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Pity the poor millionare

Two more annoying political posts...

Here's a Washington Post editorial called "Five myths about millionaires", explaining why we shouldn't increase taxes on the wealthy.

The truly outrageous part is this:

Today, $1 million in the bank generates only about $50,000 per year in interest. That isn't chump change, but it's roughly equal to the 2010 median household income.

Awwwwww! So the poorest of the millionaires makes as much in interest than the average person does after slaving away for 40+ hours a week. And this is an argument against increasing their taxes? Are they kidding me?

As insane an argument as that is, it gets worse the more you think about it. First, no one is talking about a tax in wealth holdings. We're talking about income tax. So if a person is earning $50,000, either from working or from sitting around collecting interest, they will be taxed at the $50,000 tax rate... not a millionaire's rate. Second, the millionaire's $50,000 will likely be taxed as capital gains, which is currently, unfairly, taxed at a lower rate than wages.

Next we have two completely irrelevant factoids:

  • Millionaires don't think they are rich (who cares?)
  • Millionaires don't all share the same political beliefs (so what?)
And then there are two items that are supposedly debunking myths but actually need some debunking of their own:

The first is about whether or not millionaires pay lower tax rates than working people. The WP article leaves out payroll tax and state and local taxes, and adds the nonsense about double taxation on top of it (the argument is "dividends are paid out of corporate profits that have already been taxed". Guess what? Wages are also paid out of corporate profits that have already been taxed! And when i pay sales tax, that's out of my earnings, which i pay income taxes on. My god, it's triple taxation!). Regarding the rest of it, here's Krugman.

The second is that a millionaire's tax will hinder investment. I recently posted an article that touches on the fact that most corporations and investors are basically sitting on money right now. Again, our current problems aren't supply side.

The previous two myths are typical conservative talking points. The real clunker is that first item. Honestly, right now, we need all the demand we can create, so if i were president i wouldn't be raising any taxes (except a stock transaction tax). But i'd also be increasing spending. The reason we're talking about tax increases at all is because we've stopped worrying about the economy and started worrying about the deficit. Which is the wrong thing to focus on right now. But if we're going to, i don't think the fact that millionaires currently earn "only" $50,000 in annual interest should stop us from returning to tax rates that we had in the Clinton... or Reagan... or Eisenhower eras.

By fnord12 | September 26, 2011, 9:58 AM | Liberal Outrage