Rants & Raves

(Don Chance)

Tax the Rich and Economic Hypocrisy


A common position in the liberal agenda is taxing the rich.  In fact, it is stunning how many rich people say, “Tax me more.”  They are economic hypocrites, because they have every opportunity to pay more taxes and yet fail to do so. 

I’ll cut the middle class and poor some slack regarding the calls some of them make to tax the rich more.  They tend to be ignorant of economics and they succumb to the rhetoric of the rich, the powerful, and the media.  But I will cut not the rich politicians and other rich people any slack.  I will explain here how we know their personal actions belie their beliefs. 

The taxes computed on IRS Form-1040 are not the maximum you pay in taxes.  They are the minimum.  The government cares only about whether you report all income.  It does not care if you take deductions and exemptions.  You are more than free to underreport your deductions and exemptions, thereby raising your taxes.  Another thing you can do is lie about your income.  Now, the wages, salaries, etc. and other financial income (dividends, interest, capital gains) must match what was reported to the IRS and you are legally obligated to report all income, even if it is not sent to the IRS.  I always have income that is not reported to the IRS, but I include it.  Therefore, you can make up income if you want to pay higher taxes. 

Also, you are allowed to itemize deductions or take the standard deduction.  Everyone , repeat EVERYONE, takes the one that gives them lower taxes.  But you don’t have to. 

In short, there are multiple ways to pay higher taxes.  But if you can show me a rich person, who does that, hence, pays more taxes than required, I will show you a unicorn,  .  I am sure that rich people do not voluntarily pay higher taxes.  I don’t know this because I see their tax returns.  I know it because if they did it, they would tell people they did it.  It would show that they believe in what they say. 

But we do have some cases in which we can look at the tax returns of rich people.  I could not care less whether a politician releases his or her tax returns, but if they’re going to, their actions had better be consistent with their beliefs. 

While campaigning for president in 2020, Joe Biden released his 2018 tax return and reported Adjusted  Gross Income of about $4.6 million.  He also reported itemized deductions of $314,000.  Why didn’t he take no deductions or the standard deduction, which would have been $24,000?  That would have increased his taxable income by about $290,000.  He paid about 35% of his income in taxes.  Taking the standard deduction would have increased his taxes by about $101,000. 

Obviously, Joe Biden is far more interested in raising taxes on others than on himself.  If he really believed that the rich should pay more, his personal actions would show it.  He would put his money where his mouth is. 

In 2016 Hillary and Bill Clinton released their 2015 tax return.  They reported Adjusted Gross Income of $10.6 million.  The standard deducted was $12,600, but instead, they chose to itemize and take $2.2 million in deductions, which saved them more than $700,000 in taxes. 

No one rails against the rich more than Bernie Sanders.  And while he’s one of the poorer rich, making only $566,000 in 2018, he took $41,000 in itemized deductions, instead of the standard deduction of $24,000.  This saved him about $4,000 in taxes.  Geez.  You’d think someone in the top 1% of income who wants the rich to pay more taxes would be willing to fork over a few grand more.  Elizabeth Warren took an extra $36,000 in itemized deductions over the standard deduction, to whittle down some taxes off of a hefty $846,000 of income.  She even took $46,000 in a residential energy credit she didn’t have to take. 

Moreover, if you think the government should get more money, you can donate to the government.  There is a fund created for that purpose, but it hasn’t exactly led to a lot of donations.  If the rich really wanted more money to go to the government, they could contribute.  But I have yet to hear of a rich person claiming to have done this.  Bill Gates and Warren Buffett are donating their estates to charities.  Why didn’t they donate them to the government?  Because they know that it will get wasted.  They know that private organizations will do a better job with their money. 

The state of Massachusetts has a box you can check on the state return to pay at a higher rate.  One year it raised $250,000, a drop in the bucket in its $40 billion budget,  Confused?  It’s a rich state, full of liberals.  But obviously these people don’t truly believe the rich should pay more or surely the state would raise more money than that. 

Where is all that compassion?  Arthur Brooks, a formerly liberal professor, has already shown with data, not just arguments, that conservatives are more compassionate than liberals and the difference isn’t even close.  He shows that conservatives overwhelmingly donate more of the three things we can donate – money, time, and blood – than liberals, who confuse taxes with compassion. 

Some would respond by saying that high tax advocates are just following the law as it is currently written and that the law needs to change.  But the law requires only that you report income.  It doesnt care if you deduct anything.  It allows you to do so, but it doesn't reequire it.  Why can't these people show some compassion where it really counts, in their hearts and from their own bank accounts? 

One can make all sorts of arguments for and against higher taxes.  It is just the hypocrisy that I can’t stand.  When wealthy politicians and other rich people claim they should pay higher taxes, let them prove that they don’t have to be compelled by law to do so.  Let them prove that they mean it in their hearts.  Now that is compassion. 

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Last updated:   April 11, 2020