President Obama says wealthy Americans need to pay significantly higher taxes. A new poll shows most Americans think the rich should get a tax cut.
Mr. Obama has made class warfare a central feature of his re-election effort. His proposed 2013 budget includes a number of tax increases aimed at higher income brackets, including raising taxes on family incomes above $250,000 and raising the top marginal individual tax rate to 39.6 percent. In his speeches, Mr. Obama frequently inveighs against the rich and repeatedly calls for “fairness” in the tax code.
But what is fair? A new survey suggests Mr. Obama’s proposed tax rates are unfairly high. According to polling results published Monday in the Hill newspaper, 75 percent of likely voters said a fair tax rate for the highest income group would be 30 percent or less. Just 4 percent agreed with Mr. Obama that it would be fair to take 40 percent of income from the better-off. When it comes down to solid numbers instead of windy rhetoric, the American people and the White House have a very different sense of right and wrong.
Mr. Obama labors under the common liberal misapprehension that taxing wealth creates more of it. His answer to the hundreds of billions of dollars being paid out in dividends is to nearly triple the dividend tax. The problem is that the recent massive growth in dividend income began during the George W. Bush administration after that same tax was cut significantly. Raising the dividend tax to punitive levels — and tacking on a 3.8 percent Obamacare surcharge — will not augment government revenue or increase the taxes paid by the rich. People will simply find better ways to invest their money.
The same goes for the proposed “Buffett rule.” Imposing a minimum tax rate on those making a million dollars a year will warp incentives and encourage those in top income brackets to seek other ways to secure their earnings. Considering that the top 10 percent of earners already pay more than 70 percent of all income taxes, it is hard to argue that raising the take from them is fairer.
The poll showed that most Americans want a cut in federal corporate taxes. Seventy-three percent think the current top rate of 35 percent is too high. Mr. Obama has uncharacteristically proposed a cut in the rate to 28 percent, while Republicans have backed a 25 percent rate. In an exclusive interview with The Washington Times’ editorial board, FloridaGov. Rick Scott extolled the virtues of eliminating corporate taxes altogether. Mr. Scott has enacted policies that have taken half of Florida businesses off the tax rolls and hopes eventually to tax none of them. “You put more money in business people’s hands,” he reasons, “they’ll hire people, they’ll do more marketing, they’ll be more competitive.”
When money flows through productive channels rather than into wasteful government programs, the result is higher economic growth, more jobs and ultimately higher revenues at lower tax rates. Mr. Obama should spend less time fretting about what he thinks is fair and focus more on tax cuts that will get the economy out of its debt-ridden ditch.