It Really Is about Soaking the Rich

by Douglas Holtz-Eakin

The drive to raise taxes this year really is just about soaking the rich. Liberals just can’t decide who is really rich.

Raising taxes on those making more than $200,000 (or $250, 000 if married) has been dressed up as fiscal propriety, sound economic policy, or even “fairness.” I’ve disagreed at length (see here) in recent testimony before the Senate.

But as Democrats have negotiated with themselves, it has become increasingly clear that this is simply about figuring out who is rich enough to safely attack. The latest salvo came from Alice Rivlin, a member of the White House’s National Commission on Fiscal Responsibility and Reform, who said in an interview that Congress should exempt everyone who makes less than $500,000 a year from a higher tax threshold. The key insight is that she felt that it was a way to “cut a deal” on the definition of “high income” because “there would be few people that believe $500,000 is not a lot of money.”

This comes on the heels of Sen. Blanche Lincoln arguing that the magic line should be drawn at $1 million.

My question is: Why should there be a line at all? Why are Democrats so intent on dividing America? When did it become received wisdom that there should be a class of families responsible for paying for the costs of government, and a privileged class that should reap only the benefits?

The reality of the situation is that payroll taxes are earmarked for specific Social Security and Medicare benefits. Income taxes pay the cost of general government, and close to one-half of Americans currently pay no income tax. Why should the cost of government be further targeted on a very few?

Douglas Holtz-Eakin is president of the American Action Forum.

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