The Prince and the Super Committee

It's complicated. That's the only way to describe the debate on where and how to raise taxes. Unfortunately, the pundits have a tendency to paint everything with a broad brush and the reality is that there is no quick or easy solution.

Take the estate tax, for example. Whether a person's estate is valued at $30 thousand or $30 million, that's double taxation, unless the income was solely from municipal bonds. If a couple a total of 120 hours a week and earned a high income and saved and invested wisely, they've already paid taxes on the money they're leaving to their heirs. Another example is a tax on financial transactions. Since the stock exchanges were created, it was drilled into people's heads that in the long run one can make more money by investing stocks than by having a savings account at a bank. Until Glass-Steagall was repealed and Wall Street turned into the world's largest casino, that concept held true in most cases. Here's another thing to consider about a tax on financial transactions. What about employees who contribute to their 401(k) plans? Would that tax apply, as well? Would it apply to corporations that match contributions, or would corporations be exempt from this tax?

Decades ago, the thinking was that one started out by investing in 10 shares of a blue chip company and reinvesting the dividends and investing more as one's income grew. By retirement, one's portfolio was worth hundreds of thousands of dollars, if not at least a million and the dividends would be taken as cash to supplement Social Security, annuities, IRAs, KEOGHs and personal savings accounts. People also had realistic expectations, then. Now being comfortably well-off isn't good enough. Two weeks or one month's bonus isn't enough, either. Nothing counts unless it starts in the millions. When I worked in the marketing department of a real estate firm, luxury housing was anything that was priced at $1 million. Now every condo and house is marketed as luxury. It's the financial equivalent of Prince Metternich's quote, quote, "For me, mankind begins with barons." (Note: some people attribute it to Alfred I, Prince of Windisch-Graetz.)

The bottom line is that the secret Super Committee failed in its mission to figure out a way to reduce the deficit, something that everyone with half a brain knew could be done without raising taxes on the rich. Even if it capitulated and raised taxes, deficit reduction is not the same thing as creating jobs, which is what concerns the millions of people who are unemployed and underemployed. Americans have been swallowing the Kool-Aid about tax cuts and job creation. Now that drink is rising painfully in their throats like acid reflux. What's the solution? The only thing I can suggest is to impose taxes and tariffs on imports and make it as expensive to produce goods and hire services overseas as it would to have it here. Even that's complicated. When a corporation moves into a building, every cost is factored in, including how much desk space, utilities and workers comp costs. They can make adjustments, if necessary. Let it become necessary.