Schiff: Taxing the Wealthy Won't Cure Financial Woes

As America approaches the fiscal cliff, Republicans and Democrats are still working through negotiations to see if a deal could be struck before the end of the year. If nothing is done, tax cuts enacted on the richest Americans under President George W. Bush would expire, raising the tax rate on those earners from 35 to 39.6 percent.

But raising taxes on America's wealthiest earners won't help fix America's bleak finances, according to Peter Schiff, a Weston resident who is the CEO of Euro Pacific Capital.

Schiff, who unsuccessfully sought the Republican nomination for Connecticut's U.S. Senate seat in 2010, wrote an op-ed piece published in the Wall Street Journal last week which seeks to debunk President Barack Obama's notion that taxing the rich at higher rates—which has been done in the past—will help America climb out of yearly deficits and ever-increasing debt. Schiff took to CNBC recently to defend his op-ed. 

"Raising taxes on the top two percent—they're already paying more than their fair share," he said. "Increasing taxes on that group isn't going to solve the problem. We do need to dramatically cut government spending, and if we fail to do that, then we're going to have to increase taxes dramatically on the middle class. The fiscal cliff is just a small down payment on paying the piper. We have to pay for all this government. The big mistake was growing government."

Schiff said the wealthiest are already paying more than enough in taxes. In his op-ed, he said that while the tax rate on the wealthiest has fallen since the 1950s, the tax burden has remained relatively flat because almost half of those who file taxes pay none. 

"Right now, I'm paying 45 percent of my total income in income taxes, both to the state of Connecticut and to the federal government, and if you take the three percent Medicare tax," he said. "After the tax hikes go into effect next year, more than half—more than half of my total income is going to go to the government. You tell me, what's fair about that when medieval serfs pay 25 percent, I'm paying half. I don't care what the majority voted to do, they don't have a right to steal my money just because they vote for it."

And what will happen if taxes are raised on the rich?

"You know what the wealthy are going to do," Schiff said. "They're going to invest more abroad, they're not going to work as hard, they're not going to pay as much in taxes, they're not going to employ as many people. Their employees are going to pay all the taxes."