Two weeks ago, President Obama ventured courageously into the debt crisis debate with soak-the-rich proposals aimed at the usual suspects—“oil companies,” “hedge fund managers,” “millionaires and billionaires,”—and a new enemy, “corporate jet owners.” That phrase may have tested well with focus groups, but economists and pundits weren’t duped. The imprudence of a new punitive tax on a segment of the country’s manufacturing industry was immediately mocked up and down the Twitterverse, and longer arguments have since been made.

There’s also the “small” problem of the size of the tax break for corporate jet owners: over a decade, the government could collect three-quarters of one-tenth of one percent of the portion of our debt that the President aims to eliminate. The proposal begins to smell like demagogic nonsense.

Then we have this towering irony: the President wishes to harm a segment of the economy (manufacturing) which he claims at the same time to support. His union base insists that he sign no new free trade agreements until Congress passes protections for workers whose jobs are outsourced. There is no talk, however, of protections for Gulfstream employees who will be laid off when the higher price of jets brings down demand. Focus groups can’t provide much in the way of economic analysis. Perhaps the President’s team should have talked to Steve Rooney, president of the International Association of Machinists and Aerospace Workers in Wichita, Kan., who told the AP:

I think it’s just insulting. He acts like it is just a luxury for somebody to own a business jet when they’re used as tools. And I don’t think he realizes how many people that this industry employs and how much revenue is brought in here from those types of aircraft.

Senate Majority Leader Harry Reid, who claims that lawmakers are fighting the President’s tax agenda “to protect the owners of yachts and corporate jets. To protect corporations that ship jobs overseas” misses this inherent contradiction.

The Heritage Foundation’s Mike Franc calls it an “off with their heads” mentality, and he’s right. That successful businessmen should be bled dry out of a “sense of shared sacrifice” is not the instinct of a free society. It is a Marxist sentiment, one based in a view of historical progress as class conflict.

The creation of wealth, from which the U.S. can pay down its national debt, is not a zero-sum enterprise.  It requires the cooperative striving of the whole business ladder. As Pope John Paul II pointed out in his 1981 encyclical Laborem Exercens, management and labor ought not to be separated at all. “Isolating … ‘capital’ in opposition to ‘labor,’” he says, “is contrary to the very nature” of wealth and its creation.

In concocting a solution to this country’s fiscal problems, our leaders would do well to remember that.

  • Thomas

    I think it is clear that the $4 trillion in deficit
    reduction could not be made only with
    spending cuts. If the US want smaller government debt it is neccessary
    to raise the income side too. Maybe the tax raising is the easiest way
    to do it and only that people can pay higher tax who has money, AKA the
    rich people or companies.

    And maybe the 0.075 percent is a small number but only because the $4
    trillion is a huge number. I think the private jet tax could be the
    easiest way to gather $3 billion dollars. Taxing is not a good thing,
    but somebody has to pay back that debt. The jet owners, the ship owners,
    the car owners, or the bicycle owners, or they all together.

    I think there will be more painful moves in the future to reduce the debt level.

    • Josh

      I disagree.  To argue for new taxes to cover the deficit, one must accept that some of that excessive spending is necessary and appropriate.  On the contrary, most of that deficit is new phenomenon, incurred by a president who clearly does not respect the traditional level of government spending relative to GDP.

      Why increase any taxes, which can only work as an economic anti-stimulus, when the country is still trying to pull itself out of a recession?  If we do so, we support the President’s big-government ideology.  Instead, let’s stop the spending, get back to a reasonable level of government spending with a balanced budget, and worry about raising taxes to pay off yesterday’s debt when the economy is thriving again.

      • http://blog.acton.org/archives/author/kspence Kenneth Spence

        The question raised by the corporate jet “millionaires and billionaires” talk is not whether we should have taxes though. I don’t take a position on new taxes in this post–that’s another matter. The question is whether or not we view the path to fiscal rectitude as a piggyback ride on the backs of the rich. That way seems avaricious to me.

      • http://blog.acton.org/archives/author/kspence Kenneth Spence

        The question raised by the corporate jet “millionaires and billionaires” talk is
        not whether we should have taxes though. I don’t take a position on new taxes in
        this post–that’s another matter. The question is whether or not we view the
        path to fiscal rectitude as a piggyback ride on the shoulders of the rich. That way
        seems avaricious to me.

        • Thomas

          I do not feel that this would be an attack against the rich people. First of all this tax is about the corporate used privet jets, not the private people used private jets.
          As I sad you can gather tax only from those people or companies who has money. I think it would be a worse effect on the ecenomy if this ammount of money was gathered by raising the general corporate tax.

      • Thomas

        So you think the debt level is okay now and it should not be decreased? Sadly the Moody’s don’t think so:

        http://www.reuters.com/article/2011/07/19/us-usa-debt-moodys-idUSTRE76I52X20110719

        Btw I do not agree with the Moody’s and I agree with you that this is
        not the best time to reduce the debt level and as long as the US can
        finance its debt cheaply it is not a huge problem. But if the US loose
        their AAA rating it would cause serious problems on the financial
        markets. Not only in the US but worldwide.

  • http://blog.acton.org/archives/author/kspence Kenneth Spence

    Yes indeed. Or at least some people’s outward acts are indistinguishable from the envious person’s.

  • Roger McKinney

    If Obama doesn’t want to be a hypocrite, he will give up use of Air Force 1!

  • John Meszaros

    I agree that singling out one group to bear a tax burden is not appropriate.  We’re all in this problem together as Americans, and burdens will need to be shared in many ways.

    However, I feel there is a disconnect between labor and management in corporations and companies.  From personal knowledge, in my father’s workplace, the management doesn’t take “suggestions” or advice from the working folk and are, in fact, separated.  As we know, most corporations have labor, management and shareholders/board.  At least at my father’s workplace, the management and board make company-wide decisions without any real input from the “average” worker.  I would guess that many companies operate this way.  Until the workers feel like they have at least a partial say or are real partners in their company, I think, unfortunately, that many will still think of the workplace in terms of classes.

    • http://blog.acton.org/archives/author/kspence Kenneth Spence

      I agree John. Whether our leaders should be encouraging that I am not sure…

  • http://www.facebook.com/people/Mark-Roeda/2260805 Mark Roeda

    How defensive do you have to be to think that Obama has declared “class warfare”?  No wonder the wealthy are so obsessed with money, they’re totally insecure.  One comment about taxes on corporate jets and they assume someone’s declared war on them. 

    • http://blog.acton.org/archives/author/kspence Kenneth Spence

      Obama himself has talked about ‘corporate jets’ at at least 3 press conferences. And the remarks from Congressmen are more inflammatory than the President’s.

      The block quotation in the post is of a union leader who represents regular manufacturing workers. They’re concerned because this tax would hurt them the most.

      Cheers!

      • http://www.facebook.com/people/Mark-Roeda/2260805 Mark Roeda

        So Obama uses corporate jets to illustrate a point three times.  That constitutes a declaration of war?  All this “class warfare” talk is nearly as ridiculous as those who resort to Nazi/Hitler comparisons.  Whether the tax on corporate jets is fiscally responsible is a separate issue.  My point is that we need to tone down the rhetoric.

        • http://blog.acton.org/archives/author/kspence Kenneth Spence

          Indeed we do!

          • http://www.facebook.com/people/Mark-Roeda/2260805 Mark Roeda

            Wait a second, Mr. Spense.  You’re agreeing that we need to tone down the rhetoric and yet you suggest that Obama’s declared “class warfare” and you agree with the Heritage Foundation guy’s “off with their heads” remark.  I’m confused.

          • http://blog.acton.org/archives/author/kspence Kenneth Spence

            What I mean is that the class warfare rhetoric needs to be “toned down.” More than toned down though–it needs to go! The “off with their heads” characterization followed naturally from French Revolution parallels that Nancy Pelosi was drawing–the man who said that was in fact drawing out Pelosi’s inflammatory character.

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