Thursday, February 2, 2012

War on Success or Common Sense?

Editor’s Note: Tax rates have become a partisan issue, but I believe it’s just a difference of opinion on what steps should be taken to be a fiscally responsible country. I’m asking liberal and conservative readers to be patient and open-minded enough to consider this topic in a depoliticized way. Thank ya kindly.

Last week, I hosted a State of the Union Watch Party, per’s request via several emails. (Unless Will Smith runs for office, the Prez has got my vote, but seriously… the emails have got to chillllll.) Most of President Obama’s statements were pretty safe and garnered him moderate applause in the chambers and my living room. Pretty vanilla stuff.

And then he made the following statement:

Right now, we're poised to spend nearly $1 trillion more on what was supposed to be a temporary tax break for the wealthiest 2 percent of Americans… Right now, Warren Buffett pays a lower tax rate than his secretary. Do we want to keep these tax cuts for the wealthiest Americans? Or do we want to keep our investments in everything else - like education and medical research; a strong military and care for our veterans? Because if we're serious about paying down our debt, we can't do both. The American people know what the right choice is. So do I… we need to change our tax code so that people like me, and an awful lot of Members of Congress, pay our fair share of taxes. Tax reform should follow the Buffett rule: If you make more than $1 million a year, you should not pay less than 30 percent in taxes. And my Republican friend Tom Coburn is right: Washington should stop subsidizing millionaires... Now, you can call this class warfare all you want. But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.

The way the crowd at my house hollered and shouted, you’d think we were in church with Pastor Wesley at Alfred Street Baptist (#shoutout!).  Well, except for one person. A good friend of mine commented via Twitter, “#waronsuccess.”

Thinking about it at a basic level, I can understand that. Why should you pay a higher percentage of taxes just because you made more (legally at that!)? Sounds unfair. Everyone should pull their own load. But when you think beyond the surface, it’s a little more complex than that. Many of us have heard the adage, “It takes money to make money.” This is generally true. Let me provide you with an example:

Let’s consider Janet. Janet was born and raised in a suburb of Spartanburg, South Carolina, Boiling Springs. Janet’s parents are middle class folks; her mom is an engineer and her father is a tax accountant. I'll tell Janet’s story on the left and track the government’s role on the right:

Janet can’t seem to fathom why it is her patriotic duty to pay a higher tax rate than poor and middle class Americans.  After all, her American-owned business is fueling the economy, providing jobs for thousands (who are now tax payers), and she worked hard to get there!

I agree. Janet did work. But so did America. America worked hard to ensure that Janet had the opportunities she had. I touched on just a few of the tangible hard costs, but one can’t even begin to quantify some things (like providing a relatively safe, clean country for Janet to work in.) Janet has consumers and can conduct her business here because people like living in an America where you can practice your religion, where you can earn a free education, where 18 year old citizens can vote (even the women!!), where folks can tweet whatever they want, and where teenagers can color their hair 4 different shades. Janet can do all this because Americans invested in America. That investment was often made with rifles and protests, but more often and frequently, it was made with tax dollars. If you think about it this way, one could argue that Janet has benefited more from than the government than a family living on government assistance. They’re getting enough to get by. However, Janet’s business is doing more than getting by; she's receiving support from a complex array of systems to run a multi million dollar business.

I understand the argument. On the face of it, a higher tax on wealthy Americans could be perceived by some as a “war on success”; I simply call it America asking for a fair return on its’ investment so that others can have that same opportunity in a fiscally healthy country.

It's not a war on success; it's a campaign for future success.

(By the way, higher taxation for the wealthy who disproportionately benefit from governmental support isn’t a novel idea; America is currently at a historically low level of taxation. Our current levels aren’t normal!)
The President closed the discussion of taxes for the top 2% this way,

We don't begrudge financial success in this country. We admire it. When Americans talk about folks like me paying my fair share of taxes, it's not because they envy the rich. It's because they understand that when I get tax breaks I don't need and the country can't afford, it either adds to the deficit, or somebody else has to make up the difference - like a senior on a fixed income; or a student trying to get through school; or a family trying to make ends meet. That's not right. Americans know it's not right. They know that this generation's success is only possible because past generations felt a responsibility to each other, and to their country's future, and they know our way of life will only endure if we feel that same sense of shared responsibility. That's how we'll reduce our deficit. That's an America built to last.

I'll just drop the mic there.

If you’d like to read more (well-informed) thoughts on this topic, I highly recommend:

2. A Conservative Opinion: Wealthy Americans Deserve TaxRelief, (Written in Oct 1999)
3. The Buffett Rule in History’s Grand Sweep
4. Only Little People Pay Taxes
5. Elizabeth Warren on Debt Crisis, Fair Taxation  (LOVE THIS VIDEO!!!)

Your thoughts?