Legislators are battling over extending the Bush tax cuts. Should the “rich” get tax cuts? Congressional Republicans say yes and Democrats say no.
But that’s really the wrong question. What legislators should ask is: do the rich pay taxes? Yes. In fact, the rich pay a disproportionate share of income taxes. The top one percent of earners contributes 40 percent of revenues collected.
So of course the rich should get tax cuts. They pay taxes. It shouldn’t be a hard principle to grasp, even in Washington: tax cuts should go to people who pay taxes, not to people who consume taxes. This confusion recently afflicted the AFL-CIO, which denounced those who allegedly would borrow more money to pay for tax cuts. Obviously, government borrows to pay out money that it doesn’t have — like the abundant social spending now favored by the union leadership. But tax cuts do not mean spending money collected elsewhere. Rather, tax cuts mean reducing the amount of revenue collected. Taxes received automatically pay for tax cuts.
Still, opponents of extending the tax cuts felt emboldened by a gaggle of millionaires who organized to oppose tax cuts for millionaires. None of the people listed among the “Patriotic Millionaires for Fiscal Strength” is particularly famous, but Warren Buffett has separately taken a similar position. Of course, he is unlikely to notice a change in income tax rates. After you’ve made your first 10 or 20 billion dollars, who can keep track of interest let alone taxes? You might as well win public plaudits by lobbying to raise taxes.
It’s always easiest to spend other people’s money. Liberal legislators have proved that for years. Compassion once meant suffering with others. Then it turned into writing checks. Now — at least in Washington — compassion means making other people write checks.
The self-proclaimed “patriotic millionaires” look to be the same sort of hypocrites. While proclaiming the importance of people paying higher taxes, most are probably pocketing their savings under the Bush tax cuts. They want their peers to pay more, but in the meantime they are living the good life.
If they really believe that the federal government needs more money, there’s no reason for them to wait for Congress to raise the rates. The tax year is about to end for most Americans. Those who believe they are undertaxed have a wonderful opportunity to do their patriotic duty.
If you’re a “patriotic millionaire,” or even a “patriotic thousandaire,” it’s really quite simple. Pull out your 1040. Then let your imagination run rampant.
First, don’t claim any dependents. It’s only fair and just that you take care of them yourselves. The fact that you have a big family — contributing to the population explosion, resource depletion, and global warming — certainly should not reduce your taxes.
Next, inflate your wages. Granted, the really rich often don’t draw a standard salary. And the IRS might be confused if your W-2 and reported salary don’t match. But they aren’t likely to complain if you say you earn a lot more than the forms suggest.
Do the same for interest and dividends. But make sure you report extra taxable interest and ordinary dividends. Remember, your objective is to maximize your taxes.
If you’re feeling in an especially creative mood, toss in some taxable refunds and alimony, even if you’ve never been married. Sure, it might look odd to the IRS agent who checks your return, but he or she isn’t likely to press you to prove that you collected something from an ex-spouse on the side.