Steve Forbes, editor-in-chief of Forbes Magazine, said taxes will not help the economy, free markets will.
04.18.2012 | AMHERST– Steve Forbes, editor-in-chief of Forbes Magazine, speaks on the UMass campus in a lecture titled, "How Capitalism Will Save Us" (Photo by Brian Canova)
AMHERST — Steve Forbes, editor-in-chief of Forbes Magazine, told a University of Massachusetts audience Tuesday night that taxes will not help the economy, free markets will.
“Taxes are not just a way of raising revenue for government, they are also a price and a burden,” Forbes said in a lecture at the Student Union Ballroom hosted by the UMass Republican Club, the Smith College Republican Club and the Young America's Foundation. “The tax you pay on income is the price you pay for working. Tax on profits, if you have a business, is the price you pay for being successful, and tax on capital gains is the price you pay for taking risks that work out.”
Citing the approximately 9 million words that comprise the federal income tax code, Forbes offered a simpler alternative: a flat tax rate of 17 percent on individuals who earn more than $46,000 a year, the same proposition he campaigned on during his 1996 and 2000 presidential bids.
Twenty-five countries around the world have adopted flat-tax policies similar to the one Forbes envisions, including Russia, Hungary and Iceland.
“What I hope ultimately happens in this country is we recognize one of the biggest burdens on this country is the federal income tax code,” said Forbes. “Nobody knows what’s in it. How many people prepare their own tax returns? It’s become an abomination.”
As part of Forbes’ policy, the 17 percent flat-tax rate would be extended to corporations, lowering the 35 percent rate on them, currently the highest in the developed world.
04.18.2012 | AMHERST– Steve Forbes, editor-in-chief of Forbes Magazine, speaks with a group of students after delivering a speech on the UMass campus Tuesday night (Photo by Brian Canova)
Asked about the "Buffett Rule" bill after the lecture, Forbes called the legislation destructive. The "Buffett Rule," derived from a statement by billionaire Warren Buffett, who suggested that he shouldn't be taxed at a lower rate than his secretary, would impose a minimum tax rate of 30 percent on the wealthiest Americans.
“In effect it raises the capital gains tax to rates we haven’t seen since the '70s, which means two things, you destroy capital, and you get less revenue and less capital creation. We’ve seen this movie before,” Forbes said, calling the move a political stunt.
“They don’t like rich people,” Forbes added.
Also during the speaking event, Forbes offered his take on health care, and the expected Supreme Court ruling due in June on the constitutionality of President Obama’s 2010 Patient Protection and Affordable Care Act, using the opportunity to frame his qualms with regulatory expansion.
“Ask yourselves, ‘Why is there a health care crisis?’ People will say, ‘Well, we want more health care, people like me are getting older and consuming more health care and it becomes more expensive.’ But ask yourself, why is the demand for health care considered a crisis, and not an opportunity? In every other part of our lives, if we want more of something, it seems a great opportunity for our entrepreneurs. So what’s with health care? Why is this seen as a disaster and not a real opportunity?” said Forbes. “The answer is we don’t have real free markets in health care.”
Forbes argued that in areas where free markets have permeated the health care industry, technological innovations have flourished while the cost to consumers has stayed relatively the same.
04.18.2012 | AMHERST– Steve Forbes, editor-in-chief of Forbes Magazine (Photo by Brian Canova)
“For example Lasik surgery for the eyes,” said Forbes. “Millions of people have done it. Lasik surgery today is better than it was 10 years ago and in real terms costs less than it did 10 years ago. Why? Because you, the consumer, write the check. Therefore providers have every incentive to make it more affordable to you, more attractive to you.”
Danielle Stone, a University of Massachusetts senior psychology student, said while she agreed with much of what she heard from Forbes, the health care discussion raised concerns, especially when it came to middle- and low-income earners and households.
“With health care, it’s easy to say ‘Pay what you can afford.’ But how do you account for the middle income people with families who can’t afford it right now?” said Stone, a founding member of Democracy Matters, a student organization on campus.
Nathan Lamb, president of the UMass Republican Club, said the magazine editor’s take on the health care issue was the night’s biggest takeaway.
“You don’t hear a lot of that on the news. You hear a lot about the Affordable Care Act, and not a lot about the alternatives,” Lamb said.
Nathan Fatal, president of the New England Objectivist Society, which also took part in the event, said while he admired Forbes as a businessman he felt the lecture failed to make a moral argument for free markets and capitalist enterprise.
“The moral argument is it allows us to act on our own judgment and provide for our own life,” Fatal said.