Soaking The Rich Could Soak Us All
With Desert Storm behind us, we dared hope that Congress would keep the pressure on government spending. Instead, a few Democrats on Capitol Hill have renewed their calls to soak the rich. Just consider the economic impact of raising tax rates while the nation is trying to claw its way out of recession.
The latest scheme, put forward by Presidential hopeful Senator Albert Gore Jr. (D-Tenn.) and three House members, would create a new 35% top income-tax rate and impose an 11% surtax on the richest taxpapers to give more generous tax credits to working parents. This is a bum idea. To propose increasing taxes on the group of Americans who account for the most discretionary spending just as we are trying to spend our way out of recession is to stand reason on its head. And don't forget that in this age of multiple-income families, an increase in the taxes of the 6 million U. S. families with taxable incomes above $110,000 includes much of the not-so-rich upper-middle class, with its very high spending propensity.
Any tax legislation incorporating Gore's scheme facescertain veto, but it would be heartening if the Democrats themselves recognized its folly. Let's hope their tax-drafting leadership, already leery of adding to the party's "tax-and-spend" rap, pigeonholes this one as a nonflier. This is not to say that the affluent don't get some unfair breaks: an excessively generous deduction cap of $1 million on mortgage interest, deductions of mortgage interest on second homes (including yachts), even child care payments for affluent parents who work. But raising tax rates on multiple-income families would be an outrage, particularly in a fragile economy.