Monday, September 26, 2011

Class Warfare

"It's not class warfare, it's math," President Obama claimed when justifying his newest proposal for taxing the rich. Is he right? There have been telling indicators.

In 2008, it was pointed out to candidate Obama that lowering the capital gains tax causes tax revenues to increase. His response was that he was still in favor of raising the tax out of fairness. Since then he has regularly called for making the rich pay their fair share.

When talking with Joe the Plumber, Obama was in favor of raising taxes as a way of "paying it forward" in order to give a leg up to the next person. Senate candidate, Elizabeth Warren, used the same "paying it forward" justification.

The idea of "paying it forward" normally means that after someone does a kindness for you, you should do a kindness for someone else. Note that Obama and Warren turn an act of voluntary kindness into a government-mandated obligation.

But this is beside the point. The "pay if forward" phrase is just used as cover.

Every so often Paul Krugman gives the game away. Last year he insisted that conservatives want to see Social Security fail because they can't stand the thought of such a big government program being successful. His giveaway was that the reverse is true - liberals refuse to admit that Social Security has major structural defects because it is the cornerstone of big government.

More recently Krugman claimed that this is not class warfare. Then he quoted some statistics on long-term income by class. Obama has quoted some of the same statistics. They show that wages have been constant for most people but the wealthiest have seen their income quadruple.

Keep in mind that the rich are paying taxes on their wealth. The US has the world's most progressive income tax. The bottom 50% pay nothing or get money back. The highest percentage of wage earners pay a disproportionate percentage of the nation's taxes. By what measure are they not paying a fair share?

Warren gives us the answer. The problem is not how much they pay, it is how much they get to keep. It offends the left that people can make so much money. In Warren's view, it isn't really their money since they exploited the common infrastructure.

So what is a fair share? The real answer is that Obama and company want to tax the rich until they are no longer rich (or at least no longer as rich). Then they will redistribute the income through the government. They do not really care how effective this is as economic policy. They do not stop to consider what this would do to the economy. They just want the world to be a fairer place.

Is it class warfare? Of course. How could it be anything but? They are offended by the wealthy and want to tear them down.

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