Due to mud slinging during the current presidential campaign of Mitt Romney, the idea of a "Millionaire" tax has been brought into the spotlight. This tax, dubbed by some as the "Buffet" tax, would presumptively tax those who make over a million dollars a year at a 30%ish tax rate instead of the 15% that these wealthy citizens often pay. While I can get behind equality, I am totally against targeted taxing of the rich because they are rich.
How can the rich get away with paying a lower tax rate?
The uber rich like Warren Buffet or Mitt Romney pay a lower tax rate because they make their money from investing instead of a normal paycheck like you or I receive (and because they have really good accountants). Instead of being mad at this lower tax rate they pay, it should be a lesson to us that 1. If you want to get really rich, investing is probably the best way to do it, and 2. Earn a living by investing instead of by a paycheck to pay lower taxes. This is outside the scope of this article however, but a ridiculously popular book that you can learn these principles from is Rich Dad Poor Dad. Check it out.
Consequences of a "rich" tax
Discouraging investing
The "Millionaire" tax would essentially be a penalty to those who make oodles of money. What would be the motivation for someone who made $950,000 to breach the $1,000,000 mark? None! He or she would essentially lose money if they made that extra push, discouraging investing.
That my friends is anti-capatilism.
In this rocky economic climate we need as many investors to pull out there pocket books as possible. Investing fuels economic growth, creating jobs and wealth for many other americans. My job was created by someone who invested his dollars into starting a company and I appreciate it.
Now, investors like my bosses are still human, and I am not suggesting that we bow to their every whim, but I also don't think that we should discourage anyone from dumping money into the economy.
Possible IRA pain
The other option would be to raise investment taxes for everyone. Can you imagine how irate retirees would be, who, expecting to pay lower capital gains taxes when they retire, all of a sudden had to forgo an extra 15% of their potential income? Especially if they knew they had to pay the higher tax rate to target millionaires. I would be super mad.
Slippery Slope
If we start targeted taxing out of jealously or spite, it can turn into a slippery slope. Next it could be that they should pay a higher tax rate, or target caucasian males because on average they make more money than any other demographic. It may be hard to believe that that would happen, but if you can target one group, why not another?
So while I won't argue that a tax reform may be in order, let's not target the rich, or anyone for that matter out of spite, it's really not good for anyone.
The whole "Mitt only pays 15%" drives me NUTS!!! I'm no economist {though I did take 12th grade economics, so that makes me more qualified than some people ;)} and maybe I don't understand all the math that goes into it, but doesn't he get taxed even more because he also pays capital gains taxes?
ReplyDeleteIn any case, who cares if he does only pay 15%? When have we become a society that is so angry at others' success? Class envy is beneath us. What has set America apart -- and what has made us great -- is that we are nation that doesn't constrict people to certain classes. It's the reason capitalism is as awesome as it is. Everyone has the opportunity to be as successful as they want to be. It might be harder for some and most don't achieve the level of success of someone like, say, Mitt Romney, but it can happen. Hopefully, it will stay that way for future generations of Americans.
Hooray for the new blog, by the way!