You Make Too Much Money

In a recent speech promoting his financial industry reform bill, President Barack Obama had what may become known as another “Joe the Plumber moment” (in which he spoke off-the-cuff about “spread(ing) the wealth around”). This time, he said:

“We’re not trying to push financial reform because we begrudge success that’s fairly earned. I do think at a certain point you’ve made enough money.”¦”

Left unsaid was what the president thinks should happen to those who make “more than enough.” Should their taxes go up? Or, should everything they earn over some arbitrary level be taken from them and redistributed to others?

One prominent American who did lay out what he thought should happen to those who made “more than enough” was famed 60-Minutes TV show creator and producer Don Hewitt. In 1995 Hewitt wrote to Forbes magazine:

“If all the Forbes billionaires agreed to limit themselves to their basic billion and handed over the excess to Uncle Sam, Uncle Sam would end up with some $90 billion without one member of the club having to give up a single necessity or, for that matter, a single luxury”¦not a house, not a car, not a boat, not nothing.

“The right to earn and keep a billion dollars is, as far as I’m concerned, a tenet of a capitalistic society””more than that, maybe we should rethink.”

Both President Obama and the late Mr. Hewitt were expressing a sentiment likely shared by a number of Americans. But it is not an American sentiment. America was founded as the land of the free. Here, unlike in the Europe of their time (and ours), the Founding Fathers understood that it was not government’s role to limit what individuals could earn honestly.

Would Hewitt have taken everything Bill Gates earned through Microsoft after his “basic billion?” First, put aside the likelihood that Gates wouldn’t have kept producing value for his customers if he had been forced to give every extra dollar to the government. Does anyone believe that the government could do a better job giving those billions away than Gates has done himself, fighting disease and poverty around the world through the Bill and Melinda Gates Foundation?

To understand better why some people think others make too much money, I recommend a talk given by psychiatrist Peter Breggin in 1979. Entitled “Communicating with Liberals,” it laid out lessons Breggin learned from years of having New York liberals on his office couch. Two lessons he learned related to “making too much money” were these:

1. Many liberals don’t understand economics and they don’t want to understand it. They’ve never taken an economics course or read an economics textbook. And,

2. Many liberals think that whatever income they themselves make is appropriate and justified, but anyone making more than they do somehow doesn’t deserve it or didn’t earn it honestly. And, anyone earning less than they do is somehow being exploited. They don’t understand how value is created, so they envy those who earn more, and pity those who earn less than themselves.

The politics of envy has always been with us, but lately it seems to be gaining traction. During his campaign for the presidency, Mr. Obama told us he wouldn’t raise taxes on anyone making less than $250,000. Now, with the health care reform legislation alone, most taxpayers will see our taxes rise either directly, or indirectly through higher premiums for required insurance coverage. Cap-and-trade or carbon taxes are another way the president will leave his campaign promise far behind.

In Oregon, January’s Measures 66 and 67 were just the latest manifestation of the politics of envy on a state level. For those who don’t understand economics, it was perhaps tempting to believe that raising marginal tax rates on the “wealthy” and “big business” would not affect the rest of us. But affect us it will, as jobs are lost, businesses close or move, and employees and customers alike bear the ultimate burden that taxing job creators and business imposes.

“I do think at a certain point you’ve made enough money”¦” will be heard in different forms and embedded in national, state and local legislation until enough of us understand that it is an un-American sentiment, and a sentiment that will harm the very people it is intended to help. Free-market transactions between willing buyers and willing sellers always create value for both sides. If a few entrepreneurs on one side get rich, that’s only because a lot of us on the other side got good value for our dollar. Using political force to stop such transactions will make all of us worse off, except perhaps those politicians who rely on our ignorance of economics to enhance their power.


Steve Buckstein is founder and senior policy analyst at Cascade Policy Institute, Oregon’s free market public policy research center.

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Posted by at 06:00 | Posted in Measure 37 | 21 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Anonymous

    What about TV and movie stars? Should the the top stars be paid more that the rest of the industry?

    How about sports? Why should Tiger woods and Coby make more than the average player?

    Should the President be allowed to make money on top of his regular salary? In book sales?

    How did Earl Blumenauer become a millionaire only working for government?
    Should he be allowed to collect money for speeches?

    Who will decide what we can or cannot make?

    I’m more worried about tax gouging by our elected officials and never ending and unsustainable spending!

  • Ron Marquez

    And on goes the Obama dream of bringing America down to the level of European and like nations world wide.

    It’s in our hands to save ourselves by ensuring BHO is a one term president and that the Pelosis and Reids are removed from positions of power or from Congress altogether.

  • Bad Boy Brown

    Also don’t forget LIBERAL BILLIONAIRES like Bill Gates and Warren Buffett are always advocating for more wealthy people to pay more taxes. Of course, what they NEVER MENTION is that both have charitable foundations that they donate money to shield billions of dollars in income from taxation; and over which they have largely complete control.

  • Bob Clark

    Americans should also realize we should stand together on taxes as this is part of a greedy government strategy to pick off groups individually. Today, it’s folks making more than $250 k. Tomorrow it’s those folks making $100k, and eventually it’s those making $50k through something like a value added tax. And what for…so the Fed and the states can continue to bleed red ink in institutions like Fannie Mae, Freddie Mac, the postal service, sc amtrak, etc. These institutions currently are bleeding red ink at the annual rate of over $80 billion. These are the institutions government should be reforming first, but I guess it’s too much to ask the government to get its own house order before it starts preaching to the “peanut” gallery.

    How much one makes is mirrored generally by how productive one decides too be. If you cut off what one can make, you are likely to decrease the person’s production. Take Steve Jobs & Apple. I guess we want to risk having him stopping innovating after he makes x amount of net worth.

    One of the problems with Dem wits like Bama is they think in terms of a fixed economic pie rather than in terms of growing the economic pie. Everybody tends to benefit in the latter case whereas the former leads to a maliase in which a lot of populism fever gets released but not much real prosperity comes about.

  • valley p

    “Left unsaid was what the president thinks should happen to those who make “more than enough.” Should their taxes go up? Or, should everything they earn over some arbitrary level be taken from them and redistributed to others?”

    It isn’t unsaid. He campaigned on letting the Bush tax cuts for those over $250K expire, meaning their top rate would go back to Clinton levels. He also has indicated that we ought to raise the cap on SSI and Medicare. As it is, middle class Americans pay far more to support old age pensions and medical care than do the wealthy.

    Don’t worry so much Steve, the rich will still be plenty rich after Obama gets done with them.

    “Many liberals don’t understand economics and they don’t want to understand it. They’ve never taken an economics course or read an economics textbook. ”

    I guess he makes exceptions for Gates, Soros, Buffet and the 53% of those who make over $250K a year who voted for Obama.I think they do get economics. And what they get is that a completely free market is nonsense and would result in most people being poor.

    “The politics of envy has always been with us, but lately it seems to be gaining traction.”

    I agree. This is evidenced by the number of times folks on this site complain about government employees having better job security and pensions than they have.

    “Mr. Obama told us he wouldn’t raise taxes on anyone making over $250,000.”

    Correction. He explicitly said he would raise taxes on this income group.

    “Now, with the health care reform legislation alone, most taxpayers will see our taxes rise either directly, or indirectly through higher premiums for required insurance coverage.”

    Nonsense. Your premiums doubled in the 8 years BEFORE Obama’s health care plan. They will increase at a lower rate in the future because of it.

    “Free-market transactions between willing buyers and willing sellers always create value for both sides.”

    Always? You might want to consult with a few Bernie Madoff investors before you make such a statement.

    • Steve Buckstein

      valley p – thanks for the correction. Of course candidate Obama said that he wouldn’t raise taxes on anyone making less than (not over) $250,000. I’ve made the correction.

  • JTT

    Do you think it’s unethical or just downright subversive to not include the rest of the quote?

    “I do think at a certain point you’ve made enough money, but you know, part of the American way is, you can just keep on making it if you’re providing a good product.”

    • Steve Buckstein

      No JTT, I don’t think it’s unethical or subversive to leave off the rest of the quote. The first part of the quote state’s the President’s opinion. The second part is more a statement of fact, which I appreciate him acknowledging, but it doesn’t lesson my concern that he is making judgments about how much money Americans “should” as opposed to “can” make.

      • valley p

        It might not be unethical but it is misleading. Both parts of Obama’s statement are opinion. There is no objective “fact” on what the American way is. If there was then we would not spend so much time here arguing about it.

        Anyway, there is nothing wrong with Obama or anyone else having an opinion on the logical or practical limits of individual wealth. As a hypothetical, what if one person owned everything in America? Every acre of land, every building, every scrap of clothing, car, gun, and loaf of bread. Would that be ok with you? Do you think the other 299,999,999 of us should be content with being naked and starving just because that is the way things happened to work out?

        Be careful with your answer because if you say it would not be ok for one person to own everything then you have just agreed that there can be limits to individual wealth accumulation, and that this is subject to debate.

        And anticipating a response, say it is 100 individuals who own everything rather than just one. Or 1000 if you prefer. Still ok?

        • Steve Buckstein

          Asking such hypothetical questions, in my opinion, exposes a misconception about the whole concept of wealth. They assume that there is some fixed pie, so if one person has a bigger slice then others much get less. As pointed out in the post, I am making the point that people can acquire wealth without diminishing the assets of everyone, or anyone, else.

          Yes, we are all entitled to our opinions, but I find the President’s opinion about how much money is “enough” to be troubling. More than most of us, he has the power, along with 535 other politicians, to put his opinions into law.

        • Steve Plunk

          Any hypothetical that reduces the argument to the absurd level becomes useless. All of these examples whether one, a hundred, or a thousand ignore reality and make a farce of reasonable, logical debate. This technique is the refuge of those with no real argument but still desire to pound the table with anything. It’s a tantrum and nothing more.

  • Steve Plunk

    I grow increasingly uncomfortable with the commonly accepted premise of wealthy people paying a higher percentage tax as income rises. Those with wealth are already contributing to society by hiring, investing, and consuming. What is the moral justification for taking more from them besides the fact they can afford it? They generally do not burden the government more than any other citizen and the benefits they provide I mentioned already. Taking from them is no less taking with force than the worst dictator or most common petty criminal might take with force.

    We have lost sight that all tax revenues are first the property of the individual either earned or given. The government might have a claim as civil society has costs but the degree of unequal takings has become astounding. Those who are on the dole in one way or another have been corrupted as has been the government. The whole system has become rotten.

    Our politicians have become corrupted enough to have the entire world on the brink of bankruptcy and yet they continue to avoid making the necessary changes. The creators of wealth are outnumbered by the takers of wealth by a large enough margin it has become nearly impossible to change those politicians and right the wrongs. It now seems likely we will have to endure a collapse in order for the realities to be addressed.

    As we approach this precipice I stand amazed we have a government moving us toward a more socialist system while the socialist model falls apart around the world. The blindness they exhibit is either an indication of extreme stupidity or a crass desire to damage our country. Whatever it might be the magnitude of this failure is frightening.

    • valley p

      Well I’m not surprised you both declined to deal with the hypothetical. Yes, total wealth is not fixed. It can grow or shrink depending on circumstances. It shrunk a lot from 1929-32. And we are in a period similar to the late 1920s in that a relatively few people own a very large proportion of what there is at the moment, and this led to a banking collapse. The fundamental economic problem, and it goes to Steve’s Plunk’s point about his misplaced discomfort with progressive taxation, is that modern economies tend to produce more than people as a whole are able or willing to consume. That leads to price cutting, layoffs, and deflation. And when we get deflation, which we are teetering on the brink of at the moment, we get economic depression. And that is good for no one, including the wealthy.

      So the practical argument for progressive taxation and some redistribution is simple. Rich people can only “consume” just so much. How many cars can they drive? How many homes can they possibly occupy? How many Air Jordans can they wear? But many middle income people can consume a lot of cars, homes, and everything else. Without high levels of effective demand by a well paid, economically secure middle class there can be no high level of production and society ends up a lot poorer. You end up with Feudalism, not Capitalism.

      “The government might have a claim as civil society has costs but the degree of unequal takings has become astounding.”

      Astounding? Really? The effective tax rate on those earning over $250K is only marginally more than on those earning $50K once you factor in SSI and Medicare and sales taxes and user fees. Warren Buffet pointed out that his secretary pays a higher percent of her income in taxes than he does. You are sadly misinformed Steve, and it colors your thinking.

      “Our politicians have become corrupted enough to have the entire world on the brink of bankruptcy”

      Correction. Our private investment bankers became corrupted enough to have the entire world on the brink of bankruptcy. Our elected politicians, by pumping trillions of newly printed money into circulation saved the day.

      “I stand amazed we have a government moving us toward a more socialist system while the socialist model falls apart around the world.”

      Our government is once again saving capitalism from itself. It did this in the 30s and is trying to do so again. And the social safety net, weak as it is, protects the rich from being eaten by the poor. This is a hard lesson each generation seems to have to re-learn. You seem to think capitalism can survive without a strong, active government that redistributes wealth. It can’t and never has.

      “Whatever it might be the magnitude of this failure is frightening.”

      The magnitude of the ignorance expressed here is what frightens me.

      • Steve Plunk

        Your Utopian fantasies are what’s ignorant. Just as your irritating habit of arguing the absurd. I would expect both of those from children.

        Our government saved the day? Our government created the problem by deficit spending for generations and the Barney Frank led debacle in the housing sector. The public sector unions have compounded the problem by breaking the local governments. Let’s not also forget the anti-business fervor of government everywhere and how it has limited economic growth.

        You need to remember SSI and Medicare should not be included as Buffet included them in his example. Those are programs with income and benefit limits. If Buffet paid unlimited SSI taxes and received the proportional benefits he would have a point but that’s not how it works.

        The rich do not have to consume in the same rations to provides what benefits they do. The savings and investments of the rich provide capital for all. The point is their money is not sitting in vault for them to run their greedy fingers through the way liberal imagine.

        Take it from a producer, when you take too much from us the results hurt everyone.

        • valley p

          “Our government created the problem by deficit spending for generations and the Barney Frank led debacle in the housing sector.

          Au contraire. You forget that we had a Democratic president who ran 4 straight surplus budgets. The big deficits started with Reagan and resumed under both Bushs. Take responsibility for your own people. Don’t lay it on the rest of us.

          And Barney Frank was in the minority in the House in all the years leading up to the crash. He had no power to make policy until 2007. Zero. A Republican Congress and Republican President governed for 6 years before the crash. They had ample time to make economic policies, and they did so. Again, take responsibility. It’s a conservative virtue you seem to have forgotten about.

          “You need to remember SSI and Medicare should not be included as Buffet included them in his example. ”

          Why would I need to remember that? Buffet calculated total income, total taxes and fees paid, and divided to come up with relative percents. Selecting out one or more taxes from the equation is what gives you the false conclusion that you keep perpetuating. The cold hard fact is that the rich as a whole pay only a bit more proportionately than the middle class relative to income, and some, like Buffet, pay even less.

          “The point is their money is not sitting in vault for them to run their greedy fingers through the way liberal imagine.”

          The point is Steve, they would have little need to invest in anything productive if there were too few consumers left. In the good old days, the rich spent lavishly on gold plated statues to hold up their ornate palaces while 80% of the people were barely above starving. No customers, no need to build cars or make Nikes. Look….if rich people were the key to building wealth for society, we would not have had a few thousand year history of a few rich people and many poor ones. Even Henry Ford understood this.

          • Rupert in Springfield

            >Again, take responsibility.

            This from the guy who wont take responsibilty for Obamas deficits.

            In Dean world – Anything good is Democrat anything bad Republican.

            See how it works? It simple pure non thought.

            Clinton surplus? Totally Clintons doing.

            Obamas deficits? Totally Bushs fault.

            See how that works? Dont think.

            Now what I am going to love is the total pass you will give Obama on the oil spill. Thats going to be a good one. Yep, the guy took more money from BP than anyone, and wowie, wonder of wonders, got zip on inspections and a safety award to boot.

            If it was Bush? Dean would be screaming for impeachment.

            Under Obama? Dean will be jumping up and down about peak oil and the need for more windmills.

            Obviously this is idiocy.

            So what will Dean do?

            Ok, watch, because I am teeing this one up.

            In the next round, either here or if anyone dares criticize his leader, Dean will attempt to divert. That diversion will be by claiming conservatives are against all government. There will be bluster about “oh gee, so now you support regulation…..oh oh….gee, so now you support government safety inspections….oh gee, wow, so now all of a sudden you support government”

            Watch for it.

          • valley p

            OK…I’ll take responsibility for “Obama’s deficits.” In fact, I wish he were willing and able to run more of a deficit right now because that is the main tool available to get people back to work and get the economy back in shape. Its called macro economics. You should look it up sometime.

            Bush ran big deficits during a time of economic growth after he squandered the surplus he inherited. Clinton balanced the budget after 12 years of Republican deficits. So yes, give me a share of responsibility for that as well.

            Oil spill? Man made disaster brought to us by a private company that made assurances this could not and would not happen. Their permit to drill was granted by the Bush Administration. And by law its their responsibility to fix the leak and clean up the mess. Could Obama be doing more? I hear that critique, including from Olberman last night. But what is the more he is supposed to be doing exactly? No one seems to have any answer. The government he manages lacks the tools and expertise to repair gushers 4000 feet below the water surface. We can debate whether the government should have these tools and expertise. I think the answer is clearly yes, because the private sector is not up to the job.

            So I’ll tell you what. Show me what Obama didn’t do that he could or should have done and I’ll join the critique.

            As for Bush….no, I never “screamed” for his impeachment. I was content to wait him out and vote against him.

  • Rupert in Springfield

    I grew up with Don Hewitt. My sister was best friends with his daughter and my families beach house was about ten minutes walk from his. As a teenage boy I knew him as well as any teenager knows an adult.

    Don Hewitt was a reasonable man but he enjoyed far more luxery than I think he was aware the average person had.

    Did Don Hewitt work very hard? Yes, he was hardly ever around. In my those years I can safely say that yes, Don Hewitt worked for his money, and he made an awfull lot of it.

    In his position, for him to have been talking about what a person should be able to earn in America is totally ludicrous. Don Hewitt was a very wealthy man and a smart one at that. However people have blind spots and I doubt for a second that it would have entered his mind that there were plenty of those making $10k a year who could have said the same about him making well over ten times that amount as he said about those making ten time what he did.

    A poor guy talking about what one should be able to make is excusable, all of us have experienced envy. A rich guy talking about what people should be able to make is insufferable.

    Don Hewitt was one of the nicest Dads of any we knew growing up, aside from 60 minutes that was his strong suit. A philosopher he was not.

    • Steve Buckstein

      Rupert, thanks for the additional information about Don Hewitt. I have no doubt that he worked hard, and the longevity of and acclaim for his show, 60 Minutes, seem well-deserved. But, as you say, he was no philosopher.

      • valley p

        “In his position, for him to have been talking about what a person should be able to earn in America is totally ludicrous.”

        Why? If he himself was wealthy, then he had a first hand understanding that wealth only bought one so much, and beyond that more was not necessary and perhaps counter productive with respect to society.

        “However people have blind spots”

        Yes. And maybe it is yourself with the blind spot here. Do you not have any concept of “enough?” Do you eat 10 cookies just because you can or do you stop at 1 or 2?

        “A rich guy talking about what people should be able to make is insufferable.”

        Why? The poor guy has little understanding of what being rich is like, but the rich guy has such an understanding. I would think the rich guy would have more credibility here.

        “A philosopher he was not. ”

        And a writer of good syntax you are not (except perhaps in a Yoda sense). But I’ll go along with you for communication purposes.

        A “philosophy” of life everyone is entitled to. Even disagree those you with. Suggest time you take to consider Hewitt what said on merits, not on think you he qualified an opinion to have.

    • Jerry

      For some reason I had always thought you were born and raised in Oregon. Never would have guessed you for an east coast transplant.

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