Don’t penalize the 1-percenters
We keep hearing about “tax cuts for the rich” from various politicians.
This demagoguery conflates earning a large income on which income tax is due and accumulating a lot of wealth.
Many high earners spend as fast as they earn.
Income taxes are levied on income earned, not wealth. Taxing high income earners more does not necessarily “soak the rich.”
The much maligned 1 percent also pays a disproportionately large share of personal income taxes (PIT).
In 2011 the top 1 percent earned 18.7 percent of all personal income and paid 35.1 percent of all personal income taxes — twice their proportionate share.
What proportion is fair?
Raising the income tax rate to 100 percent would have closed the budget deficit in 2011 for one year, but what incentive would the 1 percent have to produce the next year or after?
In Ayn Rand’s fictional classic, Atlas Shrugged, the equivalent of our 1 percenters became overtaxed and overregulated and decided to withhold their services.
The economy collapsed. Now consider how our entertainment options, as an example, might be affected by even higher income taxes.
As a base, know that according to 2011 federal income tax data, the top 1 percent earned an average of $1.1 million and the lowest of them earned $389,000.
In the same year in professional sports, baseball, football, basketball, and hockey had minimum wages of $507,500, $435,000, $525,000 and $550,000 respectively.
Every player in every major league sport is a 1-percenter. So say goodbye to professional sports.
Well, let’s just go to the movies instead. That won’t work either. Every movie actor and actress, whose name you would recognize, earns multiples of $389,000. So, say goodbye movie night.
Well, let’s stay home and watch TV, but the shows often taken for granted won’t be there. Pat Zajac and Vanna White, for example, earn millions. In fact, every nationally known face earns multiples of $389,000.
We would be only left with local programming and local news.
The demagoguery around “taxing the rich” completely misses a crucial point. These entertainers provide consumers with what they want, and are willing to pay for, through tickets prices, merchandise, broadcast fees, etc.
The key word here is “earn.” They earn their incomes. Our politicians are encouraging us to be envious of the more successful among us.
This is not healthy.
In the Christian tradition, it is said there are seven deadly sins: Pride, Greed, Lust, Envy, Gluttony, Wrath and Sloth.
However, as Charlie Munger (Warren Buffett’s intellectual muse) observes, Envy is the only one that is not fun or pleasurable. It just makes us feel worse.
He asks: Why would we choose to be envious of the success of others? It doesn’t feel good and may cost us many things we enjoy. The question answers itself — we should not.
Gable resides in Altoona. He is an occasional contributor to the Mirror’s Opinion page.