Wealth and shame: what does one have to do with the other? There must be some kind of relationship between the two, given the way wealth is used as a weapon against those who have it.
Stephen King seems to get a pass on being wealthy because he earned it through intelligence and hard work and because he is generous with it. Yet Roxanne Quimby, who built her business from a pile of unused beeswax, is derided in parts of Maine because of her wealth and her philanthropic vision.
Let’s leave it to psychologists to sort out the tangled emotions associated with money and narrow the focus to the relationship between wealth and taxes.
This election year, wealth has become political currency. Newt Gingrich and others pressured Mitt Romney into releasing his tax returns for 2010 and 2011. The former Massachusetts governor earned about $21 million each year. Using the word “earned” is itself a source of embarrassment for Mr. Romney, because the vast majority of that income would have accrued if he’d sat around all day in a smoking jacket in one of his opulent homes.
For the record, Mr. Gingrich claimed $3.1 million as adjusted gross income for 2010; President Barack Obama claimed $1.7 million. None are middle class. Wealth can mean the candidate is out of touch with working people, but that’s a subjective assessment. The issue at hand is taxes.
The president is finally getting around to acting on his campaign promise to shift the tax burden onto the wealthiest Americans. In his State of the Union address Tuesday, he said “Washington should stop subsidizing millionaires,” and urged Congress to raise taxes on the 2 percent of families with incomes above $250,000 a year. “Because of loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle-class households,” he said.
It’s a policy that makes sense, given the record budget deficits and debt the federal government faces. Someone has to pay the bill, and to ignore ability to pay as a criterion in the decision is absurd.
One simple fix is to change the tax rate on unearned income. The rate on that income is lower now because it was believed that by encouraging people such as Mr. Romney to invest in businesses, the economy would thrive. Many economists say the only people thriving are the investors, such as Mr. Romney’s colleagues in Bain Capital.
Republicans are fond of calling the wealthiest among us “job creators,” even if that is not always accurate. A way to appease those worries is to tweak the Obama plan by carving out an exception for small businesses. Such a plan was offered last month by Sen. Susan Collins and Missouri’s Democratic Sen. Claire McCaskill.
Wealth must be included in any discussion on taxes. The wealthy are not be envied, despised or punished. But their wealth is a logical place to start looking for tax revenue. And that’s only a start. A bigger debate must ensue this election year on how to help the middle class get its share of the pie.