What would Thomas Jefferson and Adam Smith Say About Raising Taxes on the Rich? I.E. The Buffett Rule

The following is a letter from former congressman, Alan Grayson.

“I don’t know what Founding Father and President Thomas Jefferson would have thought about TV, cars, spaceships, cellphones, skyscrapers, computers or nuclear weapons. But I do know what Jefferson would have thought about the Buffett Rule. He would have liked it.

The Buffett Rule is the Obama Administration’s proposal to adopt a 30% minimum tax rate on personal income above $1 million a year. It would promote one of the central tenets of progressivism: that the burden of taxes should fall on the rich, not the poor.

In 1811, two years after Jefferson left the Presidency, Jefferson wrote a letter to General Thaddeus Kosciuszko, a hero of the American Revolution. Jefferson said that he supported taxes (then tariffs, since there was no income tax yet) falling entirely on the wealthy. As Jefferson explained: “The farmer will see his government supported, his children educated, and the face of this country made a paradise by the contributions of the rich alone, without his being called on to spend a cent from his earnings.”

Here is someone else who was an outspoken proponent of progressive taxation: Adam Smith, who literally “wrote the book” on capitalism. In 1776, in The Wealth of Nations, Smith wrote:

“The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.”

(I wonder: When Adam Smith wrote about the “luxuries and vanities” of the rich, was he contemplating Mitt Romney’s elevator for Romney’s car? Or is that simply beyond contemplation?)

Two hundred years ago, when America was founded, progressive taxation was viewed as just common sense. We still have common sense, don’t we?

First, let’s see the Buffett Rule for individuals. Then the Buffett Rule for corporations. That would be progressive. And that would be progress.”

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Study Shows Progressive Taxation Makes People Happier–Tell That to Obama, Blumenauer and Wyden

Below is the results of a study. Read on and then let your president, congress people and senators, like Ron Wyden know how you feel.

The more progressive a tax system — where higher tax brackets have higher tax rates — the more likely people are to report feeling they live the “best possible life,” according to a new study comparing 54 nations.

“The more progressive the tax policy is, the happier the citizens are,” said University of Virginia psychologist Shigehiro Oishi, the lead author of the study.

The study analyzed a total of 59,634 people surveyed by the Gallup Organization in 2007 and found those living in the nations with the most progressive taxation evaluated their own quality of life higher than those living in nations with flatter taxation.

That happiness, according to Oishi, was “explained by a greater degree of satisfaction with the public goods, such as housing, education, and public transportation.”

“If the goal of societies is to make citizens happy, tax policy matters,” he said. “Certain policies, like tax progressivity, seem to be more conducive to the happiness of the people.”

Surprisingly, even though people’s quality of life was associated with their satisfaction with state-funded services, higher government spending did not yield greater happiness.

“That data is kind of weird,” Oishi said. He theorized that this result may be because some nations spend their money more effectively than others, noting that the U.S. spends more on education and health care than other developed countries, yet has a lower international standing in those areas.

Oishi’s study will be published in the next issue of the peer-reviewed journal Psychological Science. It was co-authored by Ulrich Schimmack of the University of Toronto at Mississauga and Ed Diener of the University of Illinois.

The study followed up on a previous study conducted by Oishi that analyzed 48,000 respondents over 37 years and found income disparity in the U.S. was associated with unhappiness — except for the richest 20 percent.

“Income disparity has grown a lot in the U.S., especially since the 1980s,” he explained. “With that, we’ve seen a marked drop in life satisfaction and happiness.”

Both studies show only correlations and not causation, meaning the connection between economics and personal satisfaction is unclear. Other factors could have contributed to the differences in self-reported quality of life.

Nevertheless, Oishi concluded: “If we care about the happiness of most people, we need to do something about income inequality.”

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