Patriotic, with ONE exception

I’m definitely an America-firster, almost to the point of telling people “love it or leave it.” But if this is Democratic Vice-Presidential candidate and incumbent Delaware Senator Joe Biden’s idea of patriotism I may have to rethink my position. Yesterday in an interview on ABC’s “Good Morning America” Biden exhorted the wealthiest among us to take one for the team, accepting a tax increase so they could cut taxes for those making under $250,000. While that sounds good in theory, there’s a reality which has to be addressed as well. This is well pointed out by writers at the Center For Individual Freedom, who state in part:

When times are tighter, a “soak the rich” agenda has a certain superficial appeal to many voters. After all, why shouldn’t fat cats pay an even greater share of the nation’s taxes, since they continue to prosper while working families struggle? While working families strain to put food on their tables and gasoline in their automobiles, why shouldn’t those in the top five percent bracket pay an even higher share of taxes?

This is an understandable sentiment.

As understandable as it may be among struggling families, however, here is the problem. Because most of those filing in the upper five percent are actually small businesses, which create most new jobs in America, many of those families will go from struggling to put food on their tables to not being able to put food on their tables at all. And they’ll go from having difficulty filling their gas tanks to not being able to fill their tanks at all.

To explain, one must understand an important – but little-known and little-discussed – fact about individual income tax filers.

Namely, that most small business owners, otherwise known as “S corporations” or “S-corps,” file taxes as individuals.

(snip)

According to Internal Revenue Service (IRS) data, fully 75% of individual tax filers in the top bracket are actually small businesses. More importantly for purposes of working Americans, small businesses create 75% of new jobs in America.

Voters should therefore ask themselves whether small businesses encountering softening economic conditions would be more willing, or less willing, to hire new workers after their taxes are raised.

A similar take by Dr. Jim Pelura, Chair of the Maryland GOP, brings the point home to Marylanders:

“Joe Biden said yesterday that paying higher taxes is a ‘patriotic act’. He also pledged that he and Barack Obama would raise taxes.  Barack Obama and Joe Biden both voted, in 2007, to raise taxes on anyone making above $40,000 a year. With our economy struggling, the last thing that our leaders in Washington and Annapolis should do is raise taxes. Marylanders have already suffered through the largest tax increase in state history last year. They can ill-afford afford additional skyrocketing taxes on income, life savings, and energy.”

“If paying higher taxes is patriotic, then Maryland citizens are possibly the most patriotic Americans in the country!”

You have that right, Jim. And bear in mind that the General Assembly earlier this spring placed into law something similar to the Obama/Biden plan, enacting what’s popularly known as the “millionaire’s tax” to replace a service tax aimed at the computer services business. Using the CFIF article as one piece of evidence, apparently the small businessman in Maryland had a target on his or her back in either case.

And to listen to Biden, one would think that wealthy Americans aren’t paying much in taxes. However, data from The Tax Foundation shows that the 1% who are most well-off shoulder a tax burden which nearly doubles their share of income; even more telling, they pay a share of taxation which equals that of the bottom 95% of all wageearners. Maybe Obama’s plan is to eventually have the top 1% pay every dollar of taxes and redistribute that to the other 99 percent, making sure that his buddies in the federal government get a generous cut as the cash passes through.

If you want a perspective on what this would lead to just go out and get one of my favorite books, Atlas Shrugged by Ayn Rand. (That’s why I have the Amazon link on my site.) Instead, let’s work toward making taxes fairer and flatter, or even better encouraging saving and investment by shifting to a consumption-based tax. Would we be bailing out Wall Street firms if people had saved their money instead of overstepping their credit bounds? It’s rare that I advocate tax policy to regulate behavior, but in this case there wouldn’t be a targeted group because everyone would pay a share of this tax.

True patriotism is showing a love for country and desire to defend our national interests, not having more money stripped from your wallet because you’ve managed to become an achiever in life.

Author: Michael

It's me from my laptop computer.

4 thoughts on “Patriotic, with ONE exception”

  1. Hi, Michael. A few thoughts.

    1) You have been a strong advocate for the war in Iraq here. I note that the first, biggest and messiest government program has been and always will be “defense”. Accordingly, the attack on Obama – an opponent of this war and an advocate of bringing both our honorable men and women in uniform home AND defunding the Halliburton mercs – for wanting allegedly to distribute money to “his friends” falls flat.

    2) For some reason, it’s patriotic in your view for a soldier to fight in a war but not patriotic to assess the cost and to bear the cost of his feeding and clothing, and those of his wife and his children. Massive persistent deficits and massive federal takeovers of the home finance, insurance and investment banking sectors – that’s what patriots like George W. Bush do. Paying for such expenses as they come do? Nah, that’s un-American. Demanding that the bailout beneficiaries – the bonus-laden careerists on Wall Street and their corporate clients – pay more to cover those losses? Communist plot.

    3) The distinction between “saving”, “consumption” and “investment” is largely artificial. For example: is steel for buildings “consumption”? The killing of “consumption” through burdening it with the cost of the bailouts and the multi-front wars of the Republican Party in lieu of the income tax will actually drive black-market barter sky-high, burden the poor (whom you blame for the current crisis, inexplicably) and defund the heck out of government. Now the latter may well be your goal, but it cuts against every argument you have made against raising the MD sales tax to 6%. You think 40-45% taxes on toilet paper won’t hurt? Talk about squeezing the Charmin.

    4) Michael, I respect your work ethic and your dedication to steady production. I have respected your work ethic for a long time. But I cannot think of a single clearer statement as to why I am going to campaign for Senator Obama in the October rain and wind in Virginia than this: to keep the government out of the hands of people whose concept of patriotism and public policy involves footnoting an explicitly anti-government, anti-community work of FICTION. Elections are usually about making hard choices but for a reality-based individual, this one’s an easy one.

  2. Who did the “explicitly anti-government, anti-community work of FICTION”? Are you talking about Ayn Rand?

    While the work may be hyperbole, the general principle remains that if one starts to feel that all that their sweat, labor, and innovation is getting them is a hassle by an unseen mass of nameless bureaucracy then there’s less incentive to excel. That’s why I said “a perspective” instead of “a prediction.”

    If you’ve read the book, you’d understand why the most aptly named character is Wesley Mouch. You’d also see why the community of achievers was loathe to be discovered.

  3. Bruce,
    You said exactly what I was thinking, only better. I am tired of the Republicans who wave the flag for this war refusing to sacrifice to fund it–billions and billions of dollars and counting, but by all means let’s not raise taxes. I am tired of the Republicans like John McCain, whose disastrous economic policies helped get us in this mess (note I said “helped,” unfettered greed (unregulated capitalism) played a significant role) saying middle class Americans should be the ones to give more. I am tired of the b.s that we can keep building a massive national debt without dire consequences, but God help a candidate who suggests we might raise taxes to help pay it. I agree that it is patriotic to pay your taxes, and it is patriotic for those who are doing well in struggling times to sacrifice a slightly larger percentage. It was patriotic when people sacrificed during the Great Depression, and it would be patriotic to do so today. There are many forms of patriotism out there, and I think Joe Biden was right on.

  4. I had to go back and look for this one. I read it in my feed reader and forgot to stop by and comment.

    I disagree with your suggestion that Atlas Shrugged shows us what would happen in a tax the rich scenario. The book was much more about nationalizing industries and the impact that would have on innovation and technological progress. It seems to me much more of an argument against Socialism than taxes.

    I also enjoyed the much more philosophical Anthem by Rand as well.

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