Do Americans share President Obama’s desire to impose redistributive social justice on the well-off? In liberal Washington State, of all places, voters gave a definitive answer this Tuesday: No! The resounding rejection of a punitive “Robin Hood” initiative shows that it’s not just red-state Republicans who oppose extreme tax hikes on the nation’s wealth generators.
As Capitol Hill resumes debate on whether to extend the so-called Bush tax cuts, the White House should pay special heed to the fate of little-noticed Initiative 1098. Its defeat by a whopping 65–35 margin doesn’t bode well for Team Obama’s class warriors still clinging bitterly to their soak-the-rich schemes. Treasury Secretary Tim Geithner insisted this summer that saddling higher earners with higher taxes was “the responsible thing to do.” Given the chance to weigh in at the ballot box, a diverse majority of voters in the other Washington determined otherwise.
The Evergreen State is just one of seven states in the nation without a personal income tax. The ballot measure, which would have enacted a state income tax on the wealthiest 1 percent of Washington residents to raise $2 billion for bankrupt public schools, was sponsored by Microsoft founder Bill Gates and his father, a left-wing corporate lawyer. Top donors? The Service Employees International Union, whose state and national chapters threw in a combined $2.5 million of its members’ hard-earned dues money, and the National Education Association, which pitched in nearly $760,000.
Hiding behind kiddie human shields, the I-1098 campaign assailed the wealthy for “not paying their fair share” and plastered their campaign literature with sad-faced students and toddlers. Big Labor has been pushing a punish-the-wealthy movement for months. According to Forbes magazine, “six of the 10 states with the highest income-tax rates — Oregon, California, Hawaii, New York, New Jersey and North Carolina — raised their levies on high earners, at least temporarily,” last year.
But business owners large and small, representing companies from Bartell Drugs to Amazon.com, successfully fought back against the job-killing measure in Washington State. Disavowing the Gateses, Microsoft honcho Steve Ballmer also joined the opposition. The software company’s senior executives expressed grave concern “about the impact I-1098 will have on the state’s ability to attract top tech talent in the future.” Liberal newspaper editorial boards including those of the Seattle Times and the Tacoma News Tribune added their objections, citing I-1098’s reckless targeting of wealth creation in the middle of a recession and the inevitable extension and increase of income taxes to the middle class. And economists at the independent, nonpartisan Beacon Hill Institute at Suffolk University found that I-1098’s tax burdens would lengthen and deepen the current economic downturn by destroying private-sector jobs, reducing residents’ disposable income, and prolonging the state’s high unemployment rate.
Amber Gunn of the free-market Evergreen Freedom Foundation in Olympia, Wash., gave the bottom line on I-1098’s unreality-based advocates: “Initiative proponents like to operate in a Keynesian world where higher tax rates and their effects on human behavior and competitiveness among states don’t matter. But those effects are present in the real world and must be accounted for.”
I-1098’s promoters tried to disguise their wealth-suppression vehicle as tax “relief” by tossing in a few stray targeted cuts. But they were called out by a judge and slapped with a court order to make the income-tax burden explicit in the ballot title.
If only the taxmen in Washington, D.C., were required to do the same. Obama’s budget proposal is a soak-the-rich scheme adorned with a few business tax breaks that would — for starters — impose nearly $1 trillion in higher taxes on couples making more than $250,000 and individuals making more than $200,000. Some “relief.”
On Thursday afternoon, still smarting from the nationwide “shellacking” the Democrats received on Election Day, White House spokesman Robert Gibbs signaled that Obama would be willing to “entertain” temporary — not permanent — tax relief for the nation’s highest earners. But a time-limited reprieve in prolonged economic hard times is expedient politics and bad policy. Tax relief should be all or none. The new House majority should force the Democrats to choose.
Republicans must stop allowing the White House to demonize America’s entrepreneurs and producers. By continuing to allow Democrats to refer to them as beneficiaries of the “Bush tax cuts” instead of as the besieged victims of Obama tax increases, the GOP cedes the moral high ground. It’s time to make the White House own its noxious war on wealth.