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How The Rich Feel About Paying More Taxes

Dec 13, 2012
Originally published on December 13, 2012 11:30 am

Stephen Prince has plenty of money, and he doesn't mind sending more of it to the federal government.

"There's nothing in history that supports the view that if you give the wealthy their money back, they'll invest it," says Prince, who owns a company based in Nolensville, Tenn., that makes gift cards. "We invest anyway — that's what the wealthy do."

President Obama has made it clear he will demand that taxes go up for the top 2 percent of earners as part of any new budget deal. Presidential statements, congressional debate and protests on Wall Street and around the country have all made the case that the rich must pay more in order to help both the budget and the economy.

But how do the top earners themselves feel about that idea?

Some, like Prince, say they can readily afford to pay more. Others think it's wrong to call on them to pay higher rates — even as top earners account for a huge percentage of personal income tax receipts. Mainly, they say they are tired of being singled out and accused of not paying their fair share.

"I worked hard and I had some success, and I think that's how it's supposed to be in this country," says Edward Kfoury, a 74-year-old former IBM director who now owns "a couple of businesses" in Maine. "I don't like being called a name and being called a bastard and all these other things."

'A Dark Path'

Prince, who is 61, lives in a gated golf community near Nashville, Tenn., and owns a condo in New York. Not only can he afford to pay more, he says, but he also believes people in his bracket need to pony up to support essential programs such as education and roads.

"Almost all of my friends don't have one mansion, they have two," he says. "Many of them have three."

He recently joined a group of 225 self-styled "Patriotic Millionaires," which advocates that high-income individuals pay higher taxes.

"Without willingness to support our central government, we're going down a dark path," Prince says. The conditions that create wealth — including an educated workforce and a broad customer base — are at risk if the rich are too "greedy" to pay more in taxes, he argues.

How Much Is Enough?

Not everyone whose taxes would go up under President Obama's "fiscal cliff" proposal lives in a mansion, however. Particularly in expensive parts of the country such as New York City and San Francisco, $250,000 doesn't go as far as it once did.

"My wife and I collectively make over that," says Bernie Grimm, an attorney in Washington, D.C., "but with three kids and two in college, that's not a lot of money."

As New York City Mayor Michael Bloomberg once pointed out, life in such places is itself a "luxury product." Grimm, who is 57, readily concedes that his family is able to live comfortably.

People who aren't able to make ends meet on a medium six-figure income are arguably just not being smart with their money.

"There are a lot of people in my income category who are living paycheck to paycheck," says Mark Anderson, a 29-year-old mortgage broker in St. Louis. "It's just a different level of credit card debt."

Anderson says he and his wife, a pathologist, fall into the 2 percent category but not by much. He indulges himself in "the latest and greatest that Apple has to offer" and lives in a sizable house in a good neighborhood. Beyond that, he says, he and his wife aren't extravagant — they drive Subarus rather than Jaguars.

Singling Out Success

Anderson recognizes that the kind of tax increases Obama proposes aren't going to impinge on his life materially, and he supports them philosophically. But he adds that he thinks Obama and other Democrats make being rich "sound like a bad thing," which he says is a mistake.

The top 2 percent of earners already pay 35 percent of all federal taxes, according to the Tax Policy Center. In terms of personal income taxes, the top 1 percent alone pay 37.4 percent of total receipts, according to the Tax Foundation — double the share they paid back in 1979. Kfoury, who is president of a land trust in Maine, points out that there are years when his personal tax bill has run into seven figures.

"What would make me feel a lot better is if I heard the president say, 'I want to thank the rich people who, because of our progressive tax system, pay the most — but we don't have enough money, so we're asking the wealthy people to help the country out by paying more than their fair share,' " says Martin Krall, a 71-year-old "semi-retired" attorney and media executive who lives in Palm Beach Gardens, Fla.

"Instead, you're made to feel like you're a bad guy," Krall says. "People resent the notion that somehow they've done something wrong by becoming successful."

Get Your Fiscal House In Order

Even Prince, the Tennessee millionaire, says the president "has done a horrible job of telling the story or recrafting the message."

But for some of the well-to-do, it's not just a question of being asked nicely. Some argue that the federal government itself should get its books in better order before it comes asking them for more.

"If you have tax increases and parallel cost-cutting, that's fine with me," says Grimm, the D.C. lawyer.

Grimm says he has always endorsed social programs, worked in a public defender's office and once set up a reading program at a local jail. But he believes there's plenty of waste in government — including domestic programs he worries are leaving some individuals dependent on government largesse.

Jeff Fisher, another 57-year-old lawyer, agrees that any increase in taxes for people in his income category must be accompanied by cuts to government programs. "It's got to be the two together," he says.

But if he has to pay higher taxes in order to help bring the federal budget closer to balance, Fisher recognizes that he can afford it.

"Yeah, it's going to cost me a bunch of money each year, but it's not going to make a material change in my life," Fisher says. "I'm a divorce lawyer in Palm Beach, Fla., so I do very well."

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.