Plus One to the Unemployment Line?
A well-known television host suggested recently that he might quit his job if President Obama’s plan to increase taxes on the wealthiest Americans raises his effective tax rate above 50%. The gentleman in question argues that he is an “achiever,” and that condemning him with such a burdensome tax bill would somehow punish his achievement. This man’s attitude and selfishness demonstrate the unfortunate disconnect between wealthy and ordinary Americans, particularly when it comes to the exponential benefits of wealth.
His primary point of complaint is a blurring of the comparison between capital gains taxes and income taxes. This TV personality feels that the two should be compared against one another because money invested has already been taxed once as income, so should not be taxed again when it becomes profit. This is an extremely faulty argument.
Double taxation is a legitimate concern, but the example provided by the TV host is not actually double taxation. If I earn a paycheck and my income is taxed, then I use my take home pay at the store to buy goods, I pay a sales tax. That’s double taxation. The money in my hand was taxed as I received it and was taxed again as I spent it. Not cool. The subject of this argument, though, is a tax on profits earned from invested income. The money invested may have been taxed (if it was income) but the money earned as profit on the investment (capital gains) was not. That’s a new tax on new money. It might have been taxed when it was someone else’s money, but taxing it again when it becomes yours is not double taxation.
Actual double taxation is a problem that affects working class people earning working class paychecks, who then use that money to buy groceries, clothes, school supplies, and household goods. It’s not an issue that affects wealthy Americans with discretionary income to invest. The television personality’s assertion that he is being taxed twice on his “sweat” must be a joke, considering investment income requires no physical labor on the investor’s part. If not a joke, then it must be a sarcastic insult to those who work for a living.
The gentlemen goes on to say that if capital gains are taxed at a rate higher than 20%, he probably won’t invest in the stock market (this in addition to considering quitting his job). This is meant to be taken as a threat to the U.S. economy, as the extrapolation of all American millionaires withholding all their investment dollars would certainly cripple innovation and job creation. In reality, there will always be investors willing to put money into ventures that stand to turn a profit. Even if capital gains were taxed at 90% (they never will be), a small profit is still a profit. If anything, the increased cost of investing could reduce risky speculation and minimize the threat of massive swings in the daily business of stock trading.
Another claim the television personality makes is that a high tax rate on the wealthy is a form of “oppression”. This person scarcely knows the meaning of the word. If we make a conservative guess that the TV host is paid an annual salary of $1 million, and we don’t even count the profits earned on his investments, a 50% income tax rate would leave him holding $500,000. That’s ten times the median salary for an American wage earner. Ten times the median of $50,000. Half of all workers make less than $50k. So who is oppressed? The white male college-educated celebrity with a multimedia empire in his corner from which he can air his personal complaints about only having $500,000 dollars (not counting his investment income) to spend on what he would like, or the single mother of two who works in a cafeteria at a public elementary school and pays 18% of her $29,000 annual income to taxes, leaving her with under $24,000 dollars of take home pay – less than $2000 a month? Whose sweat are we really making money off of?
The TV host finally cites a statistic that he provides no source for, claiming that 0.2% of Americans earned more than $1 million last year, but paid paid 21% of all federal taxes. I have found a corroborating source that verifies 0.2% of all filers reported earning greater than $1 million, but nothing to support the second half of that equation. I have my doubts. I sincerely wonder – if that 0.2% figure is accurate, and we live in a representative democracy, why are 50.0% of our elected officials working in the interest of those 0.2%?
On one hand, the man in question mistakenly likens the importance of his own comfort with the economic realities facing average wage-earners. Nobody who makes money wants to be told they get to keep less of it, put the proportional effects of taxing the wealthy need to be calibrated toward greater equivalence and responsibility for fellow Americans. This country provides individuals with near limitless opportunity, and some fortunate “achievers” do extremely well. It is an obligation of decency and patriotism to pay back into the system that provides one with that opportunity rather than claiming the spoils of victory. Grumbling about taxes levied on money received for doing nothing more than lending money to public corporations is an embarrassment that this man should recognize.
On the other hand, this person on television reveals an unfortunate characteristic many of us are guilty of at some point in our lives- he is over-valuing his importance at the workplace. He honestly believes that if things don’t go his way and he walks off the job, the company will never be the same. He said so. He said that “scores of people” depend on him to make his company enough money to pay their salaries. But like all of us, he’s easily replaceable. He says things on TV that a team of writers scripts for him about the actions and statements of people who are not him. He is a talking head, nothing more. If he walked off the set tomorrow, someone else would ably perform the duties of the position.
In fact, I’ll offer my services to his employer. Half the price. And I’ll voluntarily pay a 75% tax rate on both income and capital gains. I can talk politics all day, but I may need some OJT on the selfishness.
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Jake Negovan drives Red Brown and Blue to be an outlet for progressive political opinion that leads to the betterment of life for the real, multicultural population of the U.S. and the rest of the world. His columns address the issues faced by our country as we continue growing toward a society of equality. More about Jake can be found on the web at jakejots.com or on Twitter@jakenegovan.
