Henry Blodgett destroys the RW argument against raising taxes on those above $1mm in income

[Ruby the Liberal]

Bravo, Henry.

:applause:

The Republicans have had 12 hours to digest the news that President Obama plans to propose a "Millionaire's tax" on annual incomes over $1 million. As expected, they're freaking out. And if they had a good argument as to why such a tax was a terrible idea, we'd be happy to say so. But so far anyway, they don't.

-snip-

The Republic arguments against Obama's millionaire's tax boil down to the following:

- Raising taxes on millionaires will kill their ambition and discourage them from working -- Even the most aggressive tax-rich-people proponents are talking about raising the top bracket a few percentage points, to the Clinton era 39% or so. Anyone who says with a straight face that successful, ambitious people will kick back in a chez longue because the government is going to take 40 cents of every dollar in income instead of 35 cents is an idiot, an ideologue, or a liar.

- Raising taxes on millionaires will punish successful people for being successful -- Oh, please. And raising taxes on the middle-class will punish middle-class people for not having enough money to be able to afford higher taxes. And raising taxes on poor people will punish poor people for being poor. Taxes "punish" whoever has to pay them. This is just a way of saying "tax someone else--not me."

- Raising taxes is always a terrible idea--the problem is spending -- It is certainly true that one of the problems is spending--and spending does need to be cut. But few reasonable non-partisan economists think that we can solve our budget-and-debt problems just by cutting spending.

- Taxes are a form of theft: The government has no right to take our money away -- This is just ridiculous. It's like arguing that paper money is illegal.

- Raising taxes in a weak economy will further weaken the economy -- Obama's new tax is not targeted at people making $250,000 a year. It's targeted at those making more than $1 million a year, of which there are only about 145,000 people in the country. And, importantly, if Obama's millionaire's tax is aimed at income and not capital gains or dividends, these $1+ million earners will NOT be "discouraged from investing." On the contrary, they will be encouraged to invest.

Why?

Because they will be encouraged to take less in salary and reinvest more in their companies.

If a small business earns $1+ million a year, and the owner "passes through" all this income and pays taxes on it, Obama's "millionaire's tax"
will encourage this owner to do the following:

- Pay him or herself less
- Hire more people or otherwise reinvest the money in the business (so it won't be taxed)

-snip-

So there's a strong argument to be made that Obama's proposed millionaire's tax will encourage investment, not discourage it.

Bottom line, if the Republicans want to make some compelling arguments why a millionaire's tax is a horrible idea, we're all ears. But we haven't heard any yet.

Read more: http://www.businessinsider.com/millionaires-tax-2011-9#ixzz1YKMRVdu8

[Andy823]

1. Excellent points!

I would be willing to bet that the vast majority of americans are in favor of this, but our republicans in congress are doing to keep spinning this their way, making false claims like the ones posted here, and trying to make the country "THINK" they are doing what the people want when in reality it's only a few of the rich "people", and of course corporations, that they really speak for!

I really think this is a win win situation for the president, and democrats. If they keep pushing this more and more people are going to let their reps know just how they feel, and then we will see what happens. Will republicans and teabaggers in congress continue to do what Grover Norquist wants, or will the actually listen to the people? That will be the question. Either way I see a win for democrats on this.

[golfguru]

2. Right approach, wrong time

With the worst economy since early 1980's, this is not a good time to raise taxes. What is really needed is to get rid of loopholes, and apply means testing to lower rates on dividends and capital gains. Then Buffet would pay much higher rate than his secretary.

[Ruby the Liberal]

3. Personally, I would be happy with a transaction tax

on investment trading, but you take what you can get and if this is all we can get right now, I'll take it.

[golfguru]

4. Transaction tax would be faaaantaaaaastic!

It would eliminate all the paper work in maintaining records of purchases, sometimes going back many years. It would also eliminate errors and cheating in figuring capital gains.

However dividends are a separate issue. For people making more than upper middle class income should be paying at regular tax bracket, not 15%.