President Obama Profiled Me

During the presidential campaign - and continuing thereon after - President Obama lumped me and all $250,000-plus households into the same category. A category he called "the wealthy." (Without, by the way, ever describing the specific logic or genesis of that magical threshold, which sometimes dropped to $200,000.)

Raising taxes on each and every one of those households without distinction was an oft-repeated plank of his campaign.

This is financial profiling. And in its way it's philosophically as intellectually and morally indefensible as racial profiling. Now how your emails; I'm not equating paying more taxes with the ugliness and brutality of police discrimination. Nor am I taking a position on Gates vs. Cambridge (although the incident did make me think more expansively about the subject.)

Nor am I making a supply-side argument, or saying that we shouldn't increase progressivity on the high-end of the income curve.

But I am saying that the curve has points along its arc, and that both racial profiling and financial profiling are categorical, anti-individualized, sloppy and harmful. We have a president famous for nuanced thinking, for making clarifying distinctions, but his stereotyping of all $250,000 families is exactly the kind of argument-by-broad-brushing that he so articulately opposes in other realms.

Day in and day out, President Obama hammered his meme of taxing "wealthy" households without recognizing what a heterogeneous group that is, and how geography factors into the calculus. Yes, I've heard the argument that those who earn over $250,000 are a small group - as if small numbers is a legitimate rationale for profiling. (Those who earn over $250,000 represent roughly 3% of the population and around 48% of all personal federal income taxes.)

Two long-term public school teachers in New York City can earn $250,000 a year. Should they be taxed at the same rate as, well, name-your-gazillionaire? That's an argument I welcome and that we need to have: one side would maintain that the tax code shouldn't make distinctions within a tiny and privileged slice of the population: the other would insist that there's an order of magnitude difference between the teacher and super-rich.

We should also argue about what's equitable for small business owners, whose Subchapter "S" corporations require that whatever shows up as profit at the end of the year. So what is in effect working capital that gets plunked back into the business must be reported as income.

And let's have an argument about whether all categories of income should be taxed the same. The tax code already puts a value judgment on "quick money" by taxing short capital gains at a higher rate than long-term ones. The former is seen to benefit the individual more, and the social good, less. The latter, by contrast, is seen as benefiting society to a greater extent, because long-term investment, and the growth and stability it encourages, serves the greater good more so than a fast flip does.

What's the extension of that capital gains social calculus to personal income? Should a bond trader who makes a million dollars a year by moving money around digitally be taxed at a higher rate than an entrepreneur who makes $250,000 by hiring ex-cons to build furniture in the Bronx? Both inhabit the same tiny three percent.

The government needs more money to fund its extraordinary deficit, and to extend health care. But we can't have an intelligent conversation about where that money must come from if the president defaults to financial profiling and clarity-obscuring generalizations. We make narrow and sharp decisions about how we spend our tax money - good and bad - but blunt and fuzzy decisions about how we collect it.

President Obama has led the nation in some difficult but therapeutic conversations that have made lapidary distinctions about race, about torture, about national security. Next-up should be the one about money.

Comments

[S1m0n]

In 'racial profiling", it's not the profiling that that's the problem. The problem is race.

There is not a thing wrong with financial profiling.

[restoreamerica]

If you look at the history of the tax code over the years, it shows that periods that had greater prosperity
had a rather large marginal rate than is in effect today. I agree about the small business issue of it being unfair to tax profits that are used to reinvest in the business.... but would not that reinvestment be deductable on the next years return?? I understand the impact of taxing it on the front end.

Based on the history of the top marginal rate, it is hard to understand all the whining about returning to a top rate of 39 percent. History shows that some of our best econimic growth occured when the top rate was 50 to 70 percent and even as high as 91 percent. Here is a link to check it out.

http://www.truthandpolitics.org/top-rates.php

You may have to paste the link in.

[kybo88]

What this all comes down to, once you get past this "profiling" nonsense, is about a wealthy person who doesn't want to pay more taxes.

[XME]

Perhaps, but maybe there SHOULD be debate as to why a person who makes $250K a year should be taxed at a significantly higher percentage rate than a person who earns $75K a year. Either way, the person who makes more pays more taxes. Personally, I have no disagreement with folks who make more paying more, but when you look at how significantly those percentages can be, there is something to be said for them having a right to gripe. We all work hard for our paychecks, and if I worked my but off to make $250K a year, I probably wouldn't be too happy to have someone making half that basically getting a break on the percentage rate applied to THEIR income.

I think if someone wants the "rich" to consider their viewpoint, it has to start with considering theirs, even if we disagree, and see that their point might at least be valid, even if we disagree.

[restoreamerica]

What people seem to overlook is the tax rate is PROGRESSIVE. If a very well off individual makes say $350,000, he pays the same 28 percent rate on the first 50,000 that I do. The 35 per cent or proposed 39 percent rate doesnt kick in until after the first $250,000. There was a stupid story about some susposed small business owner who was detirmined to keep profits below $250,000 dollars to prevent paying the higher rate as the business was capable of earning 350,000 dollars. She was even planning to lay off a few employees in order to accomplish this. Do the math. This person was throwing away $61,000 in profits she could keep because she did not want to pay the higher rate on the additional $100,000. Perhaps she thought the rate applied to ALL income earned? This seems to be what we are being sold by the media and "Joe the Plunber" types.