COMMENTARY | Jerry Della Femina, the wealthy and prominent NYC advertising executive and restaurateur whose memoir allegedly inspired Mad Men, recently rushed to sell his big oceanfront mansion in the Hamptons to avoid an 8.6 percent increase in the capital gains rate that is scheduled for 2013.
Della Femina, who comes from a very poor Brooklyn family, wants to pass along the savings to his kids, not the government, as long as Washington continues its policy of runaway, wasteful spending.
In the New York Post, he addressed the sale of his house and how he feels he is already paying his fair share of taxes:
“The thing about capital gains is, I made the investment. I put in the original money. The house cost $3 million and then I put in an additional $6 million because the house was in terrible shape. We added rooms, sections, areas, and basically it was my investment…
“I don’t come from a lot of money. In fact, I don’t come from any money.
“So I literally started with zero. I worked very hard. And I’ve been very good to the people who worked for me. At one point I had over 800 employees, and I always paid all health care for my people…
“At this stage of my life, I want to have money to leave to my five kids and seven grandkids. Why would I want to give that additional 8 percent from capital gains to Obama instead?
“… I made the investment while Obama might have been in high school or smoking dope in college or whatever he was doing. He didn’t make the investment; I did. He didn’t take the risk; I did. He didn’t improve the house; I did. And then in the end, he’s saying I must pay him more…
“I work hard and I pay my taxes. No matter what the administration.
“This is an administration that is spending more money than any administration in history. To spend more money, they need more money.
“That’s where I object.
“It’s a case of a president who really wants to redistribute wealth.”
For those of us on the outside looking in, 8.6 percent doesn’t seem like much. And tax policy discussions as well as all the hoopla about the fiscal cliff usually makes our eyes glaze over.
But this about more than one rich dude complaining in the Post.
Writing about tax rates in The Daily Beast, Megan McArdle put it quite succinctly:
“As libertarians go, I’m not particularly fussed about taxes–I am, for example, on the record as in favor of letting the Bush tax cuts expire.
“But I am uncomfortable when the government makes more money off your labors than you do. Yes, some people don’t work very hard to earn their money, or earn it in ways that seem illegitimate. But the solution is to change the law so that it’s harder to earn money in illegitimate ways, not to take the majority of their money in taxes–and the majority of the money of other people who work quite hard indeed.”
Tax rates probably should be increased on unproductive people living off trust funds (the kind of decadent attention-seekers who show up a lot on reality TV).
Some of us also have likely had negative encounters with disagreeable affluent individuals and/or arbitrary employers, so in general it’s difficult to muster up a lot of sympathy for those at the upper end of the income bracket.
Tax hikes would also be most appropriate for tax-avoiding liberal Democrats such as US Treasury Secretary Timothy Geithner and Secretary of State-designate John Kerry (who originally docked his luxury yacht in another state to evade Massachusetts taxes) and many others of this ilk.
Regardless of your political leanings, in class warfare, however, the real casualties are the middle class.
Confiscatory taxation and piling on regulations on innovators and risk takers — irrespective of what we may think of them personally or our feelings of envy– who create new businesses means a loss of goods and services, higher costs passed along to the consumer, and disappearing jobs. If entrepreneurs “go Galt” (a reference to Ayn Rand’s Atlas Shrugged meaning dropping out), the ramifications for the economy are far reaching.
Along these lines, a group of liberal Democrat senators are trying to repeal the 2.3 percent Obamacare medical device tax because they say it will kill jobs and stifle American competition in the medical device field.
In a 2011 article about Della Femina selling off his businesses for similar tax-related reasons, Forbes columnist John Tamny wrote that “Della Femina has by any rational measure shrugged, and his decision to do so tells us what happens when society’s achievers are fleeced so that the activities of the failed and indolent can be subsidized.”
Against this backdrop, within the Beltway, government employees, government contractors, and lobbyists are doing just fine, according to Reuters:
“In the town that launched the War on Poverty 48 years ago, the poor are getting poorer despite the government’s help. And the rich are getting richer because of it. The top 5 percent of households in Washington, D.C., made more than $500,000 on average last year, while the bottom 20 percent earned less than $9,500 — a ratio of 54 to 1…
“The federal government does redistribute wealth down to struggling Americans. But in the years since President Lyndon Johnson took aim at poverty in his first State of the Union address, there has been an increasingly strong crosscurrent: The government is redistributing wealth up, too — especially in the nation’s capital.”
Do you think sending even more taxpayer dollars into the federal bureaucracy which, in turn, will encourage even more government dependency on both corporate welfare and individual welfare is a pathway to prosperity?