Tuesday, August 4, 2015

Tax us more, some rich say

Why some higher-income people say it's their duty to pay more

Tax us more, some rich say

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"In a spirit of Thanksgiving," as they put it, more than 400 U.S. business owners and professionals have signed a petition circulated by a Boston group, Wealth for the Common Good, calling on Congress and President Obama "to allow the Bush-era tax cuts for those with taxable incomes over $200,000 (individual) and $250,000 (couple) to expire on Dec. 31," raising "an estimated $700 billion over 10 years" to invest in "education, health, job creation, renewable energy, transportation," you get the picture. More here.

They're not the only ones. "People at the high end - people like myself - should be paying a lot more in taxes," the richest American, Berkshire Hathaway boss Warren Buffett, told ABC News in a program scheduled to air Sunday Nov. 28. The idea that money will "trickle down" from the rich to workers "has not worked the last 10 years, and I hope the American people are catching on."

The Boston group is making the case local. "It's damaging to the economy, both short-term and long-term, to continue the tax cuts for the top income rates," especially for "unearned" investment income, petition signer Joe Magid, owner of Gryphon Systems, a Wynnewood info tech consultant, told me. "Your hedge fund managers, your Wal-Mart family members, they're paying just 15%," while mid-six-figure incomes are charged more than twice as much. "That's sort of insane."

But don't low taxes promote investment and job growth? "Ridiculous," Magid said. "An S corporation like my business, a limited partnership, PricewaterhouseCoopers, any business organized that way, whatever isn't spent to hire people and improve the infrastructure of my company, goes to me, the owner, as personal income that I'm paying a lower tax on. That incents me not to hire people!

"If the marginal tax rate on the $10 millionth dollar of my income is the same as on my first $1 million, I have no incentive to invest in my company! If I had to pay higher taxes it would be easier to decide I should invest more in my company and make more money.

He cited a 2002 article in Harvard Business Review by scholar Mark Buchanan, subtitled "Wealth Distribution and the Role of Networks," that makes the case. In sum: "The bottom line is, if you tax work over investment, you concentrate wealth. Hello! Look what's happened in this country since Reagan's tax cuts." He's for low taxes on venture capital investments, "under $1 million," and "maybe mezzanine financing, several million. But why should the American taxpayer subsidize wealthy people who are going to use the money for offshoring jobs? That's what we're donig."

Signer Steve Weinberg, second-generation owner of National Foundry Products Inc., a Philadelphia manufacturers' rep agency, agrees. "Out of a basic sense of fairness, we have to invest in our future. I want to see our country succeed. If we don't invest, we're not going to succeed.

"In my work, I go around the world. I know what happens in countries where there's no national infrastructure to support hardworking people. India is emerging. They're moving in the right direction because they have invested in their national infrastructure. Meanwhile, we're cutting back. It's a moral decision, and it's a business decision, and it's wrong."

"It's hard to give more. If you send your kids to private schools it's easy to run up expenses. I have empathy. But we have to invest in education, in energy, in R&D. It makes more sense for people who are a little more able to make due to do their part."



 

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About this blog

PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, distefano251@gmail.com, 215.854.5194 or 302.652.2004.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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