Discerning Fact From Fiction In The Tax Hike Debate

By Austin Hill
Sunday, October 02, 2011

Just because you’ve excelled in your chosen career field doesn’t mean that you have a clue about economics.

And just because people claim that they are being self-sacrificing, doesn’t necessarily make it so. As President Obama struggles seeks support for his tax-and-spend “jobs bill,” an intriguing chorus of supporters has emerged, intertwining fact and fiction. Start with the “objective journalists” at The New York Times who have lent their support to the tax-hiking agenda.

The Times has twice characterized the President’s push for higher taxes as “asking the rich to pay more.” But here’s a fact: the I.R.S. doesn’t ask anyone to pay taxes – it mandates that taxes be paid. It requires it. The Times might ask a small business owner about this – especially one facing an IRS audit – and see if our government is requesting or demanding that people hand-over their money.

Next let’s look at Warren Buffett. The “Oracle of Omaha” is in a category all his own, and deserves respect for the ways in which he has amassed his personal wealth. He has achieved this by first and foremost serving his clients remarkably well, and in so doing he himself has prospered. This is the way it’s supposed to work, and Buffett has emulated the virtues of capitalism and free enterprise throughout his career.

Why Mr. Buffett has hitched himself to the President’s never-ending quest for higher taxes is a mystery. Yet despite the fact that President Obama has nick-named his latest tax hike plan the “Buffett rule” (reports last Friday indicated that maybe Mr. Buffett doesn’t like his name being used in this way and that maybe he doesn’t support the tax-hike scheme after all), Mr. Buffett has still found it necessary to respond to the President at times with a few facts of his own.

In August of 2009, Buffett began sounding the alarm about how staggering levels of government debt could hinder private wealth creation. And earlier this year Mr. Buffett publicly corrected some of the fiction that President Obama was propagating about how “millionaires and billionaires” duck out of their tax responsibilities by deducting the costs of their “corporate jets” from their tax bill.

The story is a bit different with former Google Executive Doug Edwards. Speaking at an Obama town hall event in the Silicon Valley recently, Mr. Edwards stepped up to the microphone during the “q and a” portion of the show and noted that “I am unemployed by choice,” and that he “worked for a small startup down the street here that did quite well (a reference to Google).” Then came Edwards’ question: “My question is – would you please raise my taxes?”

Mr. Edwards’ remarks have been characterized as a display of sacrifice and virtue. But here’s another fact: Mr. Edwards does not need his government to take more of his wealth away. As an American Edwards is quite free to do what he wishes with his money, and he has the power to part with more of his money all on his own.

“Please raise my taxes” may sound righteous, until you consider that the government doesn’t set tax rates for individuals, but rather, for groups. With a call for higher tax rates, Mr. Edwards is actually calling for the government to confiscate more money from millions of other people as well as himself. If he was serious about more of his money, alone, going to fund the government, he could simply make extra “contributions” to the IRS, and choose to not itemize his tax deductions.

But then there’s Actor/Director Ron Howard. Last week he noted that “I remember on the ‘Andy Griffith Show’ ( a show he starred in as a child during the early 1960’s) when income taxes for the upper levels were as much as 90 percent, and that’s the era that we often look back to with great nostalgia and it was a time of tremendous growth. So you know, I’m not averse to paying some taxes to try to help the country grow...”

If Mr. Howard were to check-in with his accountant, he would likely find that he is already paying “some taxes.” He would also do well to note the fact that America has changed since the 1960’s: whereas back in the day most Americans were either employed by a large corporation or a government agency, today most of us work for small businesses that were started by private individuals and investors. He also may recall the fact that during that early 60’s “nostalgia” era, President John F Kennedy cut taxes for all Americans, instead of raising them.

Buffett, Howard, Edwards – and anybody else who believes that higher taxes will pave our pathway to prosperity - should consider another fact: government wastes our money at staggering rates. Buffett has already declared that the $813 billion stimulus bill of 2009 was largely a waste (why do you want to fund more, Mr. Buffett?). And we don’t know yet how many hundreds of millions of our dollars went down the tubes with the President’s Solyndra/”green energy” fiasco.

Americans must continue to embrace economic facts and abandon the Obama fiction – no matter what the rich and famous may say.