The IUSB Vision Weblog

The way to crush the middle class is to grind them between the millstones of taxation and inflation. – Vladimir Lenin

Veronique de Rugy: The Alternative Minimum Tax Targets the Productive Middle Class, Not the Rich

Posted by iusbvision on June 10, 2011

Veronique de Rugy is one of the most respected economists alive today.

IUSB Vision Editor Chuck Norton comments:

This came as absolutely no surprise to me. As with most taxes that are “designed to target the rich” they do no such thing and the “alternative minimum tax” is no different

The Democratic Party leadership pretends to be interested in genuine class warfare. You hear President Obama talk about “taxing millionaires and billionaires” yet the very policies he and much of the Democratic leadership advocate do no such thing.

Democrats have not been interested in taxing the genuinely rich and aren’t today. John Kerry made $5,072,000 in 2003 and had a total federal tax burden of 12.34%. The very wealthy enjoy a 16,000 page tax code that is filled with exceptions. Much of the income those like John and Teresa Kerry receive is defined as “unearned income” or earnings that are not taxable at the wage earner rate so even if the regular income tax rate was increased to 50% the percentage the Kerry’s would pay would only go up by a couple of points, if that.

Yet small business “sub-s corporations” (most domestic small businesses that have between 1-200 employees) are taxed at the wage earner rate  and would be devastated by a 50% rate. Small businesses do most of the hiring in this country. Would someone care to explain how Democrats can claim to be for workers while being against their employers?

The truth is that very few people make over $250k in taxable wages. President Obama talks about taxing billionaires and millionaires (defined as those who make over $250k), but the way the tax code works the wealth of George Soros like billionaires is almost perfectly protected. If George Soros and the Kerry’s paid a percentage like small businesses must, who would fund the Tides Foundation and the Democrat’s 527 groups?

As you may be aware, Google made $3.1 BILLION last year and had a federal tax burden of 2.4%. Google throws fund-raising galas for Obama and the Democrats and have given the Democrats massive donations. Where are the “liberals” condemning the Google Corps of the world? How about GE, whose former CEO now works at the White House, earned 14.2 billion dollars and not only did they have a tax bill of zero, they received taxpayer subsidies.

Yet Obama has waged a rhetorical war against the Chamber of Commerce and who do they represent, you guessed it, most small and medium-sized domestic businesses. Obama blasted the Chamber of Commerce for daring to oppose his plan to tax such businesses at a rate of 39.6%.

Policies such as ObamaCare, tax increases, and other actions that cause regulatory uncertainty all but force the producers and investors to stop moving their money domestically. They have the option of just parking it or investing it inChina, all of which has the effect of transferring the tax burden away from the wealthy onto the working poor and middle class. Democrats are not interested in taxing the wealthy; they are interested in taxing the domestic producer class.

This brings us to Norton’s First Law: big Business loves big government because big government taxes and regulates the small and medium-sized competition out of the competition. This is a staple of modern “Alinsky” style Democrat strategy. This process is called “consolidation”. The goal of leftist philosophy is to control the wealth “rationally” from above so that less is “left to chance”. With all of these small businesses creating wealth that is chaos which is difficult to control. Through consolidation more of the wealth that is created flows through large corporations that are easier to control.

The Obama bipartisan deficit commission was tasked with the challenge of how to raise revenue, grow the economy and pay off the debt. After an exhaustive study the commission concluded that lowering tax rates, lowering the corporate tax rate and simplifying the tax code to encourage tax compliance, and to encourage more wealth to come back home (so it at least can be taxed), was the most prudent course of action. Reagan would have been pleased with those recommendations.

If you wonder why so many jobs have moved overseas and in some cases to places where governments are corrupt and workers are really exploited; now you are seeing the other side of the coin. The private sector and the jobs that go with it cannot be expected to pay for a government that costs $4 trillion a year and hope to remain competitive. If you want to see demand for American labor to rise, start by making it more economical for jobs to come home.

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2 Responses to “Veronique de Rugy: The Alternative Minimum Tax Targets the Productive Middle Class, Not the Rich”

  1. [...] 4 – “We need to raise taxes on the rich”. First of all we have been “raising taxes on the rich” for decades now so why is it that John Kerry paid 12.34% on $5,072,000 worth of income? The dirty little secret is that the tax rate that the Democrats are talking about is the wage earner rate which is paid by high-end wage earners such as doctors and engineers, but it is also the rate paid by most small businesses that have employees. Most of the income that the “rich” bring is defined by the tax code as “unearned income”, so you could raise this tax rate to the moon and the multimillionaires and billionaires will laugh as it will not be they who pay it. For more details on why this is follow this LINK. [...]

  2. [...] “fair share” except for buddies Buffet, GE, and the others who earn income in ways that are exempted from the wage earner rate that he wants to [...]

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