By Kelly McCutchen
“I think it’s so irritating that once I die, 55 percent of my money goes to
the United States government. You know why that’s so irritating?
Because you have already paid nearly 50 percent on that money.”
— Oprah Winfrey
“…for too long the [British] tax system has undervalued entrepreneurship and investment.”
— Gordon Brown, Chancellor of the Exchequer (United Kingdom)
When a pop icon like Oprah Winfrey and Britain’s Labor government both call for tax cuts, it is safe to say that the idea has become mainstream.
Ms. Winfrey’s comment came during the taping of her television show. The shocker from Great Britain came from a March budget address by Chancellor of the Exchequer Gordon Brown, in which he called for broad reductions in income taxes, capital gains taxes and estate taxes. For those who fail to recognize the significance of this particular statement, it bears remembering that the Labor Party only recently removed from their charter a call for the nationalization of all British industry.
While the Labor Party champions tax cuts across the Atlantic, here in the United States there has been talk about major tax reform for more than a decade, but little of substance has occurred. In the meantime, taxes, as a share of gross domestic product, rose to the highest level ever in U.S. history last year. Despite this fact, many signs indicate that the tide is slowly turning against big government around the globe and here at home.
The fact that social security reform is no longer off limits to political discussion is perhaps evidence of this changing attitude. Record participation in the stock market has led more and more Americans to question the ability of government to create equity through the tax code. Is our progressive income tax code more of a tax on becoming wealthy than a tax on the wealthy? Is our capital gains tax, among the highest in the industrialized world, a tax on the idle rich or is it really a tax on entrepreneurship and innovation? Is the estate tax, or death tax as it is now commonly referred to, a way to “get the rich” or is it really a tax on giving your children a better life than your own?
Eighty percent of all millionaires in America are first-generation wealthy. In other words, 80 percent of the rich made it on their own rather than inheriting their money. Since there is already such a great deal of turnover at the top, should not the aim of our tax policy be to create opportunities for more Americans to become financially independent rather than punishing the success of people like Oprah Winfrey? If Britain’s Labor government can have the courage to ask these questions, so should we.
The tide is turning. Americans are rejecting the politics of class warfare for the politics of opportunity. Whether it is the “new” Democrats or the “old” Republicans, the political winners will come from the candidates who show the leadership and foresight to capitalize on these new attitudes.
Kelly McCutchen is the executive vice president of the Georgia Public Policy Foundation. The Georgia Public Policy Foundation is an independent, nonpartisan organization dedicated to keeping all Georgians informed about their government and to providing practical ideas on key public policy issues. The Foundation believes in and actively supports private enterprise, limited government and personal responsibility.
Nothing written here is to be construed as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature. © Georgia Public Policy Foundation (May 5, 1999). Permission is hereby given to reprint this article, with appropriate credit given.
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