Sunday, March 8, 2009

Obama and the income tax

The time has come to talk about the policies of Barack Hussein Obama. It can be a tricky thing, criticizing our new president, and I feel like a scamp just typing his full name. Of course, we all know that since the inauguration the wall has fallen, and the name taboo is no more. Still, just uttering those magical syllables really had the Chief Justice rattled, didn’t it? Well, rattled or not, I will be choosing my words more carefully than John Roberts did. And I won’t allow Obama to interrupt me.

Now I don’t want this post to be a complete splenetic diatribe against the president. That sort of thing has been done before by people who have sharper pens and more animus against Obama than I do. Besides, no one wants to read page after page of personal invective. Personal attacks are cheap and classless, and they accomplish nothing. So I’ll confine them to the single paragraph that follows.

You see, I just don’t get the whole Obama mystique. What is the allure? When I look at him I see an empty suit pseudo-intellectual who somehow rose to prominence on a platform of reform in the most corrupt political machine since Tammany Hall, and he did it by . . . organizing the community? What the hell does that mean? To me it means that he became a senator despite having accomplished nothing more impressive in life than somehow getting into Harvard Law School with a GPA under 3.3. How far under 3.3? No one knows, because his transcripts are apparently documents of import to national security not fit for public consumption. (Maybe that’s what has embittered me. If only I could suppress my high school transcripts, maybe I could be president, too. . . I mean, if I were also over 35 years of age....shut up.) It’s clear that Obama has risen to prominence swaggering from one sinecure to another. Along the way the people who hold his strings have put some nice copy on his teleprompter, and he’s managed to read it pretty well. But he’s still just a socialist metro-sexual incapable of a creative thought, gift-wrapped by his handlers into an attractive package. And they did a fine job, too, except they probably should have taped the ears down a little better.

Okay, I'm done.

But my real problems with the President is his fantasy that he can pay for his socialist utopia—or, as he likes to call it, hope 'n' change—with an income tax on the rich. What he fails—or refuses—to understand is that, even if it were a morally justifiable or economically feasible for the government to take money from the rich at the point of a gun to pay for his welfare state, he cannot get at a rich person’s money using an income tax. No, an income tax can only confiscate money belonging to people trying to become rich; the indolent rich are spared.

Consider a doctor fresh off of her residency who just landed a three hundred thousand dollar a year job to go along with her two hundred thousand dollars of debt. Inarguably, the income tax is a wonderfully effective method for the seizure of her money. Now consider a divorcee’ fresh out of marriage with three hundred million dollars and no job. (If you have three hundred million, why work?) The income tax can't touch her assets.

Now, which of these two women is rich? And which woman will feel the effects of Obama’s "tax on the rich"?

Warren Buffet falls into the same category as our imaginary divorcee’: rich and, for all relevant intents and purposes, unemployed. He is, in fact, one of the world’s richest people, yet, compared to his lifestyle and reputation, he has admitted that he has little of what the IRS would call “income.” (Incidentally, Buffet proudly voted for Obama, but since the Republican candidate was John McCain, it’s hard to blame him). Instead, Buffet lives very comfortably on his capital gains, stock dividends, and the huge pile of cash upon which he rolls around naked every night. Warren Buffet may be rich, but he is not a potential target of the income tax.

Consider again the stinking rich doctor I hypothesized in a previous paragraph. She lives off the money she receives in trade for the value of the work she does, or what her accountant might call her income. She pays her huge student loans, her exorbitant mortgage, her kids’ college fund, and her spendthrift husband’s credit card bills out of the portion of her income the government didn’t confiscate. And I suppose it serves her right after she put herself through medical school on the backs of the poor. More importantly, she is the “rich” Obama’s tax plan intends to soak.

Buffet commented indirectly on this paradox when he lamented the fact that his secretary pays a higher tax rate than he. And she does. Why? Because his secretary, the doctor I invented, my barber,and everyone else in the universe who pays an income tax has their “contribution” calculated based not on the assets they have, but on the money they receive for the work they do. The more productive you and I are, the more we are charged for the privilege of plying our respective trades. One of the great things about plying one’s trade in the United States is that it can make us rich. But Obama’s plan does not tax the rich; it taxes people trying hard to become rich.

Obviously, by removing more and more of what we earn, an income tax makes becoming rich a whole lot harder. This is bad for you greedy bastards that want to be rich, but it's possibly worse for the economy as a whole; quite literally, an income tax punishes productivity, and therefore discourages it. Not to sound too erudite/full of myself here, but a high national income tax represents a government policy to discourage productivity directly proportional to the rate of the tax. (I would address the effects of the tax on capital gains that Warren Buffet does get to pay, but I don’t want to remind the Obama puppeteers that he promised to raise that one to over 30%. Not only that, it’s a really boring subject. Frankly, I’ve never attempted a capital gains tax smirk-jerker, and I’m not sure I could pull it off without an emoticon or a rim-shot. I’m pretty sure the best I could do is snarky sarcasm.)

Yet we hang a halo of selfless patriotism over the heads of those luminaries—like Warren Buffet, George Lucas, George Soros, Bruce Springsteen, et cetera and ad nauseum—brave enough to support Obama’s income tax hikes. And what do those people have in common? They are already filthy rich. Obama could impose a 100% tax tomorrow and these paragons of altruism could continue living like kings until the country collapses around them—as it surely would.

If Obama wants to implement a confiscatory income tax, he has the majorities in congress to do so. But don't fall for the tax-on-the-rich line he has been tossing around. Rich or poor, the income tax is a tax on productivity, and it is only paid by those who choose to be productive, whatever the state of their portfolio.

The question is, at what tax rate do people say, "why bother?"


  1. High praise, indeed, Tina. Thank you.

  2. Wow. You hit the nail on the head. Look at other socialist countries - you think the Dr's in those countries feel the same commitment to their jobs as ours (currently) do? And let's not get into dental care - *shutter!*

  3. If you have not already - Read "The Fair Tax" book by Neal Bortz. It may not be perfect but it will catch the divorcee and Warren Buffet spending those millions.

  4. I read it and i love it. Great idea, much fairer and less harmful than the income tax, though I don't want "revenue neutral," like the fair tax. I want cuts in governemnt so they can take less from us.

  5. Wow. I think it is safe to say we disagree on everything under the sun. Let's talk politics sometime. Just a few things. . .

    Obama was accepted to Harvard Law with a 3.3 gpa because he did his undergrad work at Columbia in political science and IR. Not too shabby.

    I am increasingly convinced that you self proclaimed "economically aware" Libertarians have a rather small grasp of Smithian economics. If you did, you would understand the inevitable pitfalls of the unfettered free market. Pure free market capitalism is nothing but a Ron Paul pipe dream. And for good reason.

    It is a large mischaracterization to label Obama's agenda as "socialist". It isn't even in the ballpark. Same goes for welfare state. Don't be so receptive of the Right's spin words.

    Oh, and the idea that this housing crisis was caused by TOO MUCH government regulation, or by a government mandate, is simply false.

    Again, it's safe to say we probably disagree on everything. That's what makes politics interesting. We should have a little debate sometime.

  6. Welcome, Ian. I love a good debate.

    Obama didn't get into Harvard law school with a 3.3 GPA. he got into Harvard Law school with LESS than a 3.3. The fact that he went to Columbia before he was let into Harvard is simply evidence that he's good at whatever method he uses to get into ivy league schools. Since BHO has refused to release any of his transcripts, grades, or the smiley-face-stickered papers hanging on his mommy's refrigerator, I think it's safe to say that the method he employed was not merit. Maybe he had a relative on staff.....

    As for your criticism of the true free market, well, we actually do agree on one thing: there is about as much chance of seeing a true free market as we have of examing BHO's transcripts. Heretofore in history, however, the closer an econmomy comes to the smith/locke/friedman model, the better the economy has hummed along. And the more the government involves itself, and the more our dear-leaders apply keynesian principles in its meddling, the more suffering is spread throughout the world.

    Finally, a confiscatory progressive tax rate is a contrivance that, when coupled with a welfare state, becomes socialism. Maybe we disagree on terms?

    I am in the process in my newest post of explaining how the government caused, not just the housing crisis, but the depression we are likely entering. I look forward to your comments after you read them.

    Finally, a Ron Paul pipe dream sounds like a wonderful place to be. alas, the conspiracy freaks that infested the movement destroyed his credibility. sad.

  7. Oh, great. Ian found your blog. Haha. This'll be good! :)
    (I'm assuming that's the Ian I go to school with.)