Image via IowaDawg
I have to disagree with our good friend at The Lonely Conservative on this idea from the Wall Street Journal:
It’s so ironic that President Obama goes out on the stump day in and day out bashing the wealthy while providing them with subsidies that add up to hundreds of billions of dollars every year. Stephen Moore and Walter Williams propose The Millionaire Subsidy Elimination Act. Their intention isn’t to bash millionaires, and they aren’t calling for higher taxes – only an end to the transfer of wealth to those who don’t need it. Unfortunately, it’s a bipartisan problem.The much bigger fiscal drain from the wealthy is on the federal expenditure side of the budget ledger: tens of billions each year in grants, loans, subsidies, guarantees and benefits pocketed each year by wealthy Americans as individuals and firms. Any campaign to downsize big government will only succeed if the needed deep cuts in spending are deemed by voters as equitable. In an era of $1 trillion-plus deficits and a $15 trillion national debt, we would like to think that a national consensus could be reached to eliminate handouts to individuals and companies with net incomes above $1 million.[snip]Last month Sen. Tom Coburn (R., Okla.) put out a report, “Subsidies of the Rich and Famous,” that identified tens of billions of dollars of handouts to the wealthy. His report included farm payments under government programs to rock stars like Bruce Springsteen and former professional athletes like Scottie Pippen.Rather than stand up against all this, Republicans recently allowed the Federal Housing Administration to guarantee home mortgages of up to $750,000. Not many in the bottom 99% can afford such homes.
Sorry, I’m not keen on this idea.
The weird and perverse consequences of implicit marginal tax rates (income + subsidies - taxes) are already bad enough. Let’s not make them worse.
And let’s remember that people with high incomes aren’t always “rich” and that wealthy people sometimes have low incomes.
End government subsides? Yes.
Target some arbitrary income bracket for poetic justice? No.
This comes dangerously close to Obama's “At some point you’ve made enough money" mentality.
We need to get away from the idea that government-funded “grants, loans, subsidies, guarantees and benefits” are appropriate in any form, even when they’re selectively redistributed like Marxist candy to the middle class. From that point of view, The Millionaire Subsidy Elimination Act falls woefully short.
The Dead Zone: The Implicit Marginal Tax Rate
Look who pays for the bailout: Meet the Henrys