One Trophy is Never Enough

Mark my word, you will raise tax rates and you'll feel good because you went out there and you got those rich people...You campaigned against rich people and you got enough envy whipped up in the country, and you're going to stick it to those rich people. But guess what? You may not get any more revenue. You may not get any more economic growth. But you can say, "I stuck it to the rich people." ~ Senator Rand Paul (R-KY)

I don't like emotional appeals. I think emotion deceives and distorts, and I believe the Bible on the folly of letting emotion rule one's actions: "The heart is deceitful above all things, and desperately sick; who can understand it?" (Jeremiah 17:9).

In the wake of the recent agreement to avoid the so-called "fiscal cliff" – a hyperbolic and media-friendly term with little practical value – I am struck by the fact that one of the major components of the agreement, raising the income tax rates on individuals making $400,000 or more a year and couples making $450,000 or more a year, has, when subjected to impassioned scrutiny, more emotional than practical impact.

Anyone who looks at the "tax the rich" scenario with the cold eye of evidentiary analysis would correctly conclude that it will have no impact on the national debt, our unfunded liabilities, or even the annual deficit for one year.

The Congressional Budget Office projects a $620 billion increase in revenue over 10 years as a result of the increased tax rates. That averages out to $62 billion a year, and since the federal government spends $10,460,188,800 a day, this new "revenue" will be exhausted in less than six days, if not sooner given the administration's desire for increased expenditures, or "investments," their preferred term. I am certain the administration is aware of this fact.

Incidentally, the use of the word "investments" to describe increased government spending is yet another attempt by the elites to elicit a specific emotional response from the people. After all, who would oppose "investments" since their intent is to bring a positive return to the "shareholders," namely the American taxpayer?

If this maneuver isn't going to contribute to debt reduction, then what was its purpose?

If it was because the government wants to spend more, then why not say that? I think you know the answer to that; such an admission would not have been politically prudent in an election year.

Even if they were bold enough to admit that their intent is to spend more, the limited revenue generated by this tax rate increase isn't nearly enough to cover the $10 trillion in new debt the Congressional Budget Office has projected as an outcome of the administration's own ten-year budget submission. Even if they had gotten the tax rate increase they desired on individuals making $200,000 or more, or families making $250,000 or more, that would add only an additional $180 billion in revenue over the same ten year period. Once again, I am certain the administration is aware of this.

The point I'm trying to make by walking through this analysis is that the administration and its advocates are not serious about deficit reduction. I also don't think it matters to them that their "tax the rich" scheme is unlikely to make up for the massive spending increases they seek. This tax rate increase was a political victory for them in that they bagged the trophy they promised to their constituents – they "stuck it to the rich people."

It's usually at this point that my liberal friends, clearly stung by the implication that their central tax policy is motivated by nothing more than covetousness and class envy, accuse me and my conservative allies of ignoring the theft and fraud perpetrated on the American people by the financial services industry in the economic meltdown of 2008.

We'll set aside for the moment the simplistic and inaccurate notion that our economic collapse was due solely to criminal actions, rather than deliberate federal policies, and business decisions carried out with the blessing and encouragement of politicians from both parties. We'll also not delve into a discussion of how much our own greed played into us making bad personal financial decisions which left us vulnerable when the housing bubble burst.

To the notion that the increased tax rates for upper income taxpayers are effectively a fair exchange after their "theft" of Americans' wealth, I ask my liberal friends, "Must all upper income Americans pay the price for the alleged malfeasance of the few? Is that your definition of 'fairness'?"

Here is what I believe. The distribution of others' income is a core principle of the American left, and taking more from those who have more is essential to the successful execution of their distributive policies.

Note that I didn't use the term "redistribution" or its derivatives because that is also a term fraught with emotional baggage. As I've stated in the past, redistribution presumes that income is arbitrarily disseminated in the first place rather than earned under mutually agreed upon contractual arrangements, and that some benevolent entity must intervene to reallocate income more equitably.

I categorically reject the inference that most people who have done well financially didn't make their income legally and ethically, as well as the idea that the state has the moral or legal authority to confiscate their earnings solely for the purpose of "fairness," which is another emotionally-laden word with little effective policy significance. "Fairness" isn't objective, nor is there a single standard or power that establishes a universally accepted definition of "fairness."

I can say with absolute confidence that life has never been fair, nor will it ever be. In fact, we have all had experiences where we were the beneficiaries of someone showing us favor over another, and I doubt we would surrender those experiences in the name of "fairness." Jesus tells us that even God's creation isn't "fair," since "He causes His sun to rise on the evil and the good, and sends rain on the righteous and the unrighteous" (Matthew 5:45).

Pursuing "fairness' in economic policy is futile and frustrates the "winners" and the "losers," the former because there will always be someone who has more, and they will always be discontented as a result, and the latter because they will accrue no benefit from their labors and therefore will lose the incentive to excel, which negatively impacts the proposed beneficiaries of this "fairness" doctrine – and around and around it goes. It's human nature that has played itself out multiple times throughout history, and the pride of those who choose to ignore nature and history because they think they can do it better astounds me.

It annoys me when the president describes his tax rate hikes as "asking the wealthy to pay a little more." The state doesn't "ask" anyone to do anything; the only tool at the state's disposal to accomplish its objectives is coercion.

Sadly, it's not as if we weren't warned about how our love of equality could lead to increased coercion by the state in order to achieve it. Alexis de Tocqueville noted in 1835 in his book, Democracy in America, that Americans' passion for equality and fairness could have unintended consequences:

But one also finds in the human heart a depraved taste for equality, which impels the weak to want to bring the strong down to their level, and which reduces men to preferring equality in servitude to inequality in freedom.

To those who think the current trophy mounted on the state's wall as a result of the "fiscal cliff" agreement is enough, I challenge you to consider Tocqueville's warning. The state's pursuit of economic "fairness" will result in an expanding definition of "haves" from whom more will be "asked" to effect "redistributive justice," as then-Illinois state senator Barack Obama phrased it in 2001. The hunt is just beginning.