived economics scholar we’ve selected a few excerpts to examine:

At a rally in Florida I pointed out that I was paying taxes of roughly 28 percent on my income. My question was, “How come I’m not paying 50?”

In 2009, the latest year IRS statistics are available 470 thousand taxpayers reported incomes in excess of $1 million.   They paid $131.5 billion in income tax.  Mr. King asks why he’s not required to pay 50%, or nearly double his current rate.

The chart shows what would have been the effect on the deficit of doubling or even tripling tax revenue from millionaires.  In 2009 the latest year for which IRS income tax statistics have been published, the deficit was $1.413 Trillion.  Had Congress been able to triple the tax take from millionaires the deficit would still have been over $1 Trillion – far and away the largest in US history.  In fact, after adjusting for inflation, $1 trillion is twice as much as the annual deficits the government ran during World War II, the previous high water mark.

Mr. King attacked New Jersey Governor Christie’s statement that if Warren Buffett thinks he should pay more income tax he is free to write a check and pay it.  Mr. King had no rebuttal to this simple, common sense except to sneer that Christie is fat and might have indulged in “the all-you-can-eat cheese buffet at Applebee’s in Jersey City.”

Mr. King continued:

It’s true that some rich folks put at least some of their tax savings into charitable contributions. My wife and I give away roughly $4 million a year…Warren Buffet does the same; so does Bill Gates; so does Steven Spielberg; so do the Koch brothers; so did the late Steve Jobs. All fine as far as it goes, but it doesn’t go far enough. What charitable 1-percenters can’t do is assume responsibility—America’s national responsibilities: the care of its sick and its poor, the education of its young, the repair of its failing infrastructure, the repayment of its staggering war debts…

Mr. King seems to believe millionaires can pay enough additional tax to make add significant spending to all these priorities, education, entitlements, infrastructure and repayment of the debt.

The chart should help Mr. King put his ideas in context.  Put simply, there aren’t enough millionaires to fund significant spending increases for his favored government activities, even if it were possible to double their tax payments, which, as we’ll discuss below, is probably not possible.  In fact, the cost of entitlements was virtually equal to all, pre-tax income earned by millionaires.

By the way, since the Obama Administration began in 2009 the combined cost of Iraq, Afghanistan and the wider “war on terror” has totaled about $554 billion or 11% of the $5 trillion increase in the national debt since the day the President was sworn in.

Mr. King continues:

That annoying responsibility stuff comes from three words that are anathema to the Tea Partiers: United American citizenry. 

Mr. King like the President, is angry because more than half of America has refused to unite behind an agenda of ever increasing government cost, intervention and control over the private economy that inevitably results in lost economic opportunity for most of us, with the blatantly obvious exception of a politically connected unions and campaign-donor cronies rewarded with funds for unworkable, green energy schemes.

Mr. King’s angry rant continues:

Most rich folks paying 28 percent taxes do not give out another 28 percent of their income to charity…And what they do give away is—like the monies my wife and I donate—totally at their own discretion. That’s the rich-guy philosophy in a nutshell: Don’t tell us how to use our money; we’ll tell you.

The opposing philosophy of the progressive left is that by running for office, or securing a job in the bureaucracy ordinary men assume the self-anointed power to manage other people’s lives and other people’s income.  Mr. King doesn’t seem to notice the manifest failures of vast government bureaucracies, not the  least of which is Congress and the President running up spending so high that there is no plausible scenario wherein the tax payers ever catch up and balance the budget and start chipping away at the debt.

Mr. King complains about several issues that have nothing to do with tax rates on the rich such as his opinion that America is insufficiently regulated.  But it wouldn’t require any more tax revenue for the existing bureaucrats to write even more odious regulations.  They’re only restrained by fear of voter blow-back as they recently suffered when they tried to make it illegal for farm children to do chores.

 Mr. King gives sneers and dismisses verified, validated arguments against higher top bracket tax rates:

  • A dramatic tax rate increase, enough to double revenue from the rich is likely to result in less, rather than more revenue.  The rich, more than the rest of us have the means to avoid taxes by shifting income from one tax year to another, holding assets instead of selling them for a taxable capital gain, and myriad loopholes that politicians universally condemn but never seem to find a way to repeal.  The chart at the bottom of this post shows that government collected more tax revenue from millionaires when their effective tax rates were lower.
  • The rich are the investors who provide the capital resources an economy must have.  Without capital resources jobs are not created and goods and services can not be produced.

Stephen King’s anger is misplaced.  Rather than blame America’s troubles on taxpayers, even rich taxpayers he should confront reality: America’s problems are not caused by a government without enough money to throw around.  Our problems are due to the people not having enough economic liberty.

 

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