Op-Ed by Professor Oliver Goodenough: If You Don't Tax the Wealthy Enough, They Get Lazy
May 31, 2012
Vermont Law School Professor Oliver Goodenough, who also is a Faculty Fellow at the Berkman Center for Internet & Society at Harvard University, wrote the following commentary.
A few weeks ago, I spent some time in the village "watering hole," decompressing a bit with some friends over a beer or two. It was a little later in the evening, when philosophy has replaced thirst in our thinking and when we understand that everything we say to each other is remarkably wise and penetrating. I describe the scene not because it was noteworthy in itself - just the opposite - but because that evening, illuminated from within by the warm glow of hops and barley, one of my friends uttered a truth so profound, that now, weeks later and dead sober, I still feel the need to share it with the world.
"If you don't tax the wealthy enough," he declared slowly to his amber handful, and, incidentally, to the rest of the company, "they get lazy."
And, in that little nutshell, he had nailed it. The problem with the American economy is that our wealthy have gotten lazy. They're supposed to be our job creators, after all, but how are they doin'? Not so good. And why is that, they tell us? "Because taxes are too high."
"Well," I say to the top 1 percent in return, "Excu-u-u-se me. We've cut your taxes to the lowest rates in nearly a century. It's been that way for a decade. And all we got was this lousy recession. You rich folk must be lazy. You don't need more tax cuts; you need a kick in the behind. You need things to be a little tougher, so that you get motivated and go out and work a little harder to have two Cadillacs, a private island and a NASCAR team. Instead of the IRS taking 13.9 percent of your earnings, as it recently did to your spokesman Mitt, we should treat you like the middle class and do something radical, like asking for 20 percent or even 25 percent. With a little of that motivation, you might get off your well-padded backsides at the Maidstone Club, put down the Pouilly-Fumé and actually get busy and hire a few more people to help make that extra money you feel you need. Works for the rest of us."
The statistics are on the side of this insight. Let me admit that you probably can tax the rich too much for the good of society - the 95 percent bracket satirized by the Beatles in their great song "Taxman" clearly put a crimp in economic growth in the UK. Some of Margaret Thatcher's corrective medicine was in order. But you can also tax them too little. The state of our economy since the Bush cuts made federal income tax a relative flea-bite for many of our wealthy has been mixed at best. And a lazy, under-motivated performance from our job-creating rich is as good a reason as any for why this may be so.
We should stop coddling our job creators. Forget about lowering their taxes. Whack them a little harder on April 15, so that they get up off their duffs and do their job. Higher rates worked during the Eisenhower administration and even during the Reagan administration. The lazy rich clearly need a wake-up call, and enacting a decent minimum level of taxation would be a great way to set the alarm for them.
And when they've done their work, the 1 percent are welcome to join the rest of us at the bar to try to persuade us that "trickle down" isn't just what a good brew does when you sip slowly, and that the "Laffer Curve" isn't a way of rating jokes. But only if they buy a round. Otherwise, its class warfare all the way.