How to Defend the Rich against Progressive Taxation

link here to article

There are several highly funded conservative "think tanks" that employ clever folks like this guy whose salary depends upon his cleverness in making the tax system less progressive. He starts out by telling us that Obama was booed for telling an audience that it was a good idea to increase taxes for the rich and then he tells us why the audience was correct and why Obama was wrong.

His principle point is that income is at least partially a function of merit and that meritocracy is good. Everyone can agree with that point but it has nothing to do with the issue as to whether the rich should pay a higher share than they do in taxes. Our tax system has become less progressive over the last 30 years. In fact, when income taxes and the payroll tax are taken into consideration along with regressive state and local taxes, we have an almost flat tax system. The issue that Obama was talking about is returning the highest marginal tax rate back to where it was in the Clinton administration, and before Bush lowered the highest marginal tax rates. It is not an attack on meritocracy, it was about the progressiveness of the tax system. Obama believes that the tax system ought to be more progressive, and those who get paid by the rich to defend the rich would like the tax system to be as regressive as possible. In fact, the Ryan plan would make it less regressive by eliminating the taxes on capital gains, interest and dividends.

In summary our, clever fellow from the American Enterprise Institute has turned the debate away from the progressiveness of the tax system into a defense of meritocracy, which is more defensible than arguing for alms for the rich. I wonder how clever folks like this sleep at night or look themselves in the mirror. They know what they are doing to earn their living.

Frankly, I would support a more merit based income system as would many economists. For example, I would want to see the merit argument that would justify the greater share of corporate income that goes to top corporate executives relative to their peers 30 years. How much better are they than their peers? How much better are they than the top executives from Europe or Japan that explains why they earn many times what they earn? Moreover, how we can use the merit argument to justify the compensation of the top financial executives, and their facilitators in government and elsewhere, who brought the world economy to its knees? Perhaps we have a reverse merit system in place. Our highest paid executives on Wall Street did the most damage to the economy. We should talk more about merit and compensation and less about merit and the progressive tax system.