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Hillary Clinton Wants to Tax the Rich -- Here, There and Everywhere

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Hillary Clinton"Don't tax you. Don't tax me. Tax that fellow behind the tree."

You've got to hand it to former Louisiana Senator Russell Long. When he coined that saying, decades ago, he nailed the guiding principle of politicians in government -- everywhere and everywhen. You want revenues? Fine and dandy. But if you also want to get reelected, make sure you get those revenues from somebody else.

In our current democracy, the "somebody else" most often targeted for taxation these days is "the wealthiest 1%," a group of folks with the equally attractive attributes of (a) having a lot of money to tax and (b) lacking a majority vote with which to punish the taxer.

But taxing high income individuals does pose problems -- problems that Secretary of State Hillary Clinton proposes to deal with.

Don't mess with taxes

Perhaps the chief problem with taxing the wealthy is this: Rich folks are awfully good at dodging the tax man. They've got accountants and lawyers at their beck and call who are experts in locating loopholes in the tax code.

And when such "tax minimization strategies" fail?

Why, then a rich guy can always decide to "pull a Facebook" -- follow in the footsteps of Facebook (FB) co-founder Eduardo Saverin, renounce U.S. citizenship, and fly away to someplace with a more lenient tax code. (It's not just U.S. citizens going this route, either. Last month, Bernard Arnault, France's richest man and the CEO of luxury-goods maker LVMH, responded to French plans to hike taxes on the rich by emigrating and seeking Belgian citizenship.)

Enter Secretary Clinton, with a novel solution to the problem: Tax everyone, everywhere, and especially the rich.

Make Them Pay

Clinton first floated her proposal at the Clinton Global Initiative conclave in New York last month: "It is a fact that the elites in every country are making money. There are rich people everywhere, and yet they do not contribute to the growth of their own countries."

So far, mainstream commentary on the speech has painted it as a simple expression of the American-centric worldview: We think raising taxes on our richest 1% is a pretty keen idea, and you other countries should, too.

But there may be something more subtle afoot. The real purpose behind Clinton's salvo could be to send a shot across the bow of would-be Saverin and Arnault imitators: If you think you can avoid higher taxes by simply switching citizenship, think again.

Nowhere to Run to

Consider: Right now, the top 1% of American taxpayers earn annual income of $1.9 trillion. Collectively, that is. On average, the effective tax rate on this income is about 29%. Thus, if you're a politician looking for an easy way to close America's $1.3 trillion budget gap, raising taxes on 1% of Americans looks like a made-to-order solution.

It just so happens that after taking 29% of these folks' income in the form of taxes, the 71% they have left over works out to a little over $1.3 trillion.

Voila! Problem solved! Except for one thing: You obviously can't raise taxes on the 1% to 100% -- or anything close enough to make a real dent in the deficit -- without causing a lot of people to seriously reconsider the benefits of U.S. citizenship.

Raise taxes on the richest 1% too much, and you're likely to spook a few of them into bolting -- though probably not enough of them to affect your ability to reduce the budget deficit, granted. But it still makes you look bad when the fauna start fleeing the forest.

So to prevent this from happening, it's probably prudent to start closing off a few exit lanes, and making escape more difficult before the Great Tax Hunt begins.

And that's how we wound up with the CGI pronouncement last month. Secretary Clinton apparently wants to make it harder to find a tree safe for tax-evaders to hide behind, anywhere in the world. And while that may not solve anyone's deficit problems, it sure makes for good politics.

Rich Smith is a Motley Fool contributing writer. The Motley Fool owns shares of Facebook. Motley Fool newsletter services have recommended buying shares of Facebook.

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davmusgro

Um does she take all of the loopholes ? Does she think she is not wealthy? Its always THEY Name names girl when your husband ran for president he was worth 35 million which by the way made him richer than both of the Bush president put togther Now I'll bet she paid no more than Romney Now at the same time she gets those FREE PERKS with NO tax on them Put in a flat tax and rate it in an index the more you make the higher the tax The problem with that is Clinton would have no way to keep what she is being taxxed Sorry but we need middle class people making the tax laws One from each state making less than $100,000

October 21 2012 at 8:01 PM Report abuse rate up rate down Reply
rlstried

Cut the Spending

October 07 2012 at 6:51 PM Report abuse rate up rate down Reply
croone22

The IRS is the problem. Too many tax-codes and tax commands that have resulted in a corrupt and mal-functioning Tax-revenue collection agency. The majority of the increase in part -time jobs, just reported, are the thousands of CRs the IRS just hired for this years taxpayer inquiries. You can call the IRS five different times concerning the same question about your account,and you will get 5 different answers. This antiquated mich marsh of confusion should have been replaced years ago. And as far as Hillary is concerned,she should also be replaced and go back to Arkansas with Bill, and buy a pig farm.

October 06 2012 at 11:55 PM Report abuse +1 rate up rate down Reply
Somey

GO Hillary GO

October 06 2012 at 8:46 PM Report abuse -2 rate up rate down Reply
democracks0

thedukeoforange2
Only 375,000 Americans have incomes of over $1,000,000

===================================================================

Here we have the liberal racist who created a screen name to make fun of a persons skin color
posting about those who have incomes over $1,000.000.00. Maybe if you would stay off of AOL all day
give up all your welfare benefits and apply yourself you could be one of those people too.

October 06 2012 at 12:57 PM Report abuse rate up rate down Reply
tsimpson2333

It is truly hard to believe she was once a Republican. Her views are so far left that she would fit nicely living in France. a pro-socialist country.

October 06 2012 at 11:33 AM Report abuse +1 rate up rate down Reply
scottee

of course she does.
but usually the Washington elite are exempt.
is this okay with everyone?

October 06 2012 at 9:40 AM Report abuse +1 rate up rate down Reply
toosmart4u

Mike, your story is old. The jobs left for overseasc cheap wages and chilld labor. There are people who will never get back to work, and yes mike, with a college degree.

October 06 2012 at 6:55 AM Report abuse +1 rate up rate down Reply
mike4751

Let's see, I go out work my butt off 60 hours a week, have 1500 people working for me making above average wages, I donate sizable sums of money to charity, but I should give most of my hard earned wealth up to the government to stuff their pockets with most of it and meter out the rest. There are greedy wealthy people true, but the number of immoral, greedy, jealous, lazy people in this country far far far outnumber them!!! Get a life people and get up off your couches and go earn a decent living.

October 06 2012 at 4:58 AM Report abuse -1 rate up rate down Reply
1 reply to mike4751's comment
scottee

congress makes it easy to give people entitlements on a negative check book balance because it gives them more power. how do we stop this? how do we take away their power? congress is running amok with it.

October 06 2012 at 9:43 AM Report abuse rate up rate down Reply
usabarb4u

It's only the greeders who can't stand to part with their money. That's why they keep it in off-shore bank accounts. Mitt Romney is a disgrace to America...he has no business running for Presient when he is under investigation for an 8 billion dollar ponzi scheme. The man is a blatant...liar and his ability to say whatever he thinks the crowd wants him to say while in public...but talk about Americans as if they are white trash...I can't stand him. America is not a business. It is a country of Americans. We don't need a business man who creates ponzi schemes...we need a President who works for Americans...and does what is necesary for AMERICA...MITT ROMNEY ONLY CARES about PROFIT!!! God I can't believe how transparent he is and some just don't want to see how corrupt he really is. Amazing...RISE UP AMERICANS...VOTE OBAMA

October 06 2012 at 4:10 AM Report abuse +1 rate up rate down Reply
2 replies to usabarb4u's comment
scottee

who wants to part with their money?
who would want to give a totally fiscally irresponsible congress another cent?
just wondering???

October 06 2012 at 9:44 AM Report abuse rate up rate down Reply
1 reply to scottee's comment
t_trevor1

In the bizarre world of the dumbest 1%, if you don't like being victimized by thieves, you're "greedy".

In other words, to these useful idiots, it's not the thieves who are greedy, but the victims!

We should all band together and steal pitiful barb's assets. If she complains, we can dismiss her as "greedy".

October 07 2012 at 10:14 AM Report abuse rate up rate down
scottee

been there, done that.
now it's time for real hope and change.
ROMNEY/RYAN

October 06 2012 at 9:44 AM Report abuse -1 rate up rate down Reply