Of Taxes and Fairness — 16 April 2012

It’s not fair.

This is Tax Day, so of course I’m feeling bitter.  For one thing, I have the dubious fortune of living in Illinois, a state known for its Democratic political machine, rampant corruption, and calamitous public finances.  Consider those to be synonyms.

Indeed, our state deficit is so dire that our Springfield Solons passed an income tax increase of two-thirds, and it will not come close to closing the gap (in fact, because it will drive away all mobile taxpayers – those with the means to be job creators – it will end up leaving the state worse off than before).

In my particular case, not only did my state tax bill go up by thousands, but I got a nasty little surprise when I did my federal tax.  That vile invention, the Alternative Minimum Tax (the one that was passed forty years ago to make sure the uber-wealthy paid at least some tax and is now hitting 40 million decidedly non-rich Americans) has found a new way to bite:  because one of the deductions the AMT takes away is the state income tax, the higher state tax means a higher number added back into my income on which the AMT is calculated.  So I get to pay thousands more to the Feds as well for the profligacy of our state politicians.

In fact, add together the federal tax, the state tax, my real estate tax (which keeps going up, even though my house has probably lost 30% of its value), the taxes I pay for Medicare and Social Security, and the prodigious 8.25% sales tax our locals have levied, and I am sending nearly 40% of every dollar I make to pay for some government somewhere.

That means it won’t be until May 17 or so that I’m actually working for my family’s benefit instead of that of some government.  President Obama thinks that’s too early.  He’d rather it was sometime in mid-summer.  After all, I don’t need that money, certainly not compared to the good he can do for society if I gave it to him.

When Obama touts his plans to reverse “tax breaks for the rich,” he makes it sound like he is sticking it to the fat cats – those financiers who gamed the rules and now light their cigars with $50 bills.  But in point of fact, the entire list of Forbes 400 richest Americans among them don’t have enough money to pay for more than the 2011 federal deficit even if you confiscated every dime they own, which of course you can do only once.  And that includes some very legitimately wealthy people, not just the exploiters, including Obama’s favorite Warren Buffet.

So he’s coming after folks like me.  Some perspective: last evening at a restaurant, I passed on the Mediterranean sea bass I really craved in favor of the stuffed pork chop, because the fish cost 50% more.  Does that sound rich to you?  Perhaps the very fact that I can still take my family to a restaurant makes me fair game in Obama’s eyes, although I would point out that the folks working at the restaurant would have had a bit more wealth to share among themselves had I ordered the sea bass.  Raise my taxes even more, and I may opt for Applebee’s next time.

Obama has hit on this chimerical idea of “fairness” as his campaign theme for 2012.  The logic is tortuous, but it goes something like this: never mind the hundreds of billions spent in stimulus that failed to stimulate, on attempting the conversion of the world’s most advanced economy to non-viable “green” energy, on one-off attempts to fix the housing market (HAMP and all its bretheren); never mind the wholly partisan plan to remake the US health care system which may rest on an unconstitutional premise; never mind that the national debt has zoomed by 60% in just this President’s tenure; never mind all that.  The real problem we face is that rich people should not be so rich, and it is only fair that they share it with the rest of us.  They probably did something underhanded to get so rich in the first place, so it’s only restoring justice if we take a big chunk of that money away.

But there isn’t enough money among the really rich to amount to any more than a teaspoon’s worth of deficit reduction.  This “Buffet Rule” is a case in point.  It has become the major focus of Obama’s campaign pitch over the last week or two, and today it predictably crashed and burned in the Senate.  And yet, if it indeed raises the $4.7 billion per year that is predicted for it, it will pay for just about a day and a half worth of deficit for this administration.  It is a measure of how cynical and unserious this President is that he would spend so much time touting a plan that a) will do precious little good, and b) has no hope of doing even that, because it won’t become law.

But for Obama, it is key to the “fairness” campaign.  He can make the Republicans look like friends of the wealthy, which by extension makes Obama friends of everybody else.  And there are a lot more of the everybody else.  Therein lies the Obama campaign strategy.

People are not stupid.  They can see that Obama’s ambitions will require higher taxes from everybody who pays them, regardless of how “rich” they are.  Obama and his shills give the game away when they talk about raising taxes on “millionaires and billionaires” but the proposed laws draw the line at $250,000 for families.  That includes a lot of people who don’t consider themselves rich by any means.

Obama likes to talk about an economy where “everybody plays by the same set of rules,” except that is not what he intends.  He wants a different set of rules for some people – the ones he intends to tap for his spending plans.  Their taxes will go up, while everybody else either continues a tax holiday or actually gets more from the government.  This is government as Robin Hood.

The Robin Hood story resonated because the Sheriff of Nottingham and his cronies extorted their wealth from the hapless peasantry – that’s how things worked in the Middle Ages, and it satisfied our sense of justice to see it returned to the poor.  In 21st-Century America, it’s the hardest-working, most creative, most productive who are wealthy.  Only in the eyes of an ideologue does “fairness” require taking their money and giving it to others.

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