Consider these arguments about taxing the rich, Part III | In Focus

Some final tax myths perpetuated by the right.

Conservative tax myths defending the rich have been stated and refuted in the two previous columns (Part I and Part II here). This column will finish examining the myths with responses by Robert Reich, former secretary of labor under President Clinton, and by me.

Myth #9: “If taxes are raised on the wealthy, they’ll find ways to evade them. So very little money would be raised.” Billionaires and millionaires will go somewhere else where taxes are cheaper, or they will find ways to avoid paying them.

Reich’s response: “More rubbish.” If Senator Elizabeth Warren’s tax proposal were implemented—taxing the top 1 percent with a 2 percent tax—that is well-enforced with no loopholes over the next decade, then $2.75 trillion could be raised from citizens making $10 million or more a year. A 70 percent marginal tax could raise over $720 billion over a decade.

Tom Wheelwright advises the rich in his article, “3 Ways to Avoid Taxes Like a Millionaire (legally)” in Real Dad: “If you want to be rich, you need to play by the rules of the rich. Meaning, the rules of money are skewed in favor of the rich, and against the working and middle class.” Taxes are created by the rich (through lobbying) for the rich.

My rebuttal to this myth is to change the laws and make them simple enough and clear enough that it isn’t possible to wriggle out of paying them.

Myth #10: “The only reason to collect taxes on the wealthy is to raise revenue.” As Tucker Carlson stated, “you just want to bring in more stuff.”

Reich replies: “No”. The money would go for schools and roads and to pay off the national debt. More importantly, it would end deep income inequality between the rich and the poor and thus protect the nation and democracy from rule by oligarchy.

My response to Myth #10 is, “And your point is?” Taxation’s purpose is to raise revenue. We elect representatives to decide how much to raise and where to spend it. The purpose of Congress is to decide what “stuff” (programs, projects, aid) the nation needs.

Myth #11: “It’s unfair to raise taxes on the wealthy.” One conservative commentator stated, “It’s more about punishing the rich, about punishing success.” Another commentator asserted that the rich are already paying their fair share.

Reich responds: “Actually, it’s unfair not to raise taxes on the rich.” Over the past 40 years most Americans have seen little or no growth in their incomes while the rich on the top have increased by 46.9 percent from 1980 to 2017, according to the Economic Policy Institute. Today, more than 60 percent of wealth is inherited in America.

My response is, before someone decides if something is “unfair”, the word should be defined. According to Wordnik, one definition is, “contrary to laws or laws or conventions, especially in commerce: unethical.”

Congress, as the lawmaker, determines what is fair or not fair. Ideally, according to the Preamble, members of Congress are elected to “provide for the common Welfare… and secure the Blessings of Liberty”. That should be their criteria, not to protect the rich at the expense of the middle, working classes and the poor. This myth strikes me as arrogant. Contrary to what one reader wrote in a letter to the editor, the Preamble is part of the Constitution. It is the thesis statement defining the whole purpose for the Constitution’s creation.

Myth #12: “They earned it; it’s their money. If people earn money, they should be able to keep it.“

Reich’s reaction: “Hogwash! It’s their country, too.” They have obligations as a result. The rich couldn’t have earned such wealth except that the laws of the nation and the freedoms we enjoy protect it. America provides military defense, the courts, political stability, laws and the Constitution. It also provides education, respect for private property and infrastructure. All these benefit the rich. Additionally, the government has acted to aid the wealthy by bailing them out through loans and outright gifts to Wall street bankers and subsidizing the research of new drugs and vaccines by funding Big Pharma.

Wheelwright agrees with myth #12 in his article above. “Understand that your money is your money—and not the government’s.”

My take is that, while Wheelwright is partially right, the Constitution’s preamble also places a burden on all of us living under its rules: We as a nation agreed to “provide for the common defense, [and] promote the general Welfare.” Emphasizing the blessings of freedom part of the social contract and denying the second part about general welfare is to pick and choose what parts of an agreement we decide to obey. It doesn’t (or shouldn’t) work that way.

Myths are often created to confuse Americans. But, if you are discerning and thoughtful, “You shall know the truth and the truth will set you free.”