Just a couple of days ago, President Obama excoriated the Republican Congress for wanting to keep tax rates low for “people like me” — that is, people who, like the President, have very high incomes.
Now we learn that on an income of $1.7 million, the Obamas paid $450,773 in taxes, taking full advantage of the Bush tax cuts. I think it is fair to ask: If the President believes that people like him ought to be paying more, then why didn’t he pay more? There is absolutely no rule against sending in more money than you owe.
Landsburg goes on to argue that while the extra contributions from the Obamas would be small, so would their sacrifice, since they are only one family as opposed to many. Indeed, the Obama sacrifice would give more bang for the buck since it would go to the most underfunded areas of the government.
What this highlights is a breakdown in the way we talk about taxes. Its convenient to make simply moral plays – the rich should pay more taxes. Where in this case we use the word should like we do when we say you should call your grandmother more often. That is, the rich have a moral obligation to help the country by paying more taxes.
Some people may mean this and its certainly good for intensifying the debate. What is more likely meant by thoughtful commentators is that the world would be a better place if the law required the rich to pay more in taxes.
If we want to be truly honest then most people mean something like this: I would prefer a world in which all other rich people paid more taxes and I paid less. However, I doubt that anyone is going to go for this. So I am willing to settle for a world in which all rich people including me pay more in taxes. I am not willing to settle for a world where I am the only rich person paying more in taxes.
This is often how public decisions work. I would prefer a world in which everyone else had to obey speed limits but I could speed when I felt it necessary. Yet, its unlikely that anyone is going to go for this. So I will settle for a world in which everyone including me is subject to speed limits. I am not willing to settle for a world in which I am the only person obeying the speed limits.