Taxing the Rich – Will They Bend but Not Break?
Mr. ToughMoneyLove is not ready to launch a full-bore rant on the health care proposal that has emerged from the House. I will wait and see what the Senate does first.
But it is now clear that the fallback funding strategy favored by many Democrats in Congress is “tax the rich.”
Here are many of our wise Congressional leaders lined-up together. If you have money – they want it. Can you see it on their faces? Somber and intense. When it comes to taxes, they don’t fool around. (Photo credit: WSJ)
There are also different opinions on who qualifies as being “rich” such that they should be paying for health care and other benefits for everyone. Small business owners are in for some serious trouble according to the House plan. I fear for the employees of small businesses that are forced into providing benefits they cannot afford.
For those who are embarrassed about being rich, I have a practical suggestion. Instead of projecting your feelings onto others by taxing them, just surrender your own wealth to the government to distribute. (That means you, Ted Kennedy. After all, the only thing you did to acquire your wealth was to be born into the right family.) That solves two problems. You purge yourself of wealth-guilt while saving the government the trouble of creating new wealth-targeted taxes.
If the government continues its trend of refusing to say “we cannot afford that”, the taxpayers – the “rich” included – will be stretched to the breaking point. Recent estimates are that only 47% of tax filers for 2009 will pay any federal income taxes. Is it sustainable for 53% of us to pay the costs of uncontrolled government spending for everyone?
At this point I’m not sure what will happen if the rich (and not so rich) “break” under an increasingly large tax burden. Tax revolts don’t work because you get put in jail. Some of us who are closer to retirement may accelerate our plans, because continuing to work will bring diminishing returns all the way around. Indeed, if the new plan provides part-timers and the non-employed with affordable health care options even before Medicare eligibility at age 65, who knows what might happen to fed-up, late stage baby boomers?
Or we may all just reluctantly trudge along with pre-Reagan era marginal tax rates.