Off-The-Cuff

Before starting my editorial yarn, I first have to thank our panel of Minnesota State College of Business professors for choosing our 2012 Business Person of the Year, an honor shared this year by North Mankato kettle corn moguls Dan and Angie Bastian. Without our judges’ expert help, our annual award would lack zing and credibility. With that said, buckle your seat belts and away we go….

In recent months, and with a suffocating federal deficit threatening the sustainability of many social programs, some Occupiers have been expressing a desire to dramatically raise income tax rates on “the wealthy.” It’s not just Occupy—many people assume if wealthy people pay more taxes, most social programs can avoid painful cuts. To illustrate the naivety of this position, I’m about to use a schizotypal-laden, illegal drug-related example that is probably inappropriate. So re-buckle your seat belts and bear with me…

To begin with, the 1970s had some really rotten popular music: Disco Duck, The Streak, the sappy Carpenters yodeling Close to You, The Village People semaphoring YMCA, Debbie Boone bawling You Light Up My Life, and the Bee Gees, Bread, Donna Summer, and Gilbert O’Sullivan, to name a few. But the ‘70s also had cannabis-influenced Pink Floyd. I liked Pink Floyd.
Years ago, an acquaintance said that when Pink Floyd’s Dark Side of the Moon and The Wizard of Oz were played simultaneously from the beginning of each, a rational person could only come to the conclusion that Dark Side of the Moon was produced with The Wizard of Oz in mind. The music and film complement each other perfectly, he said. As I later learned, a great many people really do believe in what they call The Dark Side of Oz. After watching the Youtube video in November and seeing The Dark Side of Oz myself, I now weigh in….

Honestly, about a dozen lines on the album really do seem to synch up perfectly with the movie, such as “Waiting for someone or something to show you the way” when Toto jumps through a window to a waiting Dorothy; and “The lunatic is on the grass” when neurotic Scarecrow tucks straw into his shirt. In other words, just enough Pink Floyd and Oz match to construct a compelling argument. But what these ardent believers won’t tell you is that far, far more doesn’t match. And therein lies the rub….

I actually have heard people say we wouldn’t be in this federal budget deficit morass if people with higher incomes were paying more. I can see how this line of thinking could seem logical to some people—the same way I can see how many stoned people could believe Pink Floyd wrote lyrics to match The Wizard of Oz. The truth: The U.S. doesn’t have enough wealthy people to even come close to having them fix the deficit debacle all by themselves.

Let’s start with the wealthiest 400 Americans, who earned a combined $90.9 billion in 2008 and paid $19.54 billion in federal income taxes. This was the income group and tax year investor Warren Buffett cited in his New York Times opinion piece that slapped around “the rich” for not paying enough. The federal deficit in 2011 was $1.3 trillion. Even if confiscating all the income the Top 400 earned in 2008, which would be equivalent to a 100 percent tax rate, the federal government still would be able to cover only 7.0 percent of the 2011 deficit.

Okay, so cut Buffett some slack and cast a wider net, you say? Let’s look at the most recent, available IRS tax data. If confiscating 100 percent of the 2009 earnings of everyone making more than $10 million in adjusted gross income, which would likely include half the National Basketball Association, the federal government in 2009 would have been able to cover only 17.2 percent of the deficit. Those people had a combined adjusted gross income of $240 billion, which would have barely dented our $1.4 trillion of red ink that year.

So let’s go all out and consider the 729,451 people earning over $500,000. Together, they earned $1.06 trillion in 2009 income, which—after having 100 percent confiscated—would still leave us $400 billion short of balancing the budget that year. And I don’t know anyone advocating a 100 percent tax on high-earners.

Clearly, as a nation, we can’t even come close to overcoming serial trillion dollar deficits just by raising taxes on wealthy people. Heck, we can’t even come close to doing it by taking all their income. They have only so much money. Of course, this massive deficit issue wouldn’t exist at all if we had more wealthy people to shoulder the tax burden.

Thanks again for reading southern Minnesota’s first and only locally owned business magazine, and the only one blanketing our nine-county region with a circulation of 8,400. We are already looking forward to our March 2012 issue—and trust you are, too.