This is a painful commentary for me to write.

For nineteen years, I have been a proud graduate of the University of Chicago’s Graduate School of Business. The rigorous, “Chicago School” of economics-inspired curriculum has provided me with a firm grounding in economics, finance and business which has served my career well in the fields of private equity, management consulting and currently, technology services.

The late Nobel laureates, Merton Miller and George Stigler, were among the elite class of professors whose lectures I had the privilege of attending. Central to the teachings at the University are some the most important and time-tested underpinnings of free-market societies including:

Economics is a behavioral science which posits that individuals are “rational actors” who make conscious choices and trade-offs seeking to optimize their own personal objective functions;

Adam Smith’s “invisible hand of self-interest”, while serving the wealth maximizing interest of the individual, enriches society as a whole by providing products and services that people need and value;

To maximize wealth creation, labor and capital must be allowed to flow freely among market participants across industries and national boundaries seeking their highest alternative use and return.

Imagine my dismay to learn this election cycle that the epicenter of Barack Obama’s wealth redistribution-based economic plan is Hyde Park, Illinois. Austan Goolsbee, the University of Chicago’s newest celebrity economist, is not only challenging these time-tested foundations of free societies, but he also seeks to test the theoretical limits of the Laffer Curve. Mr. Goolsbee seems to think households and small businesses making over $250,000, as well as those making under this threshold, will not “rationally act” to changes in the marginal economics of working and investing — driven by changes in tax rates — in ways that will be harmful to the overall economy. Preserving incentives to work, save and invest is critical to capital formation, the fuel which drives economic activity, employment and wealth creation. Under Obamanomics, capital and capitalism are under assault at a time when we need a double dose of both to stimulate much needed economic activity.

Mr. Goolsbee also seems to believe that taxes and marginal economics are only influenced at the federal level. Under current law and depending on the state that one lives in, household marginal tax rates can easily range between 60-70% when you include federal and state income taxes, local earned income taxes, FICA taxes, unemployment insurance taxes, Alternative Minimum Taxes (AMT), Schedule A and personal exemption phase-outs. I estimate my own personal household marginal tax rate to be between 47-52%, again under current law. Under the Obama-Goolsbee plan, I expect this rate to increase an additional 10 points. Adding in all forms of taxation including property taxes and other taxes levied mostly at the local level, the tax burdens of most Americans, both “rich” and not, are well in excess of what was intended by the 16th Amendment. Is this what is meant by tax fairness?

Just fifteen years ago, my household did not have two nickels to rub together for wealth accumulation purposes. But through hard work, investments in education, a dual wage earning household (sacrificing precious time with our young family), and a diligent focus on spending and thrift, through good times and bad, we managed to accumulate some wealth. We have no corporate pensions and expect nothing from a bankrupt Social Security system that our government refuses to acknowledge or reform. Our home is vinyl-sided, not stone, our cars are aged, not new, and our focus on material wealth is held firmly in check. We have never lived beyond our means and Wednesday nights are reserved for bible study at our local church. We believe deeply in personal responsibility and the words “to whom much is given, much is expected.” We have a charitable foundation and give more to charities annually than Al Gore and Joe Biden have given decade-to-date, combined.

We are Americans, just like you and my immigrant grandparents, whose values we cherish and try to emulate. And yet, despite our diligence and thrift, we find ourselves in the crosshairs of Mr. Goolsbee’s economic experiment which is well poised to punish our moderate success, as well as those of many other Americans.

Mr. Goolsbee promotes a different form of capitalism where economic activity and wealth creation is created from the “bottom up”; where government can be the primary engine of job creation; where “the rich” can carry nearly 100% of tax burden of society; and where $3 trillion of capital drained from the private sector annually to support government spending is a better resource allocation option than private sector alternatives. As relevant examples, these are the underpinnings of the current French and Swedish social democracies, which even their respective governments are trying to move away from due to capital flight and economic stagnation. Is this the new vision of America to inspire the next century of immigrants and citizens that Mr. Goolsbee has in mind?

I am in full motion preparing our list of rational actions in anticipation of new tax legislation from the liberal trinity of Obama, Pelosi and Reid, inspired by the Chicago School of Obamanomics. Among the many actions we are considering (with the help of a tax professional with whom we’ve never before engaged) are work leaves-of-absences/sabbaticals, inspired by poor “take home pay” economics, and reduced discretionary spending and charitable giving beginning with, of course, the University of Chicago’s annual contribution. Rational actors, all of us.

Michael J. Briglia

Kimberton

MBA, UC Graduate School of Business, 1989 (with honors)