Jim Clayton, the owner of a Knoxville, Tenn., company that builds mobile homes, is one of the millionaires whose taxes would soar under President Clinton's economic recovery plan. His personal tax bill would probably increase to $3.5 million, from the $2.8 million he paid last year.
But he's not complaining. "The proposed tax increase is clearly livable," said Clayton, whose net worth was estimated by Forbes magazine at $370 million.What does bother Clayton, and many other wealthy taxpayers, is the nagging worry that Congress will not be able to reduce spending, that the deficit will continue to grow and the economy worsen.
Polls show that a majority of Americans support the president's plan but that four of every 10 people are concerned that it may turn out to be just another way to raise taxes.
And a dozen affluent taxpayers who were interviewed last week said much the same thing. None objected to paying higher taxes as long as the government used the money to reduce the federal deficit or to stimulate the economy.
But almost all of those interviewed said the plan did not go far enough in reducing government spending - and most predicted that the plan would fail because Congress would be incapable of cutting back on lawmakers' favorite programs and projects.
Accountants say that if the Clinton plan is enacted and the top income-tax rates are raised to 36 percent and 40 percent, wealthy taxpayers would most likely respond by shifting investments from companies that pay high dividends to companies with more potential for long-term growth.
They would do that to take advantage of the suddenly more attractive 28 percent tax rate on long-term capital gains, said Sol Upbin, a New York partner with Arthur Andersen & Co.
"There is nothing in Clinton's proposal that opens the door for people to chase the kind of non-productive investments that were around before the 1986 tax act," Upbin said. But that could change, he added, if Congress is unable to resist the impulse to add tax shelters and loopholes for pet projects.
Most of the affluent taxpayers interviewed said they believe the Clinton plan is fair.
"I basically feel the president's plan is necessary," said Noel D. Ginsburg, 33, who owns a plastics factory in Denver and expects to pay $50,000 to $100,000 more in taxes if the tax plan is approved. "People in lower income-tax brackets will be willing to pay more taxes only if they realize that the people in the higher brackets are paying their share and don't have a lot of loopholes."
As a practical matter, the tax increases would have little effect on the lives of the richest taxpayers, whose numbers continued to swell in recent years despite the recession, said John J. DeMarco, senior vice president of PSI, a Tampa, Fla., marketing-research concern that monitors the behavior of wealthy consumers for financial institutions.
"The new taxes would have virtually no impact on their lifestyle," he said. "They'll keep the Mercedes an extra year, or something."
Some millionaires were cryptic about the tax increase. The comedian Bill Cosby, whose net worth exceeds $300 million, said only, "I am, therefore I pay."