Last week, President Obama reversed course once again and now wants to raise taxes on the "rich" making above $250,000 per year. Obama is in dire need of additional revenue after proposing a $3.8 trillion 2011 budget -- containing the largest deficit in U.S. history at an estimated $1.6 trillion. Yet his latest share-the-wealth proposals make little sense.
Obama never distinguishes between the super-rich and the well-off. At one point in justification, the president scoffed, "I don't need another tax cut, Warren Buffett doesn't need another tax cut."
But Warren Buffett, unlike the building contractor or family dentist, is the world's third-richest man, worth nearly $50 billion. And Obama is probably the most privileged person on the planet, with all of his expenses covered -- from a nice free mansion at 1600 Pennsylvania Avenue to a huge private jet.
The rich and the poor are not separated across an impenetrable barrier. The president's $250,000 line in the sand is actually quite fluid. Most of those who make incomes above it did not do so 10 years ago -- and they won't, on average, 10 years hence. The income of well-off professionals and small-business people fluctuates widely as they ascend, peak and descend in earnings -- given factors like health, age, and uncertainty in employment and business. It would be more accurate to say that raising taxes on the better-off is a sort of punishment for those who break into the top brackets for a few short years and try to be careful to save what they make and not spend what they don't.
