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How to Be a Patriotic Millionaire, Even if You're Not Rich


It's not enough for you to call for more taxes; you need also to pledge that you will work the same amount at the same rate, accepting the lower after-tax income cheerfully.

MINYANVILLE ORIGINAL More and more rich people seem to be writing op-ed pieces asking to be allowed to pay higher taxes (Warren Buffett, for example). The appeal for the authors is obvious. Normally you have to spend money in conspicuous consumption to advertise your wealth. Simply telling people you are rich is not convincing, and is immodest. Writing an opinion piece is free, and the glow of your self-sacrifice erases doubts and complaints.

In fact, you don't even have to be rich.

In most cases, if someone claims a qualification to give his views more weight-a war hero who is against a war, an art expert who says a painting is a forgery, an investor who relies on his successful track record to get you to invest in his mutual fund-that person is expected to provide proof of the qualification. But when people challenged Warren Buffett (who no one doubts is rich, but who some doubt pays as low taxes as he claims) to release his tax returns, he gave selected data, which were insufficient to determine the question. As far as I know, no other "patriotic millionaire" has even gone that far.

Another great thing is that as you smother yourself in credit for generosity and patriotism; it doesn't cost you anything, since your writings are not likely to affect the actual outcome. And even if they do affect things, because our tax code is so convoluted, it's easy to call for tax increases that don't affect you.

If, like Warren Buffett, your low taxes result from running your business through a tax-advantaged insurance company, taking most of your income in the form of long-term capital gains, and fighting the IRS over $1 billion of back taxes it says you owe-call for higher taxes on ordinary income. No one will question the details, in fact, Buffett actually calls for lower taxes on the long-term capital gains he enjoys. If you have a lot of wage income, call for higher taxes on dividends and capital gains. If you live in a low-tax state and don't have a home mortgage, call for capping deductions.

Although everyone should take advantage of this free opportunity for self-promotion, there are some pitfalls to catch the unwary. You have to think your story through carefully, or you'll anger the people you're trying to pander to.

First you have to consider two fundamental principles of taxation: That the person who writes a check is not necessarily the person who pays a tax, and that raising a tax rate does not necessarily increase tax revenue. An example of the first point is the employer half of payroll taxes seems to be passed on to employees in the form of lower wages, and the same is true for the cost of all labor regulations. In fact, all taxes on companies have to be passed along to workers, customers, or investors. An example of the second is the corporate income tax, all the revenue of which is given away in tax preferences for various politically-favored corporate activity, and the reduced marginal personal income tax rates for dividends and capital gains that are set to avoid double taxation.

Generally when you raise taxes on something the price to the consumer goes up, and less of it is supplied. This, in fact, is the entire theory behind sin taxes on things the government dislikes. But that's no good in this case. You're calling for higher taxes on yourself, not taxes you plan to pass along to others. And you want this to result in more revenue for the government, not less. So it's not enough for you to call for more taxes; you need also to pledge that you will work the same amount at the same rate, accepting the lower after-tax income cheerfully.
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