Has your 401(k) lost half its value? Have you kissed goodbye to the bonus you were hoping to use to pay junior's college tuition? Do you lie awake at night, worrying there's a pink slip with your name on it?
Cheer up. Even in these hard economic times, Democrats across the nation are working on plans that will turn some of you into instant millionaires.
There's only one catch. You're not actually going to be bringing in a million-dollar income. But the tax man is going to treat you just as though you did.
That's the message coming out of Albany, N.Y., where a newly ascendant Democratic majority led by Assembly Speaker Sheldon Silver forced a deal with the Democratic governor to impose a new "millionaires' tax." The beauty is that to pay this tax, you won't have to make anywhere near a million dollars. If you make even $300,000 a year, the cash-strapped Empire State will consider you a millionaire.
E.J. McMahon of the Albany-based Empire Center for New York State Policy explains the politics. "You get people picturing some greedy Wall Street fat cat whose pockets are stuffed with TARP money, but you end up hitting the guy who owns the local hardware store whose income is also his working capital. By the time everyone realizes what just happened, it's too late to make adjustments without creating an even bigger budget hole -- which, of course, can always be solved with a bigger tax."
It's important to distinguish what New York is doing from the more traditional Democratic approaches to taxing millionaires. In California in 2004, for example, a Democratic assemblyman championed a successful ballot initiative that imposed a 1% surcharge on personal incomes over a million dollars, to pay for mental health programs. This year, another Democratic assemblyman has introduced a bill that would impose another 1% tax on million-dollar incomes, this time to help state colleges from having to raise their tuition and fees.
In a similar way, the Democratic governor of Maryland last year successfully established a new 6.25% tax bracket for million-dollar incomes. Likewise, Connecticut Democrats have just released a plan that would jack up taxes on millionaires by 60%. Say what you will about the merits of these millionaire taxes, they at least have the virtue of applying to people who in fact earn a million dollars a year.
Today such an approach seems positively démodé. The new fashion is to take advantage of hard times to target a class of people that few politicians are willing to defend -- and then expand that class. Like so many doubtful experiments in public finance, this one was pioneered by the People's Republic of New Jersey. ...
Read the rest here. You can't make the poor rich, by making the rich poor.