ALAN JOEL – Here’s a true story to ponder.
A gentleman, one of my clients, recently sold his entire business that he founded. Having worked at it and worked hard for it his entire life (he is in his late 70′s), the company sold for around $600 million dollars. This is a classic example of the American Dream.
From the sale of the company, his cut was around $65 million (pre-taxes). The sale took place recently. I advised my client that he should arrange the close of his business before the end of 2012 because of the likelihood of the change of tax rates. If he was able to close by the end of December, his share of taxes was calculated to be around $18 million, or just under 28%. This would mean his net earnings were $47 million total.
Obama is saying that amount is not enough, to a man whose company has created thousands of jobs for this country, jobs for people who have paid income taxes to the government for all those years.
The gentleman found out that, due to the numerous amounts of paperwork and regulations regarding the sale of his company, he will not be able to close on his company until April 2013. And Obama’s new tax policies say that successful taxpayers have to pay more, which means that my client would now be expected to pay 36% in taxes. Therefore, out of the $65 million from the sale, the gentleman’s net is now $41 million, while the government will get $24 million. Why that extra $6 million to them? For what?
Some people will say that $41 million is enough. Is it? Who decides? Is it really fair that the government should have that 36% instead of 27.7% for someone else’s life work because of an arbitrary date? Regulations? Massive deficits? And is it “fair” to the gentleman that the government can’t control its spending, or that he can’t close in 2012?
Why does the government get to arbitrarily decide what is someone else’s “fair share” for work that they did? How do you quantify the fair share of something — in this case, a successful company — that someone nurtured for their own entire life? As I have argued before, those who are prosperous should be given the same liberty to manage their success as any other citizen, not additional tax penalties based on whimsy and “need”. How can we honestly and morally take extra money from those taxpayers who have been able to create wealth and employment successfully and give it to the government and politicians who manage to continuously and egregiously squander income?