Tax Those Fat Cats!

By Patrick F. Cannon

I’m on record as saying a modest increase in the top income tax rate would not be the end of the world for our highest earners. At 37.9 percent, the rate is historically low. I also think the earnings limit on the payroll tax (Social Security, Medicare, etc.) could also be raised.

            The tax code is complicated, which has little effect on taxpayers such as yours truly, but often enables folks like Jeff Bezos to pay at a rate much lower than that 37.9. Were I Mr. Bezos, I would pay as little as I had to. In his case and others (Elon Musk, Bill Gates, Mark Zuckerberg and their ilk), people confuse taxable income with wealth. The fact that Bezos may have a total fortune of some $180 billion or so has little to do with taxable income.

I don’t know what his taxable income was last year, but most of his  wealth is tied up in Amazon stock. Were he forced to sell it all, his capital gains tax would be $36 billion (it’s much more complicated than that, but let’s make it simple). President Biden’s proposed budget is $6 trillion. Let’s look at the zeros: 36,000,000,000 vs. 6,000,000,000,000. For the record, the current national debt is 28,500,000,000,000, and will climb to at least 30,000,000,000,000 if President Biden’s 2022 budget is approved.

By the way, Amazon employs approximately 1.3 million people. Because of job market pressures, starting wages for entry level warehouse workers are now about $15/hour, depending on the area of the country and market forces. It’s hard work, but those who persevere can expect to get raises and promotions. Benefits for full time employees include health care, disability and life insurance, education reimbursement, and a 50% match IRA program. Bezos, who is not the kind of man I’d like to play a round of golf with, doesn’t do any of this out of the goodness of his heart. He does it because he has to. He is responding to market pressures. It’s how capitalism works. (For how Socialism works, see Cuba, North Korea, Venezuela, USSR, Nicaragua, etc.).

We hear a good deal about income disparity, and it’s true that the gap between the highest and lowest paid has widened. However, those high earners pay more than 70 percent of the income taxes; the lowest earners not only do not pay any income taxes, but actually get cash from the Federal government; not to mention food, rent and medical subsidies, among other benefit programs. Before the pandemic hit, the poverty rate was the lowest in our history, and will almost certainly go down again as the economy continues to recover.

By the way, the average hourly wage for Americans in June is not $15, but $25.68. And you won’t hear this from our left-wing friends, but real wages for Americans – adjusted for inflation – have risen by 32% in the last 30 years.

Hatred and envy of the rich is as American as apple pie and baseball. Who can forget those rapacious “Robber Barons!” But while we’re remembering them, and their contemporary descendants, let us also remember their contributions to the common good. While I am a member and financial supporter of several cultural and social service agencies, I am under no illusions about who founded and  continues to provide the bulk of their support. Some of them no doubt did so out of a guilty conscience. Whatever works!

Like Andrew Carnegie before him, Warren Buffett is on record as committed to giving away most of his (currently) $90 billion fortune to worthy causes. All without a Federal bureaucracy taking its usurious share. And should I mention that the folks I’ve cited actually succeeded because they had better ideas and worked hard to make them pay?  And that the  stock prices that have made them super rich have been known to tumble?

Copyright 2021, Patrick F. Cannon .