Saturday, June 2, 2012

What's Fair?

Saying that the rich should pay their "fair share" is very popular these days.  The President loves to say it, as do Occupy Wall Street protestors and Lefties on social media.  When you ask them to define what's fair, most of them won't.  When actual numbers are mentioned, attitudes often changed, as we saw with Will Smith when he learned of French Socialist Hypocrite President Hollande's proposed 75% marginal tax rate.

When you ask the average American about real numbers, "What should the rich be paying," the responses are telling because the average American doesn't know what the rich do pay.
  • 80% think taxes on the rich should be lower than they are today.
  • 94% think taxes on the rich should be lower than what Obama says he wants to raise them to.
  • 98% think taxes on the rich should be lower than what Obama will actually allow them to be.
Source here (Stu Burguiere crunched the numbers, but he also linked the data from the Hill, so you can verify if you like).

I've written in the past about what a ludicrous notion President Barack Obama has of "Fairness" and if you haven't read it, you should have a look.  His version of fairness actually hurts investors, tax revenues and by destroying wealth that could be used to build business and create jobs, the American people.

What do the rich actually pay? Since 2003, the top marginal tax rate in the U.S. has been 35%.  The result has been more than most of us would ask of our neighbors:  The top 1% of earners in the U.S. pay more than 36% of federal income taxes.  1% of our population is carrying more than a full third of the tax burden, but they only make 20% of the income.

Anyone with any sense of fairness who doesn't demonize success would call that more than fair.  In fact, raise it much more and we'll likely see diminishing returns (it's a simple principle called the Laffer Curve).  The very simplified version is that if you take too much seed corn from a farmer in taxes, he doesn't have enough left to grow a larger crop next year, so there's a smaller harvest the following year and less corn to take in taxes.    Capital, or investment money works exactly the same way, but people seem to understand crops better.

Now let's really shock Will Smith (I'm sure he's reading).  In 1962, the top marginal tax rate was an insane 91%, and it was actually harming the economy.  It was bad enough that JFK himself lobbied for lowered taxes (quotations and sourcing in this post).  Some of the lowest rates were seen during the prosperous years under Ronald Reagan and George Bush Sr., leading to the enormous prosperity seen through the Clinton administration.

Even staunch Lefties admit you shouldn't raise taxes in a stagnant economy (video below), though this admission makes the second half of Bill's comments nonsensical.  If taxation hurts the economy rather than helping it, why raise them at some point in the future?

The conclusion is inescapable.  Americans love the idea of their economic problems being solved by someone else, and the Left has so successfully demonized the successful, they're our target.  When you actually talk about fairness in terms of real numbers or the practical problem of fostering growth in our economy the truth comes out:  the rich are already paying a fair share (as are the rest of us) and raising taxes won't help.  The solution is to do the hard thing and really cut the size of an oversized Federal Government built during much healthier economic times.

Hotair with an excellent post on it here.
Walter E. Williams with more information here.

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