The principles that rule this blog

Principles that will govern my thoughts as I express them here (from my opening statement):

  • Freedom of the individual should be as total as possible, limited only by the fact that nobody should be free to cause physical injury to another, or to deprive another person of his freedoms.
  • Government is necessary primarily to provide those services that private enterprise won't, or won't at a price that people can afford.
  • No person has a right to have his own beliefs on religious, moral, political, or other controversial issues imposed on others who do not share those beliefs.

I believe that Abraham Lincoln expressed it very well:

“The legitimate object of government is to do for a community of people whatever they need to have done, but cannot do, at all, or cannot
so well do, for themselves — in their separate, individual capacities.”

Comments will be invited, and I will attempt to reply to any comments that are offered in a serious and non-abusive manner. However, I will not tolerate abusive or profane language (my reasoning is that this is my blog, and so I can control it; I wouldn't interfere with your using such language on your own!)

If anyone finds an opinion that I express to be contrary to my principles, they are welcome to point this out. I hope that I can make a rational case for my comments. Because, in fact, one label I'll happily accept is rationalist.

Thursday, December 13, 2012

Obama's "revenge tax"

There is a blogger who calls himself "Publius" — because that was the pseudonym adopted by the three authors of the Federalist Papers, I assume — who has finally explained, in terms I can understand, President Obama's insistence on raising tax rates, even though it would hardly make a dent in the deficit. And it is so clearly correct that I would like simply to repeat it here.

I was having trouble understanding why President Obama has been clinging so fiercely to his demands to raise the top marginal tax rate to the Bill Clinton-era 39.6%. By most accounts — especially his own — Obama is a very intelligent man, and surrounds himself with very intelligent people. Surely these intelligentsia must know that raising the marginal tax rate 4.6% on those earning over $250,000 per year will do virtually nothing to erase the national debt or close the deficit, do nothing to ease the plight of the rapidly growing number of poor Americans, and do nothing to help Obama’s miserable economy — in fact it may make his miserable economy even worse.

So the question I was having trouble answering is this: if Obama and his minions know these simple, self-evident truths, why are they so hell bent on such a tax hike?

Obama claims that he has a mandate for the tax increase; it was a campaign pledge, and therefore he must meet it. But as I recall, he also made campaign pledges in 2008 to close Guantanamo Bay, to fix the economy with a huge stimulus, and pledged in 2009 to cut the deficit in half in his first four years — broken pledges all. Since these, and so many of Obama’s other prior pledges have been broken, honoring a campaign pledge cannot be the true reason for clinging to his tax hike. Moreover, pushing legislation forward because it was a campaign pledge merely begs the question: why was it a campaign pledge?

Offered here are some possible reasons why.

A primary reason for Obama's insistence on raising taxes is this: a bully bullies because he can. Obama and the intelligentsia know that if Obama stands pat on raising tax rates — and Republicans balk — he can simply blame a Republican House for going over the cliff, which is much more proximate and much more plausible than blaming Bush.

And if the Republicans balk, Obama can appear heroic by insisting in January 2013 that the House reduce tax rates on the middle class, while maintaining the higher tax rates then in place for the top bracket. Or, as has recently been proposed, Treasury Secretary Geitner might give the middle class a temporary tax break until new tax legislation is passed; a bit of a gamble if the tax rate that gets passed is higher than the temporary tax rate, as it would stick the middle class with an unwelcome tax bill in April.

Sticking it to Republicans is but a part of a bigger Obama agenda — revenge. In the hours before the 2012 election, Obama urged his followers, saying, “voting is the best revenge.” How unifying. Obama’s revenge includes slapping higher taxes on America’s most productive wage earners. Obama’s tax hike is consistent with his liberal belief that those who have succeeded have not had to play by the same same rules as those as those who have failed, have taken unfair advantage of the disadvantaged, and have gained unearned success at the expense of the unsuccessful. Such perceived unfairness must be avenged, and taxing the rich is, for those who voted for it and the president that urges it, the best revenge. For this reason, I refer to Obama’s fiscal cliff tax hike as the “Revenge Tax.”

Revenge is akin spiking the football, or rubbing salt in the wound, or issuing the middle finger salute. But revenge, like a winning vote, is temporary; it satisfies for a season only. Obama hopes to change America forever. There is thus an even bigger reason for his Revenge Tax than simple revenge.

And raising revenue, at least with his Revenge Tax alone, is not that bigger reason. Speaker Boehner has already offered $800 billion in new revenues by reducing or eliminating tax breaks — i.e., loopholes — for upper-income people. But this is a “non-starter” for Obama. Again, the question must be, why? And the answer must be that the Revenge Tax is not just about raising revenue.

I believe Obama’s refusal to accept revenue by closing tax loopholes as a proxy for the Revenge Tax, and his insistence on that tax is for this reason: closing tax loopholes is a one-time event. Raising taxes, however, can — and often does — beget raising more taxes.

Increasing the marginal rate to 39.6% won’t do any good. Everyone knows this. Thus, we can expect that once Obama gets his 39.6% tax rate, we will soon hear that it wasn’t enough, that to meet the country’s growing needs, we must make the evil rich pay still more. Perhaps $250,000 of income for the top tax bracket will be lowered to $200,000 or $175,000. This is especially more likely as the “soft bigotry of lowered expectations” takes hold. The definition of “rich” will slide down the curve, as Obama’s broken economy makes more and more people poor and fewer and fewer people rich.

Ergo, the real reason Obama clings to raising the tax rates is to set the stage for repeated, increasing, expansive tax increases, until America’s tax rates approach those of Obama’s Utopian society — Europe. Obama yearns for Europe’s unaffordable healthcare, the so-called universal healthcare system, and I believe also yearns for Europe’s lofty tax rates. Here is what America may look like in the years ahead, if Obama gets his Revenge Tax, and in the process opens the door to giving America a Euro-tax makeover:

Top Marginal Tax Rates


The question, therefore, isn’t so much whether America will go over the fiscal cliff, but whether by avoiding that cliff, America will open the floodgates to European style taxation.

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