How much is too much?

President Obama let the veil slip a bit in his speech at Quincy when he went off script and opined that he thinks "at a certain point you’ve made enough money." Inquiring minds want to where that point is.

One thing's for sure, however. The Obama administration and the Congressional Democrats are going to make sure that a lot of us aren't going to keep as much of our money as we used to:

As the big tax increase day of January 1, 2011 approaches, the Democrats running Congress are beginning to lay out their priorities. Get ready for bigger rate increases than previously advertised.

Last week the Senate Budget Committee passed a fiscal 2011 budget resolution that includes an increase in the top tax rate on dividends to 39.6% from the current 15%—a 164% increase. This blows past the 20% rate that President Obama proposed in his 2011 budget and which his economic advisers promised on these pages in 2008.

(See "The Obama Tax Plan," August 14, 2008, by Jason Furman and Austan Goolsbee: "The tax rate on dividends would also be 20% for families making more than $250,000, rather than returning to the ordinary income rate.")

And that's only for starters. The recent health-care bill includes a 3.8% surcharge on all investment income, including dividends, beginning in 2013. This would nearly triple the top dividend rate to 43.4% in Mr. Obama's four years as President. We suppose the White House would call this another great victory for income equality.

Comments

[Robert Bell]

I saw Ed Morrissey's post. I actually find the text of the quote uncontroversial:

"I mean, I do think at a certain point you’ve made enough money."

I've never heard of an introductory economics course that didn't talk about diminishing marginal utility of wealth. Empirical measurements suggest U'(W) gets very close to zero around $30K / year. So as a description of theory and empirical data, that's about right.

"But, you know, part of the American way is, you know, you can just keep on making it if you’re providing a good product or providing good service."

I.e. just because that's true, we're not going to intervene, even though we might be able to improve the median utility of people by transferring wealth.

Now if the policy actions belie the words, then yes there may be a problem, but the actual text doesn't seem so bad.