Obama’s Tax on the Rich Has Above All Symbolic Character

U.S. President Obama wants to tax big-income earners at a higher rate. With the plan he is giving an important signal — even if the implementation is unrealistic.

U.S. President Obama wants more taxes from people who earn more than $1 million (€730 thousand) a year. This is not entry into socialism by a long shot, but in spite of that, the president will find no approval for it in the House of Representatives, where the Republicans have had the majority for three-quarters of a year. The center-right representatives have the tea party representatives too much at their backs. They say “starve the monster” — let the monster starve. That means the government.

Obama doesn’t only want a contribution for the upcoming presidential election. He also wants to correct the imbalance that he inherited from his predecessor, George W. Bush, three years ago: two wars and a tax reduction for the upper class.

Still more, he must prevent a repeat of the budget crisis that occurred at the beginning of August this year, when the Republicans refused to let the administration raise the credit limit, and the administration stood close to financial ruin. At the last hour, one did, however, agree to a compromise. Obama nevertheless came off as the loser in the eyes of his supporters from the center-left.

Tailwind for Obama

The rest of the world anxiously watched an unusual kind of poker game in those days, in which even the Republican majority leader was getting afraid. If the American Department of Treasury had withheld the payment of interest on Treasury bonds, the American crisis would have become a tsunami in world financial markets where American government bonds still set the benchmark.

Obama is feeling a tailwind with his plan. On the one hand, the tax increase is sufficiently mild to not plunge anyone into poverty. On the other hand, big-income earners and larger donors like Bill Gates and Warren Buffett — after whom the plan is named — have again and again urged publicly in recent years that they would gladly pay more taxes for a better nation.

It is not a risky bet that the project will run aground in Congress. In spite of this, Europeans have cause to wish Obama luck.