Silver Lining to Obama Tax Plan--Maybe My Husband will Slow Down

"Pet projects," "pork," "earmarks." They all equal the same thing, and Pres. Obama's new budget, passed in a flash without giving the public a chance to squeal, is larded with them. A piece in the New York Times says "Taxpayers for Common sense, a watchdog group, counted more than 8,500 'congressionally designated projects' in the bill and said the cost of these earmarks totalled $7.7 billion, up 3.4 percent from last year." Among those is $173,000 "for research on asparagus production in Washington state." That's not nearly as much as the $1.5 million "for work on grapes and grape products, including wine." Cheers!

At the same time, our sainted President proposed punishing the "wealthy" not for the wealth they have so much as for the money they're working to earn. If you're putting in lots of hours, and your business brings you $125,000 a year--less than the salary taxpayers pay most politicians, by the way--your taxes go up and your itemized deductions get slashed. A real incentive to entrepreneurs, eh?

Another New York Times article explains Pres. Obama's attempt at "fairness--" Currently, if you itemize deductions (like charitable contributions, educational expenses or mortgage payments), the higher your tax bracket, the more deductions you can take--since it's determined by your bracket. But Obama's newly "fair" plan caps deductions at the 28% level, even if you're in the 35% category--and he's raising the top bracket from there to 39.5%. That's federal income tax only; then there's FICA (social security tax); then we add on state and local and property and sales taxes.

I'm bristling. If the government makes its tax rate progressive, why shouldn't the guy paying a bigger percentage of his income get a commensurate deduction? If everybody paid the same percentage of his income, then the deduction can be that same rate. Why isn't THAT the fair way to do it? Why should people who make more have to give up so much more proportionally? (Under a flat tax rate, of course, the more you earn, the more you do pay in actual dollar amount.)

Because there's this class-envy tax system that justifies its progressive nature with the idea that people don't need above a certain basic amount in order to live, and so the government is entitled to take more of the rest of what they earn. "You can afford it," is the shrug. "We who work hard, too, but are paid less, can't."

Gosh, isn't this economics 101? Certain jobs have more value in and to society, and those jobs are rewarded with more pay. People earn what the market determines they're worth. The fewer the people qualified and available to fill a job, the more an employer/corporation is willing to pay. Unless the real underlying agenda is to "level the playing field" into socialism or even communism, the market determines salaries.

Remember when candidate Obama told Joe the Plumber we need to "spread the wealth?" Do you think Bill Gates has enough to spread some to me? Frankly, I'm glad Bill Gates has a social conscience, and is spreading it to suffering Africans and many other charitable endeavors. I'd feel creepy taking a handout from somebody just cuz he's made a lot more money than he needs to live on. But doing the same thing on a societal level is a lot easier. It's much more sterile when earned money is coerced from the well-to-do and transferred through a bureaucracy.

There's also the obvious idea that taxing something discourages it. Tax income, you discourage working. Or encourage hiding it. That's why when tax rates go down, government revenue goes up. Economics 101. I would have thought the president might have had advisers who've taken the course. Guess not.

Obama's also taxing utilities and companies if they aren't as environmentally friendly as the government determines (anyone smell a new bureaucracy?) and the cost of that, he expects, will be passed to consumers (that's you). But wait! You'll be able to pay these increased expenses from his new "Making Work Pay" tax credit that will provide $400 ($800/couple) --unless you're uber-wealthy, earning more than $75,000.

If you're a low-wage worker, you don't pay much tax anyway. President Bush shrank the rate for the lowest brackets to 5% from Clinton's 10%. But if you earn a lot, and most people still harbor that American Dream and strive to--you are the new enemy. Tax the rich, so much that they'll have to cut back their employees, defer new start-ups, postpone innovation, and have to live like regular folk.

I heard someone call into a radio show and say in a mocking fake-sympathetic voice, "Aww, those poor rich people! They'll have to get their house cleaned once a week instead of three times!" Yeah, and those poor house-cleaning workers. They'll lose their jobs.

But if you ever read The Millionaire Next Door, the best-seller by Thomas J. Stanley and William Denko from 1998, you know that the people who got rich didn't win a lottery, and didn't inherit Daddy Warbucks' estate (anyone remember Little Orphan Annie?). Most rich people plodded their way to prosperity, living frugally, putting away money bit by bit, building up businesses by hard work and clever ideas. That's why they're the millionaires next door. Of course, even with the housing plunge, being worth a million-dollars isn't that unusual in most major cities. A million dollars won't buy you a comfortable condo in Manhattan, where the monthly association fees often equal the mortgage payment. One piece of good news is it's not so odd to be in the eeeeevil group, "the wealthy" anymore. The middle class shrank because people moved up (I know a great book that covers this).

But let's look at the silver lining. With the new tax plan, President Obama is at least forcing people to evaluate their lives. Why put in all those extra hours of work when so much more of its yield gets taken? Maybe this is a blessing, and even my workaholic husband will see that getting no sleep and depriving himself of lunch to save money is too big a trade-off for the scorn of a tax system that considers controlling Mormon crickets in Utah ($1.2 million) an urgent need.