I linked the other day to Benjy Sarlin’s Daily Beast piece in which deficit-scold Pete Peterson did some outreach to the left. Jon Walker retorts with the observation that there’s really nothing particularly reasonable about a rich guy who supports cutting spending and raising taxes but insists on preserving the loophole that allows super-rich investment managers like himself pay just a 15 percent rate on their earnings:
So Pete Peterson’s definition of “shared sacrifice” is that everyone else is forced to sacrifice while his tax rate remains lower than a firefighter’s or a high school principal’s. I guess the new definition of “reasonable” billionaire is one who thinks other rich people should pay higher taxes, just not himself.
Well said. I would note that not only is the loophole absurd, but that the whole enterprise of trying to encourage saving by taxing investment income at a lower rate than labor income is regressive and kludgy. We could define the tax base as consumption (i.e., income minus savings) and then levy a progressive tax on that. This would both be more progressive than the current structure in ways that matter, and also be a better-targeted way of encouraging saving.