Poll concludes wealthy should not pay higher taxes

By DAVID MOON, Moon Capital Management, LLC
Ocotber 17, 2010

After Congress retired for the fall without deciding who should and shouldn’t pay higher taxes next year, I decided to pose the question to my favorite bastions of wisdom: employees at Pilot and Waffle House. For diversification, I also asked an unemployed homeless guy.

While this survey is completely non-scientific, I am including the responses of every person I asked.

Glynda is a professional food service engineer at the Waffle House on Asheville Highway. She is conflicted about raising taxes on people earning more than $250,000. “Part of me says they have the money to pay it, but another part of me says that if you’re going to raise it on anybody, you ought to raise it on everybody.”

Her co-worker Jina doesn’t share Glynda’s dilemma. “There is a reason taxes need to be raised – and it ought to be across the board. If people want to have more money, they ought to better themselves through education.”

At the Pilot on John Sevier Highway, Crystal shows an uncanny understanding of employment dynamics. “If taxes go up on rich people, it will probably just come out of my raise next year.”

Crystal’s not the only person that showed some understanding of larger economic concepts. I asked Randall what he thought about taxes. He has spent most of the past decade homeless.

Randall asked me, “Have you ever heard of [legendary economist] Arthur Laffer and a thing called the Laffer Curve? It explains tax elasticity and suggests there’s a tax rate that maximizes the amount of revenue the government can collect, but I don’t know if it’s higher or lower than where rates are now. But it’s probably a flat rate across all income levels.”

I am not making this up. That is exactly who Randall is and what he said.

When I asked Rio at the Pilot on Broadway, she began quoting the “Inverted Moral Priorities” section of The Ayn Rand Letter. Rio doesn’t understand why the higher-tax crowd wants to put the same rate on folks who make $250,000 and those making $3 million, but they don’t favor a flat rate on everyone else. She adds that “individuals spend money more efficiently than the government... and besides, we weren’t meant to serve our government.”

There are politicians who suggest that these folks simply don’t understand what’s best for them. A UT political science professor, Nathan Kelly, recently co-authored a study concluding that income inequality is self-reinforcing either because of an impotent government or because those at the bottom can’t effectively petition the government for action.

The study begins by explaining a theory of redistributive democracy, in which a purpose of government is to enhance the relative well-being of the poor. That premise alone is enough to question the report’s bias, if not its findings.

But when you consider the percent of the federal budget that is simply a transfer of money from presumed rich people to presumed needy people increased from 47 to 61 percent since 1990, it is almost impossible to argue that the poor are disenfranchised – at least at the federal level.

It would be interesting to read a report written by Randall on the subject.

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).

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