06.30.2009 0

Rangel Surtax Debate Exposes Class Warfare Myth

  • On: 07/23/2009 09:32:20
  • In: Taxes
  • By Howard Rich

    “Make the rich pay for it, they can afford it.”

    For decades, this has been the modus operandi of politicians and public officials who rely on unsustainable government growth and skyrocketing taxpayer debt to pad their patronage and expand their influence. It’s also the driving force behind House Ways & Means Chairman Charles Rangel’s new “health care surtax,” which the New York Democrat says will raise $540 billion over the next ten years to pay for part of “Obamacare.”

    Who would end up paying Rangel’s surtax? All joint filers making over $350,000 – before deductions. Also, the surtax applies to all forms of income, including wages, dividends and capital gains.

    This latest “bleed the (moderately) rich” scam comes from a tried-and-true big government playbook. In fact, it’s every bit as predictable as the blooming of the cherry blossoms, the naming of yet another government “czar,” or whichever Beltway sex scandal du jour is dominating the cocktail party chatter. And like countless other government schemes of its kind, it will no doubt be communicated to middle class mailboxes or televisions via slick advertisements that invoke how wealthy Americans are enjoying “faster jets or bigger
    swimming pools” while poor people lay “starving in the streets.”

    Sounds familiar, right?

    Unfortunately, many of the limited government advocates whose job it is to respond to this nonsense have fallen into a predictable rut of their own.

    “Wealthy Americans create jobs,” they remind us – and they’re right.

    “Wealthy Americans pay their fair share,” they say. Sometimes they even point out that wealthy Americans pay not only their fair share, but the “fair share” of dozens of others who can’t afford to pay anything.

    But these critical points are rarely expounded upon and are almost always ignored by our intellectually incurious mainstream media. After all, it’s just too easy for them to say that “rich people will be paying for new services for poor people” – even though in reality almost all of the money ends up going to bureaucrats, not services, while the money taken from the rich invariably ends up costing far too many poor people their jobs.

    This is precisely what would happen under Rangel’s proposal.

    According to a report issued by the Heritage Foundation, over sixty percent of the returns that would be impacted by the Rangel surtax include income from small businesses or partnerships. Twenty percent of the returns receive more than half of their income from small business or partnership income.

    Translation? Jobs will be lost. Lots of them, too.

    Contrary to the carefully-prepared talking points of the class warfare spin doctors, the people being asked to pick up this tab are not super-wealthy Americans.

    These are not “too big to fail” financial institutions or union-driven (now government-driven) automakers, these are small businesspeople – supermarket owners, retailers and website developers – in other words, the people who create the vast majority of jobs in America.

    Instead of coming to Washington D.C. with their hats in hand, these businessmen and women are doing precisely what we want them to do – innovating, turning a profit and providing a livelihood for their employees so that the taxpayers don’t have to.

    Under Rangel’s surtax, however, many of these very business owners would be forced to pay over half of their income in taxes – 52%, to be precise – a ridiculously-high rate that exceeds the top marginal rate in all but three industrialized nations.

    Even socialist countries aren’t taxing their citizens at such exorbitant levels.

    The bottom line is this – if America wants to remain competitive with the rest of the world, its leaders must realize sooner rather than later that they cannot continue to spend us into fiscal oblivion while at the same time throwing a monkey wrench into our nation’s job creation engine.

    Clearly, President Obama made no bones about his desire to “spread the wealth around,” but the problem with that approach is that you eventually run out of wealthy people – and the jobs they provide.

    The Rangel surtax is nothing more than another predictable step in that direction.

    Howie Rich is the Chairman of Americans for Limited Government

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