The "soak the rich" tax increase that so many liberals are saying will solve our financial problem is really a straw man argument. A grade school math class could see that the proposed tax hike on incomes above $250,000 would relieve only a few days of our deficit. The effect of the current proposals will be insignificant. Obama knows this. The real effect is to build the allegiance of the general voting public with the idea that someone else is responsible for our problems.
And why not? The victims in this case will be those 2% of the population in the upper income tier. Who is going to feel sorry for them, especially since they still walk away with more bucks than most people will ever see? The Republicans argue that the higher rates act as a disincentive and will result in a lower flow of revenue to the Treasury. The Dems maintain that the rates don't really matter, and they have economists with data to support that point.
My personal feelings on the issue lean toward the Bowles-Simpson recommendations. They favor a sharp drop in the corporate tax rate, a simplification of individual income taxes, elimination of most deductions and a defined drop in spending. But after the thousands of hours of diatribe from both parties in the months before the election, I took a new tack. I changed channels. Let Hannity, O'Reilly, Chris Matthews and the others bang heads. I cast my vote in November, and now I'm moving on.
Apparently I'm not the only one moving on, and one recent example says volumes about the real effect of taxes. Many readers would probably not care that French actor Girard Depardieu recently moved from his French home to neighboring Belgium. Depardieu has been a popular, if often controversial, actor in France for decades. You might expect that this would generate the same non-reaction as if one of our Hollywood stars moved to Canada. At least one prominent Frenchman did not see it that way, especially when the word spread that Depardieu left because of Belgium's lower tax rates. French Prime Minister Jean-Marc Ayrault excoriated the actor for his ungrateful treatment of his home land, the source of both his riches and fame, calling his actions pathetic.
Some might be intimidated by such criticism. Not Depardieu, who wrote an insightful response to his former leaders. The French Journal du Dimanche printed his response, which the Wall Street Journal and other papers across the U.S. then reprinted. The actor defended his love of France over many years. He said that the reason he moved was because the French government considered that "success, creation, talent . . . must be punished." "I leave, after having paid, in 2012, 85% taxes on my earnings." He then went on to say that he has paid €145 million (approximately $190 million) in taxes over 45 years. He noted that he provides jobs for 80 people in companies that were created for them and that they manage, and he objects to the statement that he is pathetic.
Does any of this sound familiar? Certainly I am not encouraging anyone in a U.S. upper income group to consider a move to Belgium, even though the people are nice and the landscape is beautiful, but please note that for some folks, taxes matter. At least, as you listen to the appeals from Washington, understand the real reasons for the goals they are setting.