What If the Rich Really Gave Back as Obama Wants?

President Obama tells us that the rich should give back to society. He even knows many wealthy people who want to give back more. (I guess they can’t until their taxes are raised). We learn from him that the rich owe their success not to business acumen and risk taking but to public roads, schools, the courts, food stamps, disability payments, workplace regulation, and other government services. We even owe the first rumblings of the internet to DARPA, unfortunately the research arm of the military-industrial complex. (Or was it Al Gore?).  Obama feels it is only fair that the rich return what the government gave them. What business could survive without access by public road? Fair is fair, after all.

What would happen if we, like France’s socialist state, taxed away seventy five percent of earnings above one and a quarter million and  high-net-worth business executives with  $2.5 million in salary, dividends and rental property pay a marginal rate of 90.5 percent. At such rates, our rich would really be giving back to government what it is due, and perhaps more.  Fair is fair.

With so much “going back,” there is little reason to go forward. The “rich” should just cash in their chips, stop building their businesses or starting new ones, pay their high taxes, and live off their wealth, unless that is taxed away too. After all, the government can “invest” their money in Solyndras,  Volts, and entitlement programs. As Obama claims, government investment has higher returns than private investment.

If Steve Jobs had paid his fair share back to society after he made his first ten million, Apple today would today be a relatively small company worth less than a billion and employing a thousand or so. It would not be the world’s largest company in market cap, it would not employ 60,400 people worldwide, and we would not have the IPads, IPhones, Apps, and other innovative Jobs products, which improve the quality of lives and raise living standards. Apple shareholders would not hold shares worth a half trillion dollars.



go to forbes.com

French Socialists Test Ride Obama Platform

French voters went to the polls today to winnow a ten-candidate presidential field down to the “right-of-center” incumbent (Nicolas Sarkozy) and his socialist challenger (Francois Hollande). The two will face each other in a  runoff election on May 6. A Sarkozy loss would be the first of an incumbent French president in  thirty years. It would threaten the German-French sponsored European Union rescue package. It is no surprise that Germany’s Angela Merkel openly supported Sarkozy’s candidacy.

The French election previews the U.S. November election contest between incumbent Barack Obama and challenger Mitt Romney in the following four ways:

1). Both Obama and Hollande offer almost identical leftist platforms (details on this below).

2) The bland challengers (Hollande and Romney) ignite electoral passions less than their more colorful opponents (playboy Sarkozy with his celebrity wife and Obama, the first black president).

3) The sorry state of the economy gives both challengers a hefty leg-up.

4) The French and American elections are foreshadowed by electoral disasters for the incumbent party in off-year races in 2010 and 2011. In both, the incumbent  party lost long-held majorities in one house of Congress or parliament.

Whereas the outcome of the U.S. election is currently too close to call, opinion polls show the French socialist candidate poised to win decisively in the run off. As the odds tip increasingly in favor of a Hollande victory, the risk premium on French bonds will rise. It is no secret that the investment community views a Hollande victory  a threat to France’s solvency.

A victory of France’s socialist candidate Hollande will not translate into electoral success for his American soul mate, Obama, for three reasons:

go to Forbes.com

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