Judge
William Whitbeck argues in his guest column (Grand Rapids Press, June 3, 2012, p. D4) that the "Buffet rule"
should not be adopted because life is unfair. This is a poor excuse for
an argument. While life is undoubtedly unfair (though it's not really
clear that Whitbeck believes that the rich do not deserve their high
incomes), we nevertheless expect that our laws and tax policies will be
fair. That an appeals court judge would not understand this is
appalling.
The
basic principle of justice or fairness is that equals should be treated
equally. Our current tax code does not do so. People who work for a
living are taxed at a higher rate than people with the same incomes who
do not earn their income from work, but receive it from investments.
This is a failure to treat equals equally. It is fundamentally and
transparently unjust and unfair.
There
are additional reasons for the perception of unfairness. Traditional
Judeo-Christian values privilege work as a source of income, and cast
suspicion on "making money off of money." See for example the biblical
prohibition of usury. Our tax code turns this on its head by
privileging investment income over wages. The degree of inequality in
our country has increased dramatically over the last thirty years. If
our economy could grow and prosper in the fifties and sixties with much
less inequality, why do we tolerate this greater inequality now?
Eliminating
this rate differential would not make the tax code "even longer, more
complicated, and more monstrous," as Whitbeck claims. Taxing all income
at the same rates would make the code simpler and make compliance
easier, as anyone who has filled out a Schedule D could testify. This
move would return us to the principles of the 1986 Reagan tax reform.
The
Buffet Rule would raise revenue in the long run, contra Whitbeck.
Changing capital gains rates result in temporary shifting of capital
gains realizations between years, but when rates are steady, higher
rates yield higher revenues. This is a help in dealing with our federal
deficit problem.
It
is hard to feel sorry for the "rich people in their gated communities
who already pay" a large proportion of our taxes. The taxes they pay
are not that large compared to their share of national income, or the
benefits they receive from our system of political economy. They have
lately come under the illusion that they can buy their way out of
society with their private security, private jets and helicopters,
skyboxes, private schools, "concierge medicine", and the like. But they
still need the rest of us, and if we're not treated fairly, it will
become increasingly difficult to make our system work. That will hurt
everybody, even the one percent.
