Patterson: Obama's 'fairness:' Taking your money - East Valley Tribune: Opinion

Patterson: Obama's 'fairness:' Taking your money

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Posted: Saturday, August 30, 2008 2:41 pm | Updated: 11:00 pm, Fri Oct 7, 2011.

Barack Obama claims his economic plans are based exclusively on fairness. He doesn't mean that those who work hard and save money are entitled to the fruits of their efforts. No, he proposes to redistribute income, to take more from those who earn it and give it to those with less.

So he justifies tax hikes on upper income families because they would restore "a sense of balance and fairness in our tax code." How to fix Social Security? By "asking the wealthiest Americans to pay their fair share." The "first part" of his energy plan? A "windfall profits" tax on oil companies because they make more money than he feels is warranted.

Obama is so keen on taxing wealth that he insists on raising the capital gains tax rates, even though that would almost certainly cause a drop in government revenues. He doesn't dispute the probable lost income, instead telling ABC's Charlie Gibson, "What I've said is that I would look at raising the capital gains tax for purposes of fairness."

Americans, as Obama knows, value fairness. But what, really, is fair and who makes that call? Obama at the Saddleback Church forum suggested that families with incomes less than $150,000 were "poor or middle class," while those with incomes exceeding $250,000 were wealthy enough to be targeted for more enforced "sharing."

But we already have a steeply progressive tax structure. The top 1 percent of payers today pay 40 percent of all income taxes, a proportion up sharply since the "Bush tax cuts for the rich" and the highest level in at least 40 years. But to Obama, that's unfairly low. Would 50 percent be about right or is that still too low? Is 60 percent too much to ask, even considering they garner only 22 percent of the total income earned? To the purveyors of class envy, it appears that the sky's the limit.

While pondering the issue of tax fairness, keep in mind that the "top 1 percent" is far from a fixed designation. Members who were part of that elite in the 1990s have suffered the greatest decline of any income group, according to the Treasury Department. The vast majority didn't inherit their wealth but worked their way to the top, where ceaseless competition generates high turnover rates.

Obama also promises to cut taxes on the poor and middle class. That's not so easy, since the bottom 40 percent already pay no income taxes. Instead, according to The Wall Street Journal, they receive payments from the tax system totaling 3.8 percent of all income tax revenues. Those with incomes in the bottom 60 percent pay less than 1 percent of all federal income taxes.

Still, Obama, in the name of tax fairness, proposes a number of "tax credits" intended for those who don't pay income taxes. There are tax credits for "Making Work Pay," for mortgage interest, for health care, for savers, for child and dependent care and an opportunity tax credit for education. The earned income tax credit would be increased and offered to more beneficiaries.

This dizzying array of "tax credits," unlike real tax credits, would be "refundable." That means you get the tax refund even if you didn't pay any tax. It also means that Obama counts the payments as tax reductions, thus supporting his claim to "cut taxes."

But there's another, less deceptive word for these handouts. It's called welfare. Americans are rightly wary of welfare. We learned the hard way, from the Great Society programs of the 1960s, how welfare saps ambition, how it causes dependence on government, drives apart families and crates a permanent underclass focused on entitlement payments. You can call welfare a "refundable tax credit," but what's the difference?

A tax system based on some politician's notion of fairness is dangerous nonsense. Obama likes to promote his image as an idealist and a defender of the disadvantaged. But the late John Templeton, who knew something about wealth creation for himself and others, had a different take. He once noted that "the true idealist preaches not class hatred but universal love; not to redistribute the wealth but to multiply the wealth ... (she) is the missionary for freedom and competition."

Amen to that.


East Valley resident Tom Patterson ( is a retired emergency room physician and former state senator.

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