Re: The Magic Bullet

Excellent.  




________________________________
From: Peter Chattaway <petert-LOVM4QxV+tDq6eQxt3vRmLDks+cytr/[email protected]>
To: Daniel Amos off-topic listserver <[email protected]>
Sent: Mon, December 13, 2010 9:13:40 AM
Subject: [DADL-OT] The Magic Bullet

http://www.commentarymagazine.com/blogs/index.php/gordon/384021

John Steele Gordon - 12.12.2010 - 1:32 PM

Chris Van Hollen, who will be the ranking member of the House Budget Committee 
in the new Congress, was on Fox News Sunday this morning (transcript not yet 
available). To no one’s surprise, I’m sure, he decried extending the “tax cuts 
for the rich” and raising the estate tax from its present zero to 35 percent for 
estates over $5 million. That, too, according to Van Hollen, was an 
unconscionable giveaway of $26 billion to a few thousand families who already 
have far more than they need. John linked to Senator Bernie Sanders’s 8 1/2 hour 
rant on the Senate floor on Friday in which he said, less succinctly, the same. 
And Peter the same day linked to Congressman Alan Grayson (soon, mercifully, to 
be former congressman Alan Grayson) saying, again, much the same thing. Their 
animus against “the rich” is palpable and their adherence to the principle of 
high taxes on the rich (which dates back to Karl Marx in 1848) is religious 
rather than rational.

I carry no brief for “the rich,” although I’d be happy to be counted among them. 
But this all reminds me of a conversation I had many years ago with a close 
friend, now gone, on this subject. She was very liberal. (How liberal? In 1948, 
she not only voted for Henry Wallace; she went to the convention and worked in 
his campaign. That’s liberal.) I proposed a thought experiment. “Suppose,” I 
said, “there were an economic magic bullet — that if Congress would pass the 
necessary legislation and the president were to sign it, the effect would be to 
double everyone’s real take-home income. If you were living on $50,000 this 
year, you’d have $100,000 to spend next year.”

“Sounds great,” she said.

“But there’s a catch,” I answered. “The effect of the magic bullet would not 
double the take-home income of those earning over $1 million — it would 
quintuple it. In other words, the rich would make out far, far better than the 
average Joe. But there’s no way out, it’s all or nothing. Would you vote for the 
magic bullet if you were a member of Congress?”

“Certainly not!” she indignantly replied.

“Fine,” I said. “Now it’s six months later and you’re running for re-election. A 
constituent comes up to you and says, ‘I’m an English teacher at the local high 
school. I take home $50,000 a year. I have a daughter who needs serious 
orthodontics that’s not covered by insurance, my son has learning disabilities 
and has to be tutored, I’m driving a 10-year-old Buick that will have to be 
replaced very soon, and my mother-in-law will not be able to live on her own 
much longer. We never go away on vacation and seldom eat out. You voted against 
my earning an additional $50,000 a year because you objected to Mr. Bigbucks 
getting $5 million a year instead of $1 million. I don’t give a damn what the 
Rockefellers earn. I care about what I earn so I can take care of my family.’ 
What do you tell him, in order to win his vote?”

Her response: “It’s time for dinner.”

We have lowered the marginal rates on high incomes four times since the 
inception of the income tax — in the 1920s, the 1960s, the 1980s, and the 2000s. 
In each case, the result was a much more prosperous national economy, lower 
unemployment, and higher tax revenues for the government. If you do A (lower 
marginal rates) four times, and four times, despite differing economic 
circumstances, B (increased prosperity) happens, a rational person might 
conclude, at least tentatively, that B is the result of A. Not liberals.

As I said, high tax rates on the rich is a religious principle with the left. If 
the poor have to suffer because of it, so be it.


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