Whitney Tilson is a hedge fund manager and a member of Patriotic Millionaires for Fiscal Strength.
I am part of the 1 percent of the 1 percent. By that I mean that I am fortunate to be a wealthy American and I say, “It’s okay to raise my taxes.”
This morning I was at the White House supporting President Obama in his call for Congress to pass the “Buffett rule.” This legislation — inspired in part by Warren Buffett’s exasperation upon learning that his assistant paid a greater percentage of her income in federal taxes than he did — would require anyone whose income exceeds $1 million a year to pay a minimum 30 percent in taxes. It would hit me hard. I haven’t finished my taxes for 2011, but in 2010, my federal tax rate was 21.4 percent; if the Buffett rule had been in effect, my federal tax bill would have been 40 percent higher. Some years, my taxes would probably be more than 50 percent higher.
Why am I okay with this? The answer has to do with simple math and basic fairness.
This country is running enormous and unsustainable budget deficits that will bankrupt us all if they are not narrowed — and there is no way to do that without both cutting spending and raising revenue. (Grover Norquist’s anti-tax pledge is pie-in-the-sky fantasy and dangerous demagoguery.) Everyone is going to have to make sacrifices as part of a comprehensive budget deal along the lines of Simpson-Bowles, with tens of millions of people getting smaller entitlement benefits, for example, and tens of millions of people paying higher taxes.
It’s not class warfare to say that people like me — who aren’t suffering at all in these tough economic times, who are in many cases doing the best we’ve ever done and who can easily afford to pay more in taxes with no impact on our lifestyle — should be the first to step up and make a small sacrifice.
I think most people agree with the idea of shared sacrifice, but for many, when push comes to shove, that principle goes out the window. I don’t kid myself that I’m making any real sacrifices. The men and women who have been fighting for the past decade in Iraq and Afghanistan — thousands of them coming home in coffins or missing limbs — are making true sacrifices. And when they enter the domestic workforce, they shouldn’t have to pay taxes at a significantly higher rate than the vast majority of millionaires pay.
Some critics of the Buffett rule point out that it would raise only an estimated $47 billion over 10 years, which is a sliver of the 2011 deficit of $1.3 trillion, let alone the national debt of $15.6 trillion. They’re right that this, by itself, won’t be enough. But we have to start raising money somewhere, and if it isn’t from people like me, it will have to come from people less fortunate than I am. Think of it this way: Every billion dollars not raised from millionaires is equal to a million average U.S. families each paying an extra $1,000 in taxes. That would be real hardship for a lot of families that, unlike mine, are struggling to make ends meet.
Other critics argue that there’s no need for anyone to pay more taxes, because our government is so ineffective and wasteful that we can generate the savings we need just by running it better. I disagree. While there’s always plenty of room for improvement, our government is actually quite effective and efficient. Our military and judicial systems and national parks are the best in the world. Unlike in countries where government corruption is rampant, I’ve never once been solicited for a bribe. And our police departments generally do a good job protecting citizens. My wife and I walk our dog in Central Park every night after 10 p.m. and have never feared for our safety.
I think that most people who complain about our government have no idea what they’re talking about because they’ve never been to a country with a bad government. I regularly visit Kenya (my parents retired there and my sister works there), I visited Ethiopia many times when my parents lived there, and growing up I lived for three years each in Tanzania and Nicaragua. So I’ve seen what life is like under corrupt, dysfunctional, underfunded governments. To quote Hobbes, it can be “solitary, poor, nasty, brutish and short.”
I am grateful for the effective government we have in this country, which is the absolutely necessary foundation for our wonderful capitalistic economic system that has benefited me so greatly. And I’m willing to do my fair share — in fact, more than my fair share — to help rein in our deficits and put this country on a more sustainable path.