The Rich Can Afford Higher Taxes?
How does one become ‘Rich’. You either inherit wealth, or you create it. Regardless of how you get ‘rich’, the current tax system is punitive in nature to these individuals. We have a progressive tax system which already means that the rich pay a disproportionate share of the tax load. Case in point; the top 1% earn 22% of all income, yet pay 40% of all taxes. The top 5% earn 37% of the income yet pay 60% of all taxes. The bottom half of all earners pay less than 3% of all taxes. 40% of the working population pays NO income tax. (source: IRS, Statistics of Income, 2008). Can the rich afford to pay more in income taxes? That’s really not the question. The question is how much should the government take from one set of earners to redistribute to another…and at one point does productivity or wealth creation literally stop? I can only speak from experience that marginal tax rates that are about to go well north of 60% under the Obama tax plan, at least in my case, seriously affect my risk tolerance for starting any kind of new business. I’ve heard the argument that “it won’t take place until 2011” giving business owners the ability to “adjust” and the economy the chance to recover. Once again, Washington doesn’t get it. It takes years, and typically five or more, to create a successful business. I’m not looking out over the next two years, since most of that time we’d be in the red on a new venture. I’m looking out five years and anticipating punitive taxes that could eat up 2/3 of my net income…after suffering losses for several years. For now, I’ll just stand on the sidelines and to hell with putting any more money at risk in a new venture. And it’s that thought process that is impeding growth right now, when we need it the most.
