Obama: Top Income Earners are just Lucky

Obama: Top Income Earners are just Lucky

In an interview with CBS News, President Barack Obama noted that increasing taxes on the wealthy is a ‘good idea’ when it comes to finding a way to pay for his proposal to nationalize the healthcare industry. As noted in my previous article, increasing taxes is nothing new for Obama or any other Democrat – it is simply what they do. However, it was somewhat disturbing to hear how Obama described the wealthy. Here are a couple of statements from his interview:


I think the best way to fund it is for people like myself, who have been very lucky and are in the top -- not just 1 percent, but top half percent -- of the income ladder to pay a little bit more.



The general notion that those of us who are the best off can pay a little bit more upfront to help reform a system that will save us money over the long term, I think that's a good idea.


First off, the latter statement is certainly reminiscent of Obama’s ‘spread the wealth around’ comment that he made to Joe the Plumber during the presidential campaign. Of course in this case he is saying that the wealthy should pay more so that the poor will save money. But as the CBO has just reported, there is no guarantee that the current healthcare reform proposals will do anything to actually save money and are more likely to increase costs instead.



Obama’s first statements were much more disturbing though. He implies that wealthy people, like himself, have merely been ‘lucky’ to achieve their status in life. Perhaps that is true in Obama’s case - who used the Chicago political machine to advance his career, used his career and Senatorial earmarks to advance his wife’s career and get her a $200,000 pay raise and used his racist reverend to develop the title of one of his best-selling books. Being lucky and/or having the right connections seems to have benefited Obama quite nicely.

However, most wealthy people are not just lucky. Instead they are hard-working and/or brilliant entrepreneurs, creative and/or persistent salespeople, dedicated former students who were able to graduate from the best universities, researchers who develop products that enhance all of our lives and a countless number of small-business owners. Sure there are some people in the upper tax brackets who are just lucky like heirs to mass fortunes like those in the Kennedy family, lottery winners and actors. But a survey of the wealthiest Americans would certainly find more people who achieved their status by working for it than those who got there just by luck.

That does not seem to matter to Obama and the Democrats though – mainly because they view our money as their (as in the government’s) money. Therefore, Obama proposes to spread that wealth, to level the playing field and to make the ‘lucky’ feel a little bit unluckier. Obviously by now we have all figured out that Obama knows very little about economic theory but once again here he seems to be forgetting a very core principle of a capitalistic society – incentives matter.

All of the ‘unlucky’ wealthy people I mentioned above had an incentive to get where they are today. Certainly one of those incentives was the accumulation of wealth to provide financial security for themselves and their future generations. Currently that incentive is still fairly strong because the top combined federal and state income tax rates are under 50% in all states. However, if Obama and the Democrats get their way, in over 30 states the combined top tax rate will be over 50%.

The psychological impact of knowing one will get to keep less than half of what he/she earns would have to be very disheartening and very discouraging. As a result, people will work less hard, be less creative and lack the dedication they once had. And for the small business owners, some of them will be unable to employ more or maintain current levels of workers, and some may even be forced to go out of business entirely. There is a major cost in raising taxes just as there is a major benefit in lowering them – as Reagan showed us in the 1980s.

Maybe we will all get lucky and Obama and the Democrats will not ram these tax increases down the throats of the American people like they did their massive stimulus bill and budget plan. However, there is really nothing that can be done to stop them because they currently have the votes. Only public opinion against these plans may cause them to change their views, but the Democrats seem to have figured out that they have only until November 2010 to push through most of their high spending and high taxing agenda. They may suffer at the polls in the coming elections for advancing their socialistic agenda, but Americans will suffer for generations to come as a result of their actions.