Issue March 11, 2009

Richy Rich?

In Maryland, fishermen must adhere to a size and number limit for Rockfish. Watermen there are trying to assure the survival of the species.

President Obama could learn from those Marylanders. Instead of preserving and promoting the resurgence of a species, in this case the economic sector Fortune magazine refers to as “HENRYs” (high earners, not rich yet), Obama & Co. are using them as chum.

Last week, the Obama administration decided that $250,000 is a magic number. As outlined in the president’s budget proposal, couples and businesses making more than $250,000 a year will soon face significant tax increases and reductions in mortgage and charitable deductions.

Flimsy argument No. 1 for this levy: The rich can afford it.

Is $250,000 a year rich? No doubt for Louisville, $250,000 is great bank. But a high salary doesn’t necessarily mean someone is wealthy. A profit of $250,000 a year isn’t much at all for a small business.

The genuinely wealthy are a privileged class, that is true — and that needs to change. We’ve all heard the tale of how Warren Buffet admitted he pays less taxes than his secretary. So fix that. Eliminate the tax system loopholes that allow multimillionaires and multinational businesses to circumvent their tax burdens. Make everyone pay his or her fair share.

Only acknowledge that while Warren and his ilk have legions of lobbyists and CPAs readying tax exemptions, Eddie Entrepreneur, who brings in more than $250,000 a year running a pizza parlor in Jeffersonville, does not. Yet sadly, many people making less than $250,000 think Eddie and Warren are one and the same. Ask Eddie and he’ll tell you why that’s not true.

Our protocol for consumption isn’t based on a sliding income scale. If two neighborhood homes are burning, one owned by a retired couple living off Social Security and one owned by HENRYs, firefighters don’t use more water on the home of the HENRYs and less on that belonging to the pensioners.

I can afford to pay more than 49 cents a pound for bananas. You can better afford to pay $8 for a movie ticket compared to someone who’s furloughed right now. Do you tell the cashier at Baxter to charge him $6 and you $10? 

Flimsy argument No. 2: We have to help the poor because they don’t have the advantages others have.

Right, because the child of a poor, single mother would never be able to attend, say, Harvard and achieve the highest office in the nation. Oh, wait …

The truth is the vast majority of Americans have unlimited earning potential. Opportunities for all might not be equal, but they do exist. Let me remind the doubters that many people with lower incomes actually have more opportunities — free and subsidized no less — than many middle-class kids. 

We’re not talking about assisting the infirmed or disabled. This new legislation not only makes the tax cuts in the stimulus package permanent, but according to an analysis by Deloitte Tax LLP, it totally eliminates the entire federal tax burden for families with two or more kids making as much as $50,000 a year. A similar family making $35,000 would be sent a check for about $4,000. Excuse me? When I made $35,000 the only thing I got was the brutal realization that in order to live better I needed to make more than $35,000 a year.

President Obama said his policy will end “an era of profound irresponsibility.”

No it won’t. You can’t legislate morality. You can’t eradicate greed and you can’t force people to be ambitious. Income inequality will always exist. It even exists in true socialist societies.  

All this policy does is replace the “era of profound irresponsibility” with an era of profound entitlement.

If you really want to buoy the lower and middle classes, cut taxes and accelerate spending so education is more affordable. Just make sure everybody kicks in. Better jobs with higher incomes will follow for those who are willing to make an effort.

President Obama is attempting to fiscally apologize for decades of Reaganomics with reparations. It’s not equitable and, moreover, it won’t work. You can’t permanently lift the incomes of lower- and middle-class earners simply by taking the money from those who make more. Such a Robin Hood approach is only a temporary fix. 

Still not convinced? OK. You make more money than somebody else. Wanna pick up their slack? Bet not.