Obama Reinvents Economic Justice

Do not repeat this, but Barack Obama has been president since January 2009. Why is he suddenly so alarmed by economic inequality? Answer: because his stimulus plan did not succeed as expected.

Barack Obama has a pretty good chance at re-election. He is personal, amiable and enjoys almost across-the-board media support, with the exception of Fox News and the Wall Street Journal. In addition, the Republicans are struggling to find an equally cool candidate to face Obama.

But most of all, Obama has found the ridiculous in the mobilized wrath of the tea party.

The latter carried the mid-term elections of 2010 by recruiting among the millions of Americans disoriented by the financial crisis, ready for anything, including a return to the texts of the Founding Fathers to respond to problems that the Fathers would never have dreamed of in 1787.

In order to win in 2012, Obama will reclaim this anger, which was stated differently by the Occupy Wall Street movement: The rich get richer, and the poor get poorer. Therefore, the rich must be taxed more.

A sixty-five minute speech on the state of the union and not a single sacrifice requested of the middle class! All of America’s problems will be solved if we only have the courage to take more money from the rich and punish the oil companies. Excellent!

Let’s remember, first of all, that half of American households do not pay a federal income tax. Similar to France … Let’s remember next that 1 percent of Americans pay 37 percent of this tax. And the top 10 percent pay 70 percent of it. The idea that the United States’ income tax is not progressive is totally false. It is a gigantic lie. A fog blown in from the Democratic Party and MSNBC to give the disenchanted American people a reason to vote for Obama.

So what should we think about the 14 percent marginal tax rate of Mitt Romney? And why is this rate lower than the 25 percent paid by Americans on income between $69,000 and $139,350 annually? (Yes, I read the tax charts before writing this blog entry)…

Answer: because Mitt Romney is essentially taxed at the preferential rate reserved for those who take risks to finance job-creating businesses. This incentive comes from the capitalist logic that believes that those with capital (the capitalists) should not tuck it away but put it into the stock market for financing companies. When such risks are rewarded, jobs are created, and the capitalists are paid. The stock market is not a casino. It is simply the meeting place for savers and investors. It is where the masterminds behind Facebook and Google go to find the resources to make their companies grow.

Is it right for these capitalists to be less taxed than the workers? This is an interesting debate. One could certainly argue the opposite. Under Ronald Reagan, for example, they were treated equally. It is not clear that America creates more jobs when capital gains and dividends are taxed less than the working class. And yet, it is logical to imagine it. But the proof of this hypothesis remains uncertain.

The debate is naturally lost from the outset if one mobilizes those who pay ZERO in taxes — who make up nearly half the electorate — and explains to them that all their problems will be fixed if, one more time, the others, the rich, pay even more. This is exactly where the Republicans say that Obama, under pretense of moderate centrism, is like a French socialist.

MUCH MORE IMPORTANT is the question of amount of revenue that taxation brings in. That is what must be discussed. Romney pays in total $3 million in federal taxes per year. If, as Obama proposes, one doubles his effective tax rate, how much will that bring to the Treasury in the medium-term?

If your answer is $6 million, you have not understood the tax system. That is exactly Barack Obama’s problem.

It is obvious that the “capitalists” will change their behavior if suddenly their effective tax rate is doubled. After a few years, they will position themselves rationally to take fewer risks, finance fewer creations of new companies and do their best to preserve their capital by minimizing their effective tax rate. Too much taxation kills the tax.

Is it exact to think that if one increases the tax rate on capital gains and dividends, America will plunge into recession? Probably not. Republicans exaggerate and dramatize things.

Is it wise to double the rate? Perhaps not.

The purpose of taxation should be, above all, to maximize revenue without discouraging job creation. There is a balance to find there. If that means that the working class pays — IN PROPORTION TO THEIR MARGINAL RATE — more than the capitalists, it is not necessarily the end of the world. What counts is not to satisfy the working class’s jealousy, but to generate economic growth and reduce the deficit.

It is in the best interest of the working and middle classes and the poor that the upper class risks their money in order to create jobs. Let us not forget that the life expectancy of young companies is short. The decline of capital has furthermore been much sharper over the last three years for the rich than for the middle class. This makes perfect sense: They had more to lose.…

The concept of using taxes to create an egalitarian society is accepted everywhere in France. I am aware that this speech is that of an extraterrestrial. But historically, in the United States, getting rich is not only encouraged but also considered patriotic, since it serves the interests of all. “A rising tide lifts all boats,” Reagan said.

The problem is that over the last several years, the tide has lifted the boats of the rich much more quickly than those of the less rich. The problem is real. Therefore, a real debate is needed. The Republicans are wrong to ignore it.

But there are many other possible explanations for inequality. It is not simply an economic issue. Proof: The problem exists in Europe, as well!

For example, access to education, the collapse of the family unit and the impact of immigration on poverty are all equally important factors in understanding growing inequality.

The notion that the rich deserve to be punished simply because they are rich is a very European idea. This year, however, the idea could seduce the American people.