Katherine Kersten: Who, exactly, aspires to soak the rich?

You won't find that sentiment among those who aspire to achieve.

Katherine Kersten

Katherine Kersten

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Why is Gov. Mark Dayton's proposal to jack up income taxes on "the rich" -- individuals earning more than $85,000 in taxable income and couples earning more than $150,000 -- going over like a lead balloon?

At first glance, you'd expect a more enthusiastic reception.

After all, Dayton's plan to boost the top marginal rate to 10.95 percent on the top 5.5 percent of Minnesota's earners promises to be painless for the other 94.5 percent -- the vast majority of Minnesotans.

And it has the added benefit of giving the rest of us a chance to take those "rich folks" down a notch.

Yet Dayton can't find a Republican to touch his plan, and many Democratic legislators seem to be keeping their distance as well.

What gives?

Are Minnesotans down on Dayton's plan because they're convinced that having one of the nation's highest marginal income tax rates will be a "job-killer" for our state?

We often hear this argument, and economic research bears it out. But I think something even more fundamental is at work.

To see what it is, we need only consider the dreams and aspirations of our families, neighbors and coworkers.

Most of us know a college student who earns a pittance at his part-time job, but has -- say -- a promising engineering degree, and plans to parlay it into a productive and economically rewarding career. This young man doesn't resonate to calls for higher taxes on "the rich."

And we know a woman who is making $40,000 to $60,000, but is going all out for that next big promotion, which will bring both greater responsibility and a larger salary. She's isn't calling for higher taxes on "the rich."

And we know a guy who's starting a small business -- a coffee shop or a plumbing business -- who's taking big risks and working endless hours. He's living on his savings and sacrificing to build a thriving new enterprise. He's not agitating to soak "the rich."

What do these three people have in common? None is making big bucks, but each believes that, in America, $85,000 or more is possible if you get a good education, work hard, and are willing to take risks and persevere.

These folks don't resent people who are more prosperous than they are. They admire higher earners who forged their own success, and they hope that they -- or their children -- will be among them.

Such aspirations are possible in America, which has been called the greatest "anti-poverty program" in history.

We don't believe that "birth is destiny" -- a notion that holds people back even in advanced nations like France, which walls off its immigrants and restricts the upper class to those who have attended elite universities.

In America, a guy like Jawed Karim -- a 1997 St. Paul Central High graduate and cofounder of YouTube -- can become one of the nation's richest men.

If Dayton wanted to sock it to the truly rich -- multimillionaires like himself -- he wouldn't do it through the income tax. An income tax is not a tax on the rich. It's a tax on those who aspire to be rich (if you can call a two-income couple making $80,000 each "rich").

For example, if you have $100 million, you can invest your fortune in 3 percent Treasury bonds (not subject to state income tax), collect $3 million a year -- and pay nothing in Minnesota income taxes.

But if you have $10,000 bucks in the bank, if you and your spouse each earn $90,000, you're "rich" under Dayton's plan, and his 10.95 percent marginal rate applies to you.

Wealthy people have a host of ways to decrease their exposure to state income taxation.

They can take compensation in fringe benefits rather than cash, shift to tax-free investments, move to Florida, or carefully time capital-gains declarations. The small-business owner making $100,000 a year lacks this flexibility.

He'll pay the price for the Dayton tax plan.

Our belief in the possibility of a brighter economic future is central to our American concept of happiness. As policy analyst Arthur Brooks has pointed out, Americans who believe in the possibility of bettering themselves economically are happier than others.

In fact, "some studies even find that the happiness of workers increases as the incomes of others climb relative to their own, because they see the incomes of others as evidence of what they themselves can achieve," Brooks has written.

Politicians who use the rhetoric of class warfare -- perennially insisting that "the rich" aren't paying their "fair share" -- risk damaging America's economic dynamo.

Dayton assures us his new top marginal rate won't touch 94.5 percent of Minnesotans. In fact, he threatens an important -- and uniquely American -- component of their happiness.

Katherine Kersten is a senior fellow at the Center of the American Experiment. The views expressed here are her own. She is at kakersten@gmail.com.

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Katherine Kersten