KITTLE: The Cliff: Stick it to the rich – a real no-brainer

By   /   November 29, 2012  /   No Comments

By M.D. Kittle | Wisconsin Reporter

GOING OVER: The president and Congress, playing a serious game of political chicken.

There’s enough division in this country to choke a donkey, or an elephant, or a RINO.

But there’s one thing on which a majority of Americans can agree: They have no problem sticking it to the rich.

A new Washington Post/ABC poll shows six in 10 Americans support raising the marginal tax rate on income above $250,000.

President Obama has made a tax increase on the wealthy — or at least the perceived wealthy — a cornerstone in what he asserts is a balanced approach to dealing with the nation’s spiraling debt.

The president and Congress, playing a serious game of political chicken, reportedly are trying to come to terms on an agreement that would keep the U.S. economy from plunging headlong over the so-called “fiscal cliff“. If they can’t strike a deal by the end of the year, the inaction would trigger an expiration of the President George W. Bush-era tax cuts and deep spending cuts to the federal budget.

The bottom line, taxpayers would get hit with a hefty tax increase as the budget ax slices federal programs.

So, since the vast majority of Americans exist below that $250,000 line, a majority says, “Put it on the wealthy’s tab — or, “Just charge it to the Underhills,” for our “Fletch” fans.

Politics matter when determining where you stand on the issue.

The Washington Post/ABC poll finds 73 percent of Democrats and 63 percent of independents think taxing the rich more is a good idea, while 59 percent of Republicans are against it.

And it depends on the definition of rich. Those making $100,000 or better a year, certainly part of the 1 Percent crowd on just about any street corner in the world, support the tax hike 57 percent to 42 percent.

Of course, these are many of the same people who prefer a smaller government but are in favor of almost no spending cut to achieve that goal.

A Pew Research Center for the People and the Press poll in October found majority support for only two of 12 proposals to reduce the federal support.

Now, what options, pray tell, do you think this fickle brood supported? You guessed it. Nearly two-thirds signed off on raising taxes on annual incomes exceeding $250,000, and 58 percent of those polled said they were in favor of limiting corporate tax deductions.

Don’t even think about cutting federal education funding — 75 percent of those polled didn’t fancy that idea. And 61 percent said take your stinkin’ paws off me, you damn dirty ape, for our “Planet of the Ape” fans.

Majorities also opposed cutting military spending (56 percent) and funding for scientific research (54 percent), according to the poll. Another 57 percent say no to raising the amount Medicare recipients chip in for their health care, and nearly as many don’t like the idea of gradually raising the Social Security retirement age.

The Obama administration and Congress “are dealing with a public that is demanding solution to a problem which it has declared to be a major priority, but at the same time Americans are resistant, or divided at best, on the sacrifices that would be required to achieve a solution,”  said Pew Research President Andrew Kohut. “The bottom line appears to be that if the deficit and related entitlement programs are to be addressed, it may well have to be in spite of public opinion, not in response to it.”

So, that leaves us with sticking it to the rich.

Simple enough, right? Those millionaires and billionaires got it coming to them. Why shouldn’t the uber-rich contribute more to pay for this federal mess? It’s a no-brainer. It is. Like most things that stem from emotion — frustration, resentment, rage — brains are not necessary.

What remains lost in the stick-it-to-the-rich approach to fixing Washington’s fiscal mess is the unintended consequences. Sure, billionaires would pay more, but so would a lot of businesses that file as individually owned businesses, such as S-Corporations and partnerships.

Obama and other supporters of the $250,000-rule argue that only 3 percent of such individually owned businesses would be impacted.

There’s a lot of economic power in that 3 percent.

S-Corporations and partnerships earning more than $200,000 a year may represent a small percentage of all personal income tax returns — just 1.2 percent in 2010, according to the IRS and a report by the nonpartisan Tax Foundation.  But such businesses represent nearly 5 percent of adjusted gross income in the U.S.

“More importantly, S-Corporations and partnerships earning over $200,000 a year represented more than 97 percent of all income earned by these entities in 2010 due to net business losses at lower income levels,” notes the report.

There’s more:

“This not only means that most of the positive net income from S-Corporations and partnerships will face higher tax rates, it ultimately means that the most successful S-Corporations and partnerships in the U.S. will see a tax hike. This is important both because there are four times as many S-Corporations and partnerships than traditional C-Corporations (as of 2008), and S-Corporations and partnerships earned 26 percent more taxable net income in the US than C-Corporations – $1.4 trillion to $1.1 trillion,” stated the report.

Upping taxes on businesses that are the economic engine of a sluggish economy is asking for trouble. That’s a lot of discretionary income that goes to the government instead of back into the economy, where it can be used for purchasing power and job creation to combat historically high unemployment.

I’m pretty sure most people in the stick-it-to-the-rich camp haven’t given much thought to the impact of higher taxes on the battlefield of class warfare.

But that’s the thing about unintended consequences: They are no-brainers.

Contact Kittle at [email protected]


M.D. Kittle is bureau chief of Wisconsin Watchdog and First Amendment Reporter for Kittle is a 25-year veteran of print, broadcast and online media. He is the recipient of several awards for journalism excellence from The Associated Press, Inland Press, the Wisconsin Broadcasters Association, and others. He is also a member of Investigative Reporters & Editors. Kittle's extensive series on Wisconsin's unconstitutional John Doe investigations was the basis of a 2014 documentary on Glenn Beck's TheBlaze. His work has been featured in Town Hall, Fox News, NewsMax, and other national publications, and his reporting has been cited by news outlets nationwide. Kittle is a fill-in talk show host on the Jay Weber Show and the Vicki McKenna Show in Milwaukee and Madison.