Millionaires and Billionaires on Tax Day

In a high-profile speech last week, President Obama said: “We cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. We can’t afford it. And I refuse to renew them again.”

Mr. President, it’s their money, not yours. And note that your speechwriters gave you a wildly exaggerated dollar figure for tax hikes on millionaires and billionaires. 

What Americans “cannot afford” is the president’s ongoing demonization of high earners. Yahoo Finance ran an interesting story yesterday describing the crucial role played by high earners in the economy. Rather than the cartoonish image of high earners propagated by the political left, the article notes:

Today, most of those folks with a net worth of $1 million or more have earned it themselves. They’re mostly entrepreneurs who create everything from high-speed networks to garbage haulers. They dig ditches and build houses and grow corn and make jewelry. They deal stamps or coins or artwork and control pests and cut lawns. They also cure people and give them new teeth.

Perhaps the president wants to hike taxes on the wealthy because they were just lucky or benefited from misguided greed. Instead, the well-known researchers of the wealthy, Thomas Stanley and William Danko, note in the article:

It is seldom luck or inheritance or advanced degrees or even intelligence that enables people to amass fortunes … Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and, most of all, self discipline.

Ironically, those are probably the traits that made President Obama a successful political entrepreneur. Yet he doesn’t seem to appreciate that the same traits drive market entrepreneurs to generate growth and earn profits. Profits are the reward for “good behavior” in the free market, so punishing them with higher taxes makes no economic sense. 

Rather than breeding resentment against the wealthy, the president should use his bully pulpit to encourage people to emulate their success by working hard, increasing their savings, and eschewing debt. Unfortunately, those are the attributes that today’s income tax punishes, and on this Tax Day the president is pushing policies to make the situation even worse.