HENRY BLOCH knows a lot about taxes and a lot about wealth. He is the retired honorary chairman of HR Block, a Kansas City-based tax services company he founded with his brother in 1955.
Having amassed a fortune by helping Americans process their tax returns, the philanthropist – and registered Republican – believes the time has come for higher taxes on his richest fellow countrymen.
“It’s not going to hurt the wealthy to part with a little money,” Mr Bloch (89) a navigator on B-17 bomber missions during the second world war, said this week. “This is a wonderful country and that’s the least they could do.”
Mr Bloch’s words highlight the intensity of the debate over the taxation of the highest-income Americans as the US struggles to find ways to reduce its long-term budget deficits.
On Monday Warren Buffett, the billionaire investor, proclaimed that he too was in favour of raising more revenue from his cohorts. "While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks," Mr Buffett wrote in the New York Times.
The call for higher taxes on the wealthy – which is shared by president Barack Obama and many congressional Democrats – appears to chime with the desire of most Americans. A CNN poll this month found 63 per cent of Americans favoured higher taxes on businesses and rich citizens to curb the soaring debt.
Even so, Republicans in Congress are showing few signs of backing down from their position that any tax increases would damage the US’s weak economy – and that additional levies on the wealthy would hurt the generators of new employment at a time when it is desperately needed.
With some conservatives even decrying the efforts to impose higher taxes on the rich as “class warfare”, Republicans resisted any such measures in this month’s last-minute agreement to raise the US borrowing limit, which initially contained only reduced spending on government programmes.
The next front in the political battle will come when a bipartisan committee of 12 lawmakers has to decide – by November 23rd – how to save a further $1,500 billion from US budget deficits over the next decade.
Republicans leaders have again indicated they would not approve any deal containing tax rises. They also have some powerful backers among the US’s wealthy elite.
Steve Forbes, the conservative publisher and flat-tax advocate, suggested Mr Buffett should simply give money to the government rather than have others shoulder higher tax burdens as well. “Treasury actually has a programme called ‘gifts to the US’ so, if he wants to send a couple of billion, I’m sure it would be gratefully received,” he told thestreet.com.
However, most of the country’s richest have remained quiet in public on whether they should be taxed more, fearing the attention that might come from taking a position on either side. Opponents of higher taxes on the wealthy may not want to appear to be greedy.
“No one wants to be the bad guy,” says David Logan, an economist at the Tax Foundation in Washington.
Mark Zuckerberg, the founder of Facebook, has seemingly embraced the idea of higher taxes. At a town hall meeting with Mr Obama in California in April, the president was pitching the White House deficit reduction plan, which includes higher taxes on the wealthy.
“I’m cool with that,” Mr Zuckerberg said.
Also in April, Jamie Dimon, chief executive of JP Morgan Chase, told a conference: “I think those well off should pay a lion’s share, I have no problem with that.”
Last year, Washington state served as a microcosm of the national debate on the matter. Bill Gates Sr, father of Bill Gates, the founder of Microsoft, led a campaign to approve a ballot initiative that would have imposed an additional levy on the wealthiest residents.
Steve Ballmer, the chief executive of Microsoft, and Jeff Bezos, the chief executive of Amazon.com, donated money to efforts to defeat the measure. The No campaign won, perhaps a sign that, while Americans like the idea of taxing the rich, they fear that one day they too could be affected, either if they make more money or if it leads to higher middle-class taxes.
– (Copyright The Financial Times Limited 2011)