What Counts as Wealth?

As the debt talks drag on, moving towards what will inevitably be a resolution that further enables the status quo (tax now, spend a little less at some undefined point in the future), Obama insists upon the necessity of tax increases.  Especially tax increases for “millionaires and billionaires.”

The right’s resistance to the tax hike solution is well-documented.  However, I think that much of the right could be won over to the importance of steeper taxes for the wealthy.  In order to persuade the right, I think that the left needs to reconsider their definition of “wealth.”

Today’s insistence that the “wealthy” should carry more of the economic burden is 20th century populism at its essence, but with an even deeper suspicion of the function of wealth in society.  The left assumes that the wealthy use their money to control politics at large and even the individual political subconscious (see Pelosi’s claim that the Tea Party is “astroturf”).  The assumption also holds that the wealth itself rigs society against the interests of the little guy (an argument that is wide open to debate — other people’s wealth may be GOOD for the little guy, even without the fantasy of “re-distribution”).  These ideas all point toward one solution: we need to move some of the wealth away from those who earned it and towards those who suffer abstract injustices at the abstract hands of the abstractly wealthy.

I say “abstractly wealthy” because I think the right’s resistance to tax hikes for the wealthy isn’t an uncompromising principle — the problem is that much of the right believes that “wealth” has been defined too broadly.

When Obama talks about raising taxes on “millionaires and billionaires” he is really talking individuals making $200,000 a year and couples making $250,000 a year.  These people, while certainly better off than many Americans, aren’t the people with the itchy palms who are up in that imagined tower manipulating the levers of society.  Many people making $250,000 a year are essentially middle class.

My family makes around $100,000 a year.  I paid for 7 years of graduate school (out-of-state for some of those years) with student loans.  My wife borrowed money to pay for 3 years of law school.  We also bought a house in S.C. in 2006 for $100,000 (we are currently trying to sell it for significantly less than we bought it for).  We also own a home in Houston, which we purchased for somewhat more than $200,000.  We have a child (day-care expenses) and all of the other expenses of living in America.  Fortunately, we own our cars outright. We do not live extravagantly (I don’t even have a smartphone!  Gasp!) I say all of this to indicate that our $100,000 per year leaves us about $5,000 to spare (Is the idea of the left that I should have nothing left to “spare”?  Obama seemed to suggest so this week, when he argued that it is unacceptable to him that he himself has hundreds of thousands of dollars at the end of the year that he has “no use” for…).  Is it very hard to imagine that a family making $250,000 a year may have debts that claim virtually all of that income?

You might be thinking: Well, if you have so much damned debt, stop spending your money!  This is part of what liberty means: I can choose what I want to do with my money.  I may choose poorly, but it is not the government’s job to insulate me from that choice before it happens or to bail me out afterwards.  Secondly, there is much complaining that the economy does not improve because the wealthy are hoarding their money instead of spending it.  This points up an internal contradiction: on the one hand, we apparently want to discourage people from spending their money (evidenced in the assumption that the “wealthy” can accommodate a heavier tax burden) even while we keep grousing that the economy can’t get going again because the wealthy aren’t spending their money.

I support an increased tax burden for the wealthy, but not according to this administration’s notion of wealth.  Tax the folks who make $1,000,000 a year — it is those people who can (or should) be able to shoulder the greater burden.  But even then, don’t tax them too much.  They have a right to spend their money too.

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One Response to What Counts as Wealth?

  1. mikeduncan says:

    Speaking as someone in roughly the same tax situation, and as someone who didn’t get a refund this past year, I wouldn’t mind a tax increase if it meant overall debt reduction for the country. We’ve gotten away with relatively low taxes compared to social services for some time, and letting expenses follow income with the aid of easy credit.

    I’m not sure who will blink in the ongoing poker hand over the budget. I can say now that surely no Congress is stupid enough to default, but…

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