Atlas Shrugged; Obama Stands FirmRandall Holcombe • Tuesday April 19, 2011 11:54 AM PDT •
I saw the move Atlas Shrugged this week-end. It has received mixed reviews, but I enjoyed it. I like the book, and seem to have that in common with others who like the movie. I’m not sure how the movie would come across to someone who hasn’t read the book.
Meanwhile, President Obama has filed his 2010 income tax return. He paid $454,000 in income taxes on about $1.8 million in income. In Atlas Shrugged capitalists went on strike in response to oppressive government. Meanwhile, the president says, “I don’t need another tax cut, Warren Buffett doesn’t need another tax cut.” No strikers there.
The president’s comment shows a remarkable lack of insight into the way most higher-income people earn their incomes. Most of the “rich,” by which Obama means people making more than $250,000 a year, earn those incomes by working hard, and by taking risks. Taxing those people makes them work less hard, and take fewer risks. Both reduce the productivity of the economy.
In the president’s case, most of his income is royalties on books he’s written in the past. The job of president is a tough one, we would all agree, but that job accounts for less than a quarter of the president’s income. Most of it comes from work he did in previous years, when his books were actually written.
Of course he deserves those royalties as a return for writing books people want to read. But few authors earn the royalties the president does. I’ve written a lot more books than President Obama, for example, but I couldn’t quit my day job and live off my royalties. He’s one of those rare people who could, like professional athletes and movie stars. For every LeBron James and Meryl Streep, there are thousands of people who are acting in community theaters, or coaching school teams because they can’t play professionally, even though they’d like to. You can’t make public policy based on the lives of those fortunate few.
Most of Warren Buffet’s income is in capital gains. He deserves that income, but he pays a lower percentage of his income in federal taxes than I do. I don’t object to that, but he may not be what most advocates of limited government consider the poster child for overtaxed Americans.
Those people—Warren Buffet, LeBron James, Meryl Streep, President Obama—are exceptions, because they are exceptional. The entrepreneurs who drive economic progress, who are more typical of the “rich,” won’t put in the hard work and won’t take the same risks if the government increases the share of their profits it confiscates. The tax system enables the government to share in entrepreneurial profits, but the risk of losses fall entirely with the entrepreneur.
The president does not seem to understand this, perhaps because his income has come to him without taking the entrepreneurial risks that drive the American economy. Salaried people may not see it either. They work hard for their money, but the difference is, they get paid their salary regardless of whether the risks the entrepreneurs who hired them pay off.
Like the government people in the movie, President Obama sees the nation’s entrepreneurs as getting more than their fair share, at the expense of the rest of us. Ayn Rand saw those entrepreneurs as the people whose innovations provide jobs and income for the rest of us. Atlas shrugged, but President Obama stands firm.