The New York Times op ed below says that we should.
The proposal is to tax away completely any annual income higher than 36X the median household income in the US the prior year. The proposal comes from Ian Ayers, professor of law at Yale and Aaron S. Edlin, professor of law and economics at the U. of Ca. Berkeley.
We certainly don’t agree with this proposal. But we will leave it for others to argue the fairness of this or to point out what it would do to the economy and in particular to saving and investment. We will instead ask another question? Why is it a good idea for government to receive this income? Quite apart from the fairness or economic results of capping income, why do the authors think government will make the best use of it? Ayers and Edlin do not even consider these questions. They just take it for granted that the only way to make incomes more equal is to make government bigger. But what evidence is there that government will actually use any additional revenues in ways that actually help the poor, much less the middle class? Is the only point of the proposal to pull down the rich? Or is it actually supposed to benefit those who are not rich? And if it is supposed to benefit the non-rich, how will it do so, especially since many would be expected to lose their jobs as saving and investment by the rich plummeted?
Let’s look at this from another angle entirely. If the goal is to cap incomes out of concern for inequality, why don’t Ayers and Edlin propose giving wealthy taxpayers facing confiscatory taxation a tax credit if they give the money to charity? That way, the rich would at least have the choice of supporting private charity instead of government. Is bigger and bigger government the only way even to imagine reducing income inequality? Did giving all the money to government in the Soviet Union in any way decrease economic inequality? Of course the answer to that is no. Communist societies ended up with more, not less economic inequality.
Isn’t it time to think about building up the charitable sector, by one means or another, rather than making government bigger and bigger?
And in this context, why is President Obama constantly proposing to cut back charitable tax deductions, which would make the charitable sector even poorer?
Hunter Lewis 12-22-2011