Obama Taxes And Consequences

Less than seventy-five years after it officially began, the contest between capitalism and socialism is over: capitalism has won.

Robert Heilbroner (born 1919), "The Triumph of Capitalism", The New Yorker (January 23, 1989)

November 6, 2012 – Should President Obama win today, what would be the consequences of his tax policies – a “fair share” for everyone?

The little 119 page book Who is the Fairest of Them All? The Truth about Opportunity, Taxes, and Wealth in America (Encounter Books, 2012, $21.50) spells out the consequences in seven chapters.

1.      The Poverty of Equality

2.      How Do We Create a Fair Society?

3.       What Happened to the American Dream?

4.      Who Really  Pays the Taxes in America

5.      Is a 76 Percent Tax Rate in America’s Future?

6.      Soak the Rich with Lower Tax Rates

7.      Why Flat is Fair

The book’s author, Stephen Moore, is an editorial board member of the Wall Street Journal  and its  senior economics writer.

The book explores what it means to be “fair.”  Does it mean everybody gets a “fair shot”?  Does it mean everybody gets equal economic results?  Does it mean government takes from “the rich” and gives to the “poor’?  Does it mean a Robin Hood government determines who gets what?   Is is plausible that the market should decide?

Given his credentials as a conservative economics writer, it will surprise no one that Moore believes a free economic system allowing people to get ahead based on their merits and achievements is the fairest system of them all.

Moore starts his book with a reference to Kurt Vonnegut’s 1961 short story Harrison Bergeron.  In this tale, government forces each individual to wear “handicaps” to offset any advantage they might have.   Beautiful people wear ugly masks to hide their looks.  The strong wear weights to slow them down.   Graceful dancers wear bags of bird shot to burden them.   Those with high IQs and talents and skills for achievement  wear government transmitters emitting sharp noises every 20 seconds to keep them from taking any advantage of their brains.

Similarly Obama would burden “the rich,” anybody making over $250,000, with high taxes to punish them for their achievements and talents that made them “rich.”

In the course of the book,  Moore illustrates through lucid prose and simple tables and graphs how the middle class in America has prospered more than any other nation  in household net worth and well-being and possessions through “shared proposperity” under capitalism. 

Moore shows free countries  are healthier and healthier.  Moore explaims that the share of taxes paid in the top 10% of Americans rose from 49%  in 1980 to 68% in 2004.  He has a table showing the richest 10% in Americans are taxed the most, 42%, compared to 32% for all OECD nations, including Sweden at 27%.

Finally, Moore lays out the dimensions of the Obama Tax Time Bomb – the tax rates now and in 2013.

·         Income tax rates now, 35%,  in 2013, 42%

·         Capital gains now, 15%, in 2013, 23.8%

·         Dividends now, 15%,  in 2013, 43%

·         Estate tax now,  35% , in 2013, 45%

Moore concludes when politicians put “tax fairness” ahead of economic growth, you produce nothing to no one’s benefit.  The economic consequeness of higher taxes on the rich are not pretty – a poorer  nation with a poorer rich, a poorer middle class, and a poorer poor. Raising the tax rates on productivity and work and effort and entrepreneurship, claims Moore,  will only set the U.S. economy in reverse.

Moore ends by saying tax reforms are necessary.  These reforms would create JFK’s “rising tide that lifts all boats. " And that is why, says Moore, that the flat tax  is the fairest of them all.

Tweet:  American capitalism has produced a wealthier, healthier,  and more productive nation that higher taxes on the rich under Obama would reverse.