[Swiftwater Gazette] Class Warfare

[Brad Haslett]

Yesterday, I spent about 30 minutes on the phone with the heavy
equipment dealer in Knoxville, TN we purchased our dozer from that he
shipped to the Gulf Coast for us.  A  member on the Bonanza list that
lives in Florida is building a hangar/home outside of Knoxville. He
has already purchased the steel building and has it ready to be
shipped, but his builder went out of business.  So I called the fellow
I'd done business with to ask for a recommendation for a local
building erector, and mentioned that this website was down.  It's down
because he's closing the Knoxville store and he's consolidating
everything at his remaining location in the TN Tri-cities area.  He
was pretty "down in the dumps" over having to let go 13 employees that
had been with him for some time. Much of what he had to say echoed
what Dr. Hanson writes in the article below.  His exact words, "what's
the point in riding this thing out when they're just going to steal it
all on the other side?" The economy is a lot uglier than most people
realize.  Published numbers in the paper don't paint the whole story.

Brad

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December 24, 2009
The War Against the Wannabe Rich
By Victor Davis Hanson

There is class warfare going on in this country -- but it's not
against the established rich. It's against those who are trying to
become wealthy.

President Obama has declared that those who make over $200,000 will
pay higher income taxes. Caps on payroll taxes are supposed to come
off as well for the upper class. Envisioned estate taxes will take 45
percent of individual inheritances valued over $3.5 million. Many
states have also hiked their income taxes on the upper brackets.


Again, most of those targeted are not the already rich - a Warren
Buffett or Bill Gates - but millions of the wannabe rich. They may
have achieved larger-than-average annual incomes, but they're not the
multimillionaire speculators on Wall Street who nearly wrecked the
American economy in search of huge bonuses and payoffs. Most are
instead professionals and small-business owners who take enormous
risks in hopes of being well-off and passing their wealth on to their
children.

Oddly, much of the populist rhetoric about the need to gouge the newly
affluent is voiced by the entrenched wealthy, who don't have to care
how high taxes go, given their own vast fortunes.

Take Bill Gates Sr. who is clamoring for higher estate taxes on
inheritances. But such advocacy comes easy for him. After all, he is
the father of the richest man in the world -- someone who clearly
needs no inheritance.

Billionaires also often set up charitable foundations to ensure their
estates are channeled to their own preferences rather than simply
given over to a needy U.S. Treasury. In contrast, moderately affluent
business owners or farmers often leave enough property for their heirs
to pay death taxes, but not enough to set up tax-exempt charitable
foundations.

Warren Buffett also wants higher income taxes on the wealthy. He once
confessed that thanks to all sorts of write-offs, he had paid only
about 17 percent of his gross income in federal taxes, a lower rate
than many employees in his office.

But Buffett like Bill Gates Jr. is worth many billions of dollars. In
truth, he has so much money that no amount of taxes would affect him
much. A combined tax bite of 60 percent of his annual income would
still leave Buffett each year with millions. Yet the same rate could
cripple a business owner making $300,000 in annual income.

Often those in government claim that their higher tax proposals are
simply targeting the affluent like themselves - proof of their own
selflessness. President Obama, for example, has complained that the
well-off like himself could afford to pay more.

But unlike politicians in Washington, most upscale Americans in
private enterprise do not receive free government perks and lavish
pensions. Nor are they guaranteed lucrative post-political lobbying
and speaking careers.

Focusing tax hikes on those who in some years make between $200,000
and $500,000 makes no sense in a recession for a variety of reasons.
They are neither the speculators who caused the panic of 2008 nor the
Washington politicians who are bankrupting the country.

Instead, most are small-business owners who hire the majority of the
nation's employees. But faced with the talk of higher taxes, more
regulations and hostile rhetoric, they will remain confused, and so
retrench rather than expand.

With the proposed new income, payroll and health-care tax rates, along
with increased state and local taxes, many business owners fear that
60 percent to 70 percent of their income will go to the government.
That does not seem a good way to convince small businesses to hire
more workers in hopes of greater rewards.

Income is also not the only barometer of affluence. Two-hundred
thousand dollars is quite a lot of annual money in Kansas, but does
not always go so far in San Jose, where modest houses often cost well
over half a million dollars. For those whose children do not qualify
for need-based scholarships, a private liberal-arts education can
easily set a parent back $200,000 per child over four years.

Why the war against the productive classes who want to be rich?

Maybe it is because they are not as numerous as the proverbial middle
class. Perhaps they do not earn our empathy that is properly accorded
to the poor. They surely lack the status and insider connections that
accrue to the very rich.

Yet continue to punish and demonize them, and the country will grind
to a halt - as we are seeing now.
Victor Davis Hanson is a classicist and historian at the Hoover
Institution, Stanford University, and author, most recently, of "A War
Like No Other: How the Athenians and Spartans Fought the Peloponnesian
War." You can reach him by e-mailing author at victorhanson.com.

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