Tilted Forum Project Discussion Community - View Single Post - "You Can't Soak the Rich"

aceventura3 · 07-20-2010, 01:09 PM

Quote:

Originally Posted by Derwood

People don't really "earn" welfare, though, right?

What do you consider welfare?

Using one example of how this issue is confusing, consider the earned income tax credit. To get this credit a person has to have earned income, but not too much earned income. With the credit, the person can get back all taxes paid to the federal government, plus in addition they get the remainder of the credit in the form of a check from the federal government. Is that welfare? A person or family can loose 100% of the tax credit if they make too much money.

Here is another editorial with facts supporting the premise:

Quote:

State Finances: Oregon voters decided in January that it was a good idea to raise taxes on the wealthy to increase revenues. The result: Tax revenues are actually down. The lesson: Envy doesn't pay.

Measure 66 passed 54-46 on Jan. 26 to increase funding for "education, health care, public safety, other services." It's an envy tax that increased the rates to 10.8% from 9% on single filers earning $125,000 to $250,000 a year and joint filers earning $250,000 to $500,000.

For individuals pulling down more than $250,000 a year and families making more than $500,000, the rate went up 2 percentage points.

The ballot initiative was pushed by aggressive public employee unions. Supporters spent $6.9 million campaigning for Measure 66 and 67, which increases corporate taxes, telling voters that 66 alone would raise an additional $472 million.

But that rosy projection isn't coming to pass. The Heartland Institute's Budget & Tax News reports that "Oregon's June revenue forecast predicted tax collections through July 2011 will come in $577 million shy of the budgeted amount. Nearly all of the decline is due to lower-than-expected personal income-tax collections."

This should not come as a surprise. Raising taxes on the wealthy often does the opposite of what the political left promises. Revenues tend to fall because soaking the rich, if we might use that class-warfare term, stifles economic and investment activity, which has a negative impact on the income that the left so desperately wants to tax. Economic history shows that when states — and entire nations — cut tax rates, tax collections grow.

Had the liberals been paying attention to the real world instead of trying to repackage their failed ideas, they would have noticed that taxing the wealthy erodes the tax base. People of means will simply leave rather than pay punitive rates.

This has been the story in New Jersey. From 2004 to 2008, $70 billion in wealth left as many of the state's better educated, more entrepreneurial and more professional residents fled a tax code that punishes success.

The Star-Ledger of Newark reported that "the exodus of wealth . .. local experts and economists concluded, was a reaction to a series of changes in the state's tax structure — including increases in the income, sales, property and 'millionaire' taxes."

Maryland has had a similar experience to New Jersey's. Increasing the rate on the state's richest residents — 0.3% of filers — led to Maryland losing one-third of the millionaires on its tax rolls. Lawmakers thought their scheme would yield an additional $106 million in tax collections in 2009, but the millionaires paid $100 million less than they had the year before.

Unless Oregon voters quickly reverse their mistake, that state will suffer the same decline as New Jersey, at one time one of richest states in the country. They could pick up a lot from New Jersey Gov. Chris Christie, who, in addition to recently proposing a sweeping privatization effort in his state, vetoed in May the legislature's income-tax surcharge on million-dollar earners.

Supporters claimed the New Jersey millionaires' tax would raise $635 million, and the Democrat-dominated legislature, deeply invested in that myth, tried to override the veto. But it was unsuccessful in superseding the decision of the governor, who acknowledged during his successful campaign against incumbent Jon Corzine that "our tax rates are oppressive and are driving residents out of state."

Wealth is not plundered treasure for lawmakers to dish out as political favors. Neither is it a sin that should be punished. It is to be respected — and invested, where it is free to generate more wealth and create jobs.

Taxing it doesn't produce more. Taxes send wealth underground and chase it away. Rather than stoking revenues, higher rates often reduce government income. New Jersey has learned, and Oregon is learning. Now that they've paid for the lesson, others can get it for free.

The Great Escape - IBD - Investors.com

The pattern is pretty clear.