Columns » Ernest Dumas

The case for taxes

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An old friend who worked harder and smarter than I did in my fecund years and has much more to show for it treated me to lunch and upbraided me in what I thought was an unusually gentlemanly way for having thrown my lot with the utopian socialist Barack Obama.

Since I have a full quarter-century on Obama and have been foisting my opinions on an occasional Arkansas reader since the president was born, it would have suited my vanity better to say that he cast his lot with me, but it would seem small of me to quibble over that so I shall not.

The issue was the president's obsession with taxes, those levied on high incomes, which my friend considers an effort to punish success, initiative, character, thrift and the other qualities that once made America the envy of the world. The goal of the schemes — the president's and mine — is supposed to be, in my friend's eye, an egalitarian society where everyone shares equally in the bounty of the land.

Specifically, the president got Congress at year's end to tack on another tax bracket for income over roughly $400,000 a year, which will be taxed not at the old 35 percent but at 39.6 percent, the same as before the temporary Bush tax cuts of 2001, and now Obama wants Congress to close a few tax loopholes for corporations and high-income individuals — all to ratchet down the deficit. The Affordable Care Act, signed by Obama in 2010, also imposes a 3.8 percent tax this year on the net investment income of people like my friend and a tax of a little less than 1 percent on the wages and salaries of people earning more than about $250,000 a year. Those "Obamacare" taxes, along with some on tanning-bed manufacturers and other medical equipment that will reap a big demand from the expansion of health insurance, are supposed to forestall the approaching Medicare deficit and help pay for expanded Medicaid and premium subsidies for low-wage workers.

Even then, the average tax rate paid by the top 1 percent is still close to lows of the past 75 years, and the record shows that industry and finance flourished in those high-tax times. The worst per-capita GDP growth occurred in the last decade when taxes on the 1 percent were just above the lowest rate since 1930.

Since in the repose of old age my income does not subject me to those taxes (in truth, even in my fruitful years my feeble labor never lifted me near those brackets) I have been quite comfortable with the higher taxes. (To be fair to myself, I thought denizens of the 15 and 25 percent brackets like my wife and I could also pay a little more.)

My friend wanted earnestly to know how I justified, morally, penalizing successful people and enterprises to reward Medicaid clients who could pay for their own health care and insurance with only a little drive and hard work.

He was disappointed in my faint answers and seemed to invite another try. I've turned it into a column and, like the good capitalist that I am, picking up a check for the trouble.

First, I'm not a utopian dreamer and, despite the Fox News meme that he's planting European socialism on American soil, there's certainly no evidence that it drives the president, whose administration is as cozy with Wall Street and industry as Bush. Robert Owens' followers at the commune at New Harmony, Ind., in the 19th century were about the last utopians.

The nation long ago embraced the idea that it was a societal obligation, to be fulfilled by government, that every child be educated even if it meant that some would pay more than their pro-rata share, which my friend certainly did happily. And people contracted their governments to provide them many other services that each person could not secure for herself — roads, defense from foreign foes, security from criminals (including the white-collar kind), safe food and drugs, a secure agricultural system, a healthy environment, a marketplace regulated to protect consumers and investors alike. For a century, people let it be known that they expected the government to somehow guarantee the opportunity for medical attention for everyone, including those who could not afford it. Each of us is a little safer if everyone gets medical attention. Hence, those Medicare taxes.

In almost every instance, those services do not meet the approval of everyone. Each of us, every day, sees government spending we think is a misuse of our dollars but others see as vital. The trillions spent by Obama and his predecessors on Middle East war, arms subsidies and, yes, those drone strikes on unpatriotic U.S. citizens, reflect a national blindness to historical truth and make us no safer. But a majority each time deemed it wise, even if approval was fleeting.

Taking $125 million of your and my tax dollars and giving it to the billionaire Koch brothers and a promoter named Correnti so that they will build a steel mill at Osceola rather than in Mississippi seems like the ultimate folly to me, but most people think it's worth it to get 500 jobs for decent Osceola boys rather than undeserving Mississippians, so I'm philosophical about it. I hoped my friend might be philosophical about pitching in for health care for the ne'er-do-wells who won't do more than hold down a dead-end job or two.

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