100% of the 1%

Dear Occupiers,

I know that most of you have the best of intentions. You, like most Americans, want America to be the best it can be, but the policies you are advocating for are not practical solutions to the problems of the nation, but rather problems in and of themselves. Allow me to explain.

Many of you on the left are advocating for increasing the marginal income tax rate on millionaires to fix the budget shortfall. This policy is not being marketed in the moralistic terms that underlie it, but rather as a practical solution to solving the massive public debt on the shoulders of Uncle Sam. If indeed taxing the "1%" would solve the national debt, then I would take no issue with marketing the tax hike in practical terms, however a spike in taxes for millionaires would do no such thing.

Let's say for a second that millionaires will not respond to incentives by taking their money to a more tax friendly country, or by decreasing the amount of money that they risk on venture capital firms because the payoff won't be big enough. Let's say, that you can somehow brainwash millionaires not to change their behavior in response to incentives. Now let's increase taxes on millionaires to 100%. I know of at least a couple of people who would get a rush of moral self-righteousness just from that last sentence. Now the IRS reports that millionaires reported a total income of $727 billion. That means that if we arrest all the millionaires, and force them to work at the same rate they were working at otherwise, while stopping them from consuming a penny of what they produce, then we get $727 billion. The federal government will spend about $3.6 trillion this year (a rate of $300 billion per month). That means that all the money you have taken from the enslaved millionaires will keep the government running for 2 months. Give yourself a pat on the back.

Clearly this is ridiculously unpractical and fails to take into account that the proverbial 1% can respond to incentives. One may even go far so far as to say that they would be more capable to relocate than others.

What is underlying a proposal to increase taxes on the 1% is not practical thought but rather irrational rage. The relatively minor sum of petty cash that the federal government could extract from millionaires will not solve the national debt, and would more likely harm the economy, by greatly shrinking VC funds and driving their investment outside of the nation and into more friendly tax environments. In a sense, taxing the "1%" is the equivalent of divesting from the future.

If you are interested in proposing serious solutions to the nation's economic financial problems, show the math, but if what you are proposing is driven by moral outrage, then come out and say it.

Your friend in the crusade against crony capitalism

John Wahba