A Christian Liberal is NOT an oxymoron.

Posted by XT on March 16th, 2009 in US News

For some reason, everyone is surprised that AIG has “misused” its federal bailout funds. I don’t know why. This is the company that sent their execs for a California vacation even as the bailout package was being put together. It isn’t like their track record indicates any type of self-restraint.

But why not give yourself a million dollar bonus? Look, you’re not going to pay any Social Security tax on it – that capped off long ago. Medicare tax is only a percentage point or two. And the federal government only takes 35% of the money. So why not give yourself a bonus of two million – that way you can keep a million even after you pay state taxes on it?

But there is a sure-fire way to fight back against this type of avarice. We used to wield it with a sure and righteous hand. It’s called “punative tax rates.” We should bring it back.

Look, there is no reason why someone should be allowed to keep millions of dollars worth of income every year. I don’t buy this argument about the creation of capital being good in and of itself. That’s just total crap. The accumulation of capital is simply the hoarding of wealth wearing a lab coat to justify its own greed.

Sure, there are some good things that could be done with great wealth. Andrew Carnegie proved that. But here are two points to consider: 1) Andrew Carnegie created as much sorrow in the accumulation of that wealth as he alleviated in its disbursal; and 2) there is nothing Andrew Carnegie did that could not have been done even if his ability to accumulate that wealth had been impinged. In other words, we would still have Carnegie Hall – it just might not be called “Carnegie Hall.”

For whatever size an economy is, there is a set amount of money within it. What punitive tax rates can do is create a disincentive to pursue ever-greater incomes. The money is still in the economy, and that means it is still going to be used. It is just going to get shoved into other hands. Other hands that, by definition, do not have the financial wherewithal at their command that those at the top do.

Yes, it is redistributive. It is also necessary. Money attracts money and poverty attracts poverty. There has to be some mechanism that forces the wealth to flow against its natural tendencies, or the economy becomes stale and stagnant (and people create speculative bubbles as they try to buy into the American Dream). Punitive tax rates for very high levels of income accomplish that.

So it’s punishing people for being “successful” and “rich”? Is it better that we punish people for being poor?

It’s the Biblical story of Lazarus at the foot of the rich man’s table. The wisdom of the Bible is that it teaches compassion for those less fortunate – and that leads to a more equitable society where people actually feel like they are valued even if their balance sheet is in the red.

There’s been a lot of talk of Obama launching a new New Deal. Fine. In 1932, the highest income bracket was raised from 25% to 63%. In 1936, it was raised again to 79%. And you know what? Families came through the Depression with their wealth intact, if a bit battered.

There’s an easy cure for the ills of greed and avarice. We just have to be willing to administer the cure before we are killed.

Update: Finally, someone listens to me:

Senate Democrats threatened to tax the bonuses at up to 91 percent through narrowly written legislation, said Schumer, if AIG does not return the money voluntarily. Republicans have said President Barack Obama should have done more to prevent the executives from accepting the bonuses in the first place.

Okay, I wouldn’t “narrowly tailor” it because I don’t think AIG is the only company dealing with immoral levels of compensation. But I think they’re on the right track.

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