See Me Squeegee

A major point of contention in this presidential election cycle involves tax policy on “the one percent”.  For several reasons, I have to say that raising taxes on the highest earners is a pretty damn good idea.  These reasons include:

1) I’m not rich and neither are you.

So who cares?  99% of us aren’t 1%-ers, and probably 98% of us will never be.  So who cares if we’re taxing someone other than us?  And while i can do better than this intellectually (and I will), this point remains pretty important in my mind.  Why are so many of us non-rich folks so protective of tax breaks for the rich?  If your United flight attendant told you that you could pay for your $8 snack box or you could just decide that the people in first class would pay for it, you’d let them pay for it.  Why doesn’t this always hold?  Why won’t we let Lloyd Blankfein and LeBron James pay for a few more teachers?  Why can’t Alex Rodriguez be bothered to pay for your healthcare with the millions he’s being paid to sit on the Yankees’ bench?  Why can’t Vikram Pandit pay for new construction jobs and new bridge construction out of his $120 million severance for doing a terrible job as Citigroup CEO?  Why do we protect these guys?!

But like I said, I’ll do better.  Not only do I favor taxing the rich because “they ain’t me”, I also see other major reasons to do so.  Namely:

2) It really doesn’t matter.

And here’s why – at the upper end, prices are entirely set by willingness-to-pay, not by cost.  Other than maybe vacations to outer space, every luxury good is priced based on what rich people will pay for it.  Lamborghinis, the watches that Jay-Z talks about, homes in Malibu…they all cost much, much more than the sum of the cost of their parts.  And so if the richest of the rich have 10% less disposable income, yacht prices will fall by somewhere around 10%.  The guy who made $22 million will have less to spend, but still substantially more than the guy who made $18 million, so ol’ deuce-deuce gets the Audemars watch and 18-mill gets the Rolex.  And both still have plenty more where that came from.  It really, really does not matter.

And for generations we knew this.  The marginal tax rates pre-Reagan were near 90 percent at that top end, and that fueled tons of job creation and growth.  And Robin Leach still had a ‘Lifestyles of the Rich and Famous’ show to host.  The rich are rich enough – we don’t need to artificially make them richer.

3) Above a certain level, you dicked enough people over to get that money that you owe us.

Here’s where I’ll get a little more controversial, but I’d say it’s 100% true.  My plan – scrap the arbitrary $250k number and instead peg the “dickishness tax” rate to just above what the average cardiologist makes.  Why?  Because we get to use tax policy to do a few things.  One, to raise revenue. Two, to encourage certain behaviors.  And three, to discourage other behaviors.  Obviously we need the revenue, but here’s what else we need – doctors and innovators, those who drive the economy.  Aerospace engineers make less than financiers; cardiologists make less than top salespeople.  And everyone makes less than Fortune 500 CEOs.  But who really drives the economy?  Who do we want more of?  Almost anyone can become an engineer or a doctor, with hard work and ingenuity.  We should encourage those behaviors by keeping their income at a “high-impact” level – the dollars they earn are those that pack the most punch.  But for the most part those salaries have caps.  Doctors are limited by what insurance will reimburse and by how many patients they can serve in a day.  Engineers are on pay scales that accelerate for VPs and CEOs.  But who’s really driving innovation?  The CEOs are at the top of the pyramid but they don’t add the same value as the true innovators.  And so for those who chase capitalism, business and finance represent lower-barrier-to-entry, higher-ceiling pay scales.  Let’s create incentives for people to seek true achievement.

And on the other side, once you’re much higher than a doctor’s salary (and in many cases even below that) you’re screwing someone over to get there.  Salespeople with high commissions are often acting dishonestly; even if not, they’re often using high-pressure, low-ethic tactics to skim money out of clients.  Capitalism is a beautiful system for rewarding innovation, but the evolution of capitalism is this – it rewards “getting that money” more so than innovation.  At a certain level in highly-developed economies like ours, the ability to talk a client out of his money is more valued than the ability to earn that business through true value.  And that’s the genesis of the “dicknishness tax”.

Look at Bill Gates – you could argue that he stole many of the great ideas for Windows straight from Apple.  It’s likely that a huge portion of his fortune came from elements of antitrust.  As much as we’d consider him a technological innovator, much of what he earned came at the expense of true innovators as he strongarmed his operating system into a dominant business position.  Bill Gates deserved plenty of money for what he contributed to the world – but in a winner-take-all economy he “won” the fair shares of many other innovators, many of whom he just dicked over to get there.

Look at Steve Jobs – for all the good he created, he was a colossal dick.  His iOS deliberately attacks Flash and Java platforms, creating a system in which users are unable to view a third of the internet just so that Jobs can dick over Adobe from the grave.  Yes, he deserves a ton of money for what value he contributed to the global economy.  But he dicked a lot of people over to get a giant portion of his fortune.

Look at the financial industry.  It’s dicked over the world, gambling with our money, lobbying for lax regulations but gobbling up bailouts and subsidies.  Look at BP, which rakes in record oil profits and takes energy subsidies, all the while risking the health of the Gulf of Mexico and its wildlife and neighbors.  Look at fitness-based companies like the World Triathlon Corporation and the Rock n’ Roll Marathon series, which are buying up the rights to local fitness events and jacking up the prices under the veil of “capitalism”.  Our economy rewards innovation to a point, but after that point it values marketing, sales, and shrewdness above all.

With shrewdness comes this – pink slime in our food; increased gluten in our food.  Why? Because they’re cheap and the consumer will never know.  With shrewdness comes the “we’ll just pay the fine…if they catch us” approach to pollution and the environment. With shrewdness comes the political lobby, creating “science” that says that global warming is a hoax and pushing for the deregulation of financial and environmental circles.  With shrewdness comes Enron, Tyco, Arthur Anderson, and Too Big To Fail.  What the business climate rewards as shrewdness is often nothing more than profit-driven dickishness.

And this is where the dickishness tax has a corollary – the Scoreboard Corollary.  At a high enough level, the finance guys aren’t shrewdly screwing investors or manipulating stock prices because they want or need the money.  It’s a game to them.  The bosses aren’t negotiating down employee salaries because they want the bonuses for themselves to buy bread; it’s a way to outsmart the other department heads and look better.  The salesman chases the commission to win; the marketing team plans its strategy to increase share; the financial analysts want to pick winners who increase market share and P/E ratio.  To win.  They’re playing a scoreboard game – it’s only that the numbers on that scoreboard could buy healthcare for seniors and education for kids.  Those points on the scoreboard could retrain employees whose jobs were shipped overseas to accumulate those points.  Those points don’t matter – who wins matters.  So let’s adjust the scale downward.  Wilt Chamberlain’s 100 becomes 75…but those extra 25 points feeds the poor.  Who loses?  No one.

Listen, it’s foolish to argue against capitalism, but it’s just as foolish to say that it’s absolute. Pure capitalism can’t exist without creating anticompetitive situations – we need to protect against monopolies just as we need to protect against dangerous products.  We need to protect against insider trading and collusion and we need to protect against the “snake oil” products that falsely advertise.  And along that slippery slope, we’ve also decided to use the tax code to reward activities – home ownership, charitable donations, having kids – and discourage others, like smoking.  With our tax code, we have a chance to reward true innovations and take some of the bloom off the sales/finance and dicknishness roses.

At a certain point, the money doesn’t matter – it’s points on a scoreboard. And at that point, dickishness reigns supreme.  Will taxes end dickishness?  No.  But higher taxes on the rich have a justification.  The advanced accumulation of wealth is often – usually – accompanied by dickishness.  Whether it’s intentionally manipulating a product. badgering through sales techniques, or screwing over a colleague or it’s more inadvertent turning a blind eye to these things as they happen with securities in your portfolio, the more money you make the more you owe to ” the pot”.  And since at that point you’re only paying in scoreboard points, who cares?
Tax the rich, if for no better reason than for Chris Rock’s take on gays in the military.  “Let ’em fight,” he says.  “Cause I ain’t fighting.”  Let the rich pay – you and I can’t afford to, and there’s a pretty good set of justifications for why they should do it for us.