The Obama administration proposes to raise the top tax rate from 35% to 39.6%. According to the Wall Street crowd, this 4.6% tax hike on adjusted gross incomes over $250,000 will sound the death knell of free markets, the work ethic, and incentives for success.
Kudlow calls it a "war on capital and the investor class" and "punishing" the most successful people who create jobs. Jeff Macke of Fast Money said that people should work until they made $249,000, and then take the rest of the year off. To Hannity, and to Rush, it is class warfare, and socialism.
Never ones to ignore the opportunity to create meaninglessness out of nothing--so long as it is a cheap way of drawing viewers--the media subjects us to a parade of experts, politicians, 'strategists' to yap away, never mentioning that all the vitriol, all the vented spleen, all the phoney high-minded principle, is about... 4.6%.
That's it, 4.6%. That's what the yapping on these talk shows are about (with apologies to Seinfeld)...nothing!
Here's the impact: Earn $1 million today (of adjusted gross income, i.e., after deductions), and one would be left with $650,000. If the Obama plan passes, that same person would be left with $604,000. (Of course, each would be somewhat higher, due to the top rate not kicking in for the first $250,00 of adjusted gross income; but trying to keep this simple.)
So, let us consider Jeff Macke's advice to stop working once earning an adjusted gross income hits $249,000, and (without going to tax tables) estimate that he would be left with, say, $190,000. In order to avoid paying an extra $46,000 in taxes, Macke would forego $414,000 of post tax income.
And, this man is on CNBC as a financial advisor!
Or, take Kudlow's whine that the 4.6% is "war on capital and the investor class". That extra 4.6% prevailed during the 1990s. If the venture capital that spawned the software, online, communications and biotech industries in the 1990s considered a tax rate of 4.6% higher to be "war", that war was about as effective as Bush's war on terror. The venture capitalists and entrepreneurs and many of the employees never missed that 4.6%, they were too busy creating 23 million new jobs. True, some of that money was taxed at capital gains rates-- but those were also 3-5% higher than they are today.
Nor did it hurt that the Treasury ran a surplus...yes, the "s" word...preparing the nation for the retirement of the baby boomers. Until, of course, George Bush waged his war on behalf of the already-privileged, destroying the financial basis of the country's safety-net even before destroying the financial system itself.
As Tom DeLay told us, "nothing is as important when you go to war than cutting taxes". (Actually, during Vietnam, there was nothing as important--to DeLay ("those damned minorities took all the places") and Bush ("no" when asked if he would volunteer for overseas duty) and Cheney ("other priorities") and Limbaugh (pilonidal cyst) and Bill Kristol ("too young", although born in 1952), and Judd Gregg (acne) and Pat Buchanan (bad knee) and Saxby Chambliss (bad knee) and Newt Gingrich (bad knee)--when going to war than ensuring someone else went in their place.) But, for Iraq, the top priority was cutting taxes, not providing body armor for the troops or healthcare when they returned, not to mention keeping the costs "off-budget" and beggaring the Treasury as the boomers began to retire.
No other country had ever done this before. It was Bush's version of American exceptionalism.
And, all this time, for the last 8 years, we were, apparently, without knowing, just 4.6% away from being socialist. Don't believe me--ask Rush or Hannity what Obama's proposed increased tax rates mean.
Just 4.6% away from socialism.
And, here I thought that my sleeplessness over these last 8 years was because George W Bush was President...