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Tax the rich: Should millionaires really pay more?

The fight over raising levies on the wealthy, a theme of the 'Occupy Wall Street' protests, is about more than money. It's a clash over fundamental American values.

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In Germany and France, wealthy citizens are petitioning their governments to tax them more; some are positioning themselves as Buffett's ideological cousins. In Italy, Luca di Montezemolo, the chairman of Ferrari, recently said in essence that the rich – the same people who can afford to buy his cars – can afford higher taxes and should pay them.

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In the United States, an argument that appears to be about money is actually something much deeper: a fight over the nation's character, waged between two archetypes at the core of the American dream. In one corner is the rugged, up-by-the-bootstraps individualist. In the other is the egalitarian, level-the-playing-field populist.

But these figures have been dueling in the national psyche ever since a band of rebellious Colonists dumped boxes of tea into Boston's harbor. So why is the notion of taxing the rich such a pervasive issue right now?

The answer is twofold. First is the matter of America's budget deficit: The federal government is awash in red ink. The national debt stands at a staggering $14.8 trillion. And the tools required to promote growth and create long-term solvency – raising taxes and cutting spending – are driving a wedge between Democrats and Republicans.

"The acute nature of the economic crisis is such that a fair number of people of goodwill and intelligence feel the deficit has to be tackled as a solution to the long-term economic problems," says Steven R. Weisman, editorial director at the Peter G. Peterson Institute for International Economics in Washington, D.C., and author of "The Great Tax Wars." "Everybody knows that it can't just be done with spending alone, so they're turning to taxes."

The decision to focus on the deficit, it's worth adding, marks a seismic shift in the nation's economic policy. "Since the time of Keynes, it's generally been viewed as destructive to raise taxes or to cut spending at a time of recession. That's what we thought was the lesson of the Great Depression," adds Mr. Weisman. "But there is a feeling that we have to close the deficit, even though that's viewed as completely irrational among the diehard Keynesians."

Twelve legislators on a bipartisan "super committee" have been tasked with creating a plan by Nov. 23 to reduce the deficit by more than $1 trillion over the next 10 years. Failure to reach a compromise will unleash a round of automatic spending cuts, ones that both Democrats and Republicans find odious.

Legislators are now locked in a game of chicken. Republicans have vowed to reject any tax increases. Mr. Obama pushed back, promising in a Rose Garden speech on Sept. 19 to veto any plan that cuts Medicare without raising taxes on the wealthy.

The deficit debacle is one impetus for cries of "tax the rich" on the left and subsequent howls of protest on the right. The other reason comes from life outside the halls of Congress. If you think the public ledger looks bad, consider the personal pocketbook.

More than 46 million Americans now live in poverty, according to census data released on Sept. 13. That number is the highest it's been since the US Census Bureau started keeping track 52 years ago.

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