December 12 2012
Carrie L. Lukas
Democrats often scoff when conservatives suggested that they oppose tax rate increases on high incomes because of the policy's economic impact. When we talk about the small businesses that file under the tax code and how high tax rates discourage productive behavior that benefits people across the board, liberals dismiss those arguments as all cover for our real secret mission: enriching the upper class so they have more and more money.
Yet there is an easy way to test the question of who really is most concerned about equity and making sure that those who need it are taken care of first by government: Support for reducing benefits for those with high incomes. After all, as Charles Blahous describes in this must-read piece “Eight Common Sense Suggestions for Fiscal Discussions, there’s a better way to “soak the rich” than raising income tax rates.
So to start, let’s pretend we all agree that the rich aren’t paying their “fair share” into government. I disagree with this premise, which suggests that somehow the government has first claim to all income. As a matter of principle, I think there should be a limit to how much government takes from someone, no matter how “rich” they are, and certainly as we approach effective tax rates in excess of 50 percent, we have long since crossed the line of what government justly should be taking.
But given that we are facing a financial crisis, with an annual government budget that’s out of balance by more than a trillion dollars, let’s start with the idea that as we make changes, the sacrifices should be weighted toward those best able to withstand them.
Why then, are the Democrats absolutely opposed to contemplating changes to our entitlement system—Social Security and Medicare—so that those with high incomes receive less in benefits? This would make our government system more progressive, which is supposedly a liberal goal. Given that Social Security and Medicare are the primary drivers of our long-term debt crisis, it make sense to focus first on balancing these programs (rather than cutting other areas of government, like education and the environment, which are comparatively small potatoes). Adjusting benefit payouts would also avoid the counterproductive economic consequences of raising tax rates on productive behavior, which even President Obama has acknowledge is bad for job creation.
We are all supposed to be outraged about Warren Buffet and Bill Gates’s effective tax rates. What about their Social Security benefits? Why is that seniors with retirement incomes that far exceed the average wages of working Americans should not have to sacrifice a penny of benefits?
I know that people will protest—those are benefits they’ve earned! But we aren’t proposing eliminating those benefits, and they haven’t earned those benefits any more than the high income earners have earned the money that liberals are so eager to tax.
Here’s what I believe the real answer is to the question of why liberals won’t propose such benefit reductions: They don’t care about making government more progressive or fairer to those with less money. They just want government bigger and to control a larger share of society’s resources.
It's something to keep in mind as you hear the debate about who is fighting for “the rich.”