This week, the U.S. Senate will consider the Republican Health Care Bill. Senators Rob Portman and Sherrod Brown will be voting on this bill. I am mostly in favor of the bill, except that the bill contains a 3.8 percent surtax on investment income earned by couples making as little as $250,000 per year. Originally, that tax was going to be repealed. Then Democrats started crying about taking subsidies from the poor to “pay for tax cuts for the rich”!
I resent that simplistic characterization of the 3.8 percent surtax on investment income. The Public apparently has the view that wealthy people flaunt their wealth and they all act like the Kardashians. Actually most millionaires are modest, frugal people who work hard in their business and successfully investing their money. It is these people, and their investments, that provide the initial seed corn for future new businesses.
As an example, I would like you to think back to 1976, to a garage in Cupertino, California, where Steve Jobs and Steve Wozniak and 10 others built 200 Apple I Computers. Steve Jobs had a great idea, but he needed money to fund his idea. The Federal Government did not come out there and give Jobs a couple million bucks. It was venture capital funds, funded by wealthy people, who made the initial and subsequent investments in Apple. Today, Apple employs 116,000 people and the company is worth over $700 billion.
That is what most wealthy people do. They reinvest their money in businesses which employ people. So really, the 3.8 percent surtax is not taking money from the poor. That surtax is taking investment money from wealthy investors who can afford to invest in businesses (and jobs) of the future.
Dr. John Cox, Lima