Rudy Takala
September 22, 2011
Who is to share the pain?
By Rudy Takala

Republican lawmakers spend a significant amount of time talking about the right of affluent citizens to retain the money that they earn. Similarly, Democrats spend a lot of time going on about the idea that no one should be allowed to get too far ahead, regardless of how hard they work.

For example, in a recent speech, President Obama repeated a common cliché. "Warren Buffett's secretary shouldn't pay a higher tax rate than Warren Buffett. There is no justification for it," he said. The Republican response has been traditional. House Speaker John Boehner replied, "I don't believe that class warfare is leadership.... We could get into this tax the rich, tax the rich, but that is not... the basis for America."

A headline on the DrudgeReport reported on the story as it continued to develop. "Obama derides fat cats, then meets them for dinner to collect cash," it read.

According to facts reported by the Wall Street Journal and Politico, tickets to the fundraising dinner featuring Obama cost $35,800, with $5,000 going to Obama's re-election campaign and the rest going to the Democratic National Committee.

It is portrayed, and justifiably so, as an instance where we should be surprised and disdainful of the President's dishonest hypocrisy. But another worthwhile question may be, is the President the only charlatan in the situation? Why do wealthy contributors keep on contributing to politicians who seemingly want to take more of their money?

Examples of Democrats maligning the "rich" while still getting contributions from the group are ample. That was especially evident earlier this year when the President proposed a tax on private jet owners that would have amounted to a mere $300 million per year in revenue. The President supported the tax simply as a means of symbolically harassing affluent citizens; Republicans defeated the proposal for equally symbolic reasons.

It speaks poorly of our political system that anyone believes their neighbor's earnings should be harvested by a wasteful bureaucracy simply for sport. However, how much energy should Republicans expend in defending the "rich"? Should it be proportionate to the effort that the "rich" put in to defending themselves? Why doesn't that effort seem to be present in people like Warren Buffett?

For that matter, why do people like Warren Buffett tell falsehoods about their own taxes in trying to convince people that taxes should go up? Buffett claims that he paid $6.9 million in taxes last year, or 17.4 percent of his earnings, compared to an income tax rate of about 36 percent paid by his employees. "My friends and I have been coddled long enough by a billionaire-friendly Congress. It's time for our government to get serious about shared sacrifice," Buffett wrote in an op-ed.

According to an investigation by the New York Post, his claim didn't take into account the taxes he paid on the money he had to earn in order to invest. That was taxed as corporate income, amounting to a 35-percent rate. On the earnings he received from the money after he invested it, he paid 15 percent capital-gains tax rate. All together, that amounted to about 45 percent of his money going to taxes.

<46 percent of households, mostly low- and medium-income households, will pay no federal income taxes this year.>According to the Tax Policy Center, "46 percent of households, mostly low- and medium-income households, will pay no federal income taxes this year." In other words, the top 54 percent of households pay 100 percent of federal income taxes.

Could the reason the rich support "spreading the wealth around," as it was famously described by Obama during his 2008 campaign, because all of the wealth gets "spread" back to them?

In the recent news continuing to develop about wireless company LightSquared, The Hill reports, "Emails between [LightSquared] and the White House make mention of the fact that the company's CEO would be attending Democratic fundraisers in Washington, and administration officials met with executives from the company on the same day that CEO Sanjiv Ahuja wrote a $30,400 check to the Democratic National Committee."

Rep. Darrell Issa (R-CA), chairman of the Oversight and Government Reform Committee responsible for investigating, observed, "This is another reason that crony capitalism ... is dangerous, because they're going to pick winners that they ideologically, or in some cases because they support their candidacy, want to see win."

In short, it is fine that Republicans advocate for lower taxes. It is accurate to say that taxing the rich is not the basis of America. But political contributions have become the basis for government appropriations in America, and some of the richest tycoons will continue to voice their support for "sharing the pain" until that reality ends.

© Rudy Takala


The views expressed by RenewAmerica columnists are their own and do not necessarily reflect the position of RenewAmerica or its affiliates.
(See RenewAmerica's publishing standards.)


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