As year-end approaches, the fiscal cliff looms large ahead. Failure to resolve this economic dilemma may inflict financial hardship on many Americans. With this in mind, President Obama has announced his intention to raise the tax rates of the so-called “wealthy” citizens.
Rather than being a strategy, this is an unvarnished partisan salvo at a relatively small group of Americans who foot more than one-third of the country’s total tax bill. Objectively analyzed, such a tax hike would have little impact on the national debt but would remove billions of dollars from the private sector. There would be clear consequences for tax-targeted individuals.
First, they would have less to spend on durable goods and personal services, possibly resulting in fewer new hires and more layoffs. Second, they would have less after-tax income available for the capital investment essential for business growth. Third, they might make fewer or smaller donations to the philanthropic organizations that help the needy, affecting many for whom other forms of aid are insufficient or unavailable.
More critically, such a selective tax increase would cast a pall over the time-honored American dream. The essence of this dream is that, through diligence and perseverance, you can achieve financial success. This dream has become a reality for countless Americans of all races, creeds and national origins; its realization has helped the United States vault to the top of the world’s economic leaderboard.
If the politically motivated actions of our elected officials now cause the sweet smell of hard-earned financial success to turn sour, who will even want to dream the American dream in the future?