I consider myself a moderate fiscal conservative but am against tax increases. Over the years, my observations have shown me that politicians are more interested in raising taxes than paying for programs. Every day you will find new examples of governments spending large amounts of money on projects that only benefit a few people at the local, state and federal levels. My industry, mortgage note buyers, is too small for such lavishness.
Like in almost every country, the U.S. politicians want reward their supporters who voted for them last time. Because it is so common, it is an ugly form corruption that is still tolerated by the people.
Who, other than those on the extreme left, would support tax increases right now? Yes, I would. But only when it comes to advocating higher taxes for the very wealthy. My motivation to raise taxes on them only has nothing to do my tax bracket (which is admittedly much lower than that of the rich), but rather with stability. I believe the country is at the edge of civil unrest, and possibly riots.
As people lose their jobs for longer periods of time, and frustration grows, particularly among youth, they will seek out someone to blame. They will perceive that the rich get off lightly and should be reduced when they see the income disparity between the rich and poor. To avoid sowing the seeds of rebellion or worse economic problems in the future, it is better for the wealthy and society to have the extremely wealthy pay higher taxes.
The International Monetary Fund (IMF), published an interesting article in December last year about how income inequality might have contributed to the country’s two major economic crises of the past century, the Great Depression of 1929 (1929) and the Great Recession 2007. Before the crises, both income inequality as well as household debt-to–income ratios had been on the rise. “In 1983, the debt to income ratio for the top 5 percent was 80 percent, while it was only 60 percent for the bottom 95 per cent. Twenty-five years later, in a striking reversal, the ratio was 65 percent for the top 5 percent and 140 percent for the bottom 95 percent.” (full article can be found at http://www.imf.org/external/pubs/ft/fandd/2010/12/Kumhof.htm).
Over the years, there have been many reports about how wealth is becoming more concentrated in this country. This means that a smaller percentage of the country’s wealth is owned by a few people. Many people of all income levels believe that the recent government bailouts have benefited Wall Street, but not Main Street. I believe that mortgage buyers can be found in every tax bracket and all demographic groups.
The recent four days of rioting that took place in London can show how one small incident can cause a massive outcry. Although police claimed it was hooligans who were causing trouble, the participants seemed to be from a wider range of people. We have witnessed flash mobs in major American cities, such as Chicago and Philadelphia. These were more likely due to greed than anger but showed how fast a group can unite to cause havoc.
The U.S. economy is not showing signs of recovery, and the unemployment rate looks set to remain high for many years. The government also doesn’t have enough money or the political will to launch new programs and hope they stick. People will become more frustrated if economic problems continue for too long. People who are unemployed or feel frustrated can do some crazy things. It is natural to attack those who have unduly benefitted. This is not a method of redistributing wealth, but a way to prevent big problems from happening.