Mathematical Impossibilities

You have to admit that Democrats are sometimes clever. Having constructed an income tax system where half of Americans pay no income tax, they then demand that any reform of the tax code not disproportionately affect lower income earners -- i.e. those that are not paying any income tax today.  It's mathematically impossible to devise a tax reform without that group of people paying more (i.e. something) in tax.

But there is another impossibility that they refuse to confront. It is also mathematically impossible to have any semblance of  budget balance unless you either a) drastically reduce spending or b) increase taxes on those paying little or nothing now. There are simply not enough Rich People to sustain the massive federal spending machine. There aren't in Greece. There aren't in the rest of Europe. And there aren't even in the United States.

AMT Repeats

In 2007, the state of Maryland instituted a "millionaire tax" surcharge (in Maryland, a millionaire is someone who earns more than $500,000). The state said it would raise $330MM in additional revenue (which the legislature promptly spent). According to the Maryland Public Policy Institute the tax raised $120MM, instead of $330MM, and the government, as usual, is flabbergasted that this result repeats itself every time it's tried.
The President is proposing a new alternative minimum tax on millionaires (Obama thinks you're a millionaire if you earn $250,000). What do you think the odds are of that tax raising anywhere near the revenue he claims it will? And what do you think the odds are of that tax ensnaring millions of taxpayers in the future just like the current AMT did?

Technology and the 1%

Since a sitting president seems to be banking his reelection on demagogueing "the 1%", it would be nice if a man as smart as he claims to be would actually inspect the reasons that these differentials come about.

One of the main drivers in income disparity is technology. Years ago if you wanted to get your taxes done, you likely went to see an accountant in your neighborhood. These accountants were skilled both at understanding the law and computing your taxes advantageously. They made a good living, and the income difference between a really good accountant and a so-so one, was maybe 5X. Today, millions of people use programs like Turbo Tax to do what these accountants did. Instead of paying hundreds of dollars to one, you can pay $15-20 to get your taxes done. The multiple of income between an accountant, and the people who created Turbo Tax is, what? 1000X?

Years ago when you wanted to build a stock portfolio, you employed a broker who worked in a brokerage that provided the analytics and execution. You paid $100+ per trade and, frankly, you had to be a big customer to get the best information and execution. The income difference between a really good broker and an average one was maybe 10X? Charles Schwab figured out how to do all that for $8 per trade no matter how small an investor you are. He earns at least 500X what an average broker does.

Would we really be better off if we could turn back the technologies that amplify the differential between those who leverage them highly and those who don't? Those who rail against "the 1%" are simply modern-day Luddites who imagine they will be better off standing in front of the technology train and yelling "stop". Meanwhile the productivity increases that technology brings drive the standards of living ever higher for "the 99%" all over the world.

"Envy shoots at others and wounds itself."