Seniors: Taxing Wealthy Americans

Oct 20th, 2010 | By | Category: Senior Moments Blog

SCJ editors try to read a balance of news articles daily to keep a finger on the pulse of issues in the United States and worldwide.  We found an article yesterday in The New Republic that deserves a spotlight.  Jonathan Cohn is a Senior Editor, and he wrote this Op Ed:

“Congress adjourned last month without voting on whether to extend the Bush tax cuts. But the debate hasn’t stopped, with prominent Republicans and most of their conservative supporters pushing hard to preserve the cuts that fall exclusively on high incomes. Letting those tax cuts lapse, these conservatives say, would not only be bad for the economy. It would also be unfair.

For the most part, President Obama and his supporters have responded with a pragmatic counter-argument: Preserving tax cuts for the wealthy would drive up the deficit without substantially improving the economy. I agree wholeheartedly. For those of you unfamiliar with the contours of the argument, I’d recommend reading through the literature on taxes at the Center on Budget and Policy Priorities.”

The budget arithmetic is important in understanding just what will happen if the tax cuts lapse,

and just what will not happen.  But Cohn’s Op Ed is about more than arithmetic.  It’s about doing what is right.

Cohn goes on to say, “According to the Republicans and many of their supporters, allowing tax rates on upper incomes to rise would punish the rich for their success, taking away money that the rich have earned. But this argument suffers from two key flaws.

  • One is that it fails to account for the power of luck. Almost by definition, people who are successful have benefited from some measure of good fortune. That fortune can take the form of obvious, material advantages — like access to advanced technology and good schools. Or it can take the form of more subtle, but still important, assets for moving forward in life — like good health or loving parents.
  • The other, albeit related, flaw in the conservative argument is that it fails to acknowledge the debt wealthy people owe to society. As Gar Alperovitz and Lew Daly argue in their 2008 book, Unjust Desserts, the proverbial self-made man is not exactly self-made. He (or she) is benefiting from the accomplishments of past generations, not to mention the support of public institutions (like the National Science Foundation) and services (like schools) that foster innovation and lead to greater productivity.”

National publications love to quote Warren Buffett, the second wealthiest man in America, worth in excess of $60 billion.  I knew Warren and his now-deceased wife, Susie, when we lived in Omaha.  They gave financial and moral support to an agency where I worked, and Susie and I co-hosted a number of fundraising events.  One evening when I arrived at their home for such an event, Warren met me at the door.  Susie had been sick all day and couldn’t get out of bed.  Warren said, “So you’re stuck with me, Sharon!”  Stuck?  With Warren Buffett?  Hmmmmm…  that’s a really good example of his diminutive spirit!  He and I had a good time with the guests that evening, it was a successful fundraising event, and Susie recovered within a few days.

I remember one conversation we had that evening as I was leaving, barefooted, carrying my high heels in my hands.  In my youthful naievete, I asked him for a financial ‘secret’ that he had never shared with anyone else…  He laughed, suggesting that had never happened.  Then he said, “Just remember, Sharon, don’t ever take credit for your successes; you never do it on your own.”  I’ve never forgotten that message from the Oracle of Omaha.

I agree with Jonathan Cohn.  I don’t know how much more wealthy people should be paying in taxes, but restoring tax levels for the wealthiest Americans to pre-Bush-tax-cuts seems to be a good place to start.  Warren agrees.

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