Raise Tax Rates - Collect Less

High Official:  Our deep and nuanced understanding of reality gives us the duty and privilege to plan, invest, and guide our society. We must collect more resources, and so we will raise tax rates.

Assistant:  Rates are quite high now, sir.
Official:  We will set them higher.

Assistant:  We will almost certainly collect less revenue and injure economic growth.
Official:  That doesn't feel right. How could that be? I don't believe it. What fun is there in not raising rates? That is one nuance too far.

Why Doesn’t Obama Realize that Higher Tax Rates are All Pain and No Gain?
02/27/12 - by Dan Mitchell

[edited]:  Higher tax rates cripple growth and drive more people into the underground economy.

Even the International Monetary Fund agrees in this analysis of the Greek economic situation. At some point, tax rates become so punitive that the government collects less revenue. A remarkable admission. IMF Survy Online, December 16, 2011:

[edited]:  Reducing the Greek deficit is going to be hard without structural spending reforms. Their deficit will be 9% this year, well above their target of 7.5%.

Thomsen: "We have reached the limit of what can be done by increasing taxes. Any further measures should be done by reducing government spending."

Obama's Tax Priorities, The English Experiment, and the Bankrobber Willie Sutton as Leftist Theorist ...

 

Obama's Tax Priorities

Obama on Taxes - 12/16/10 - American Thinker by Allan J. Favish. Obama wants to raise the capital gains tax rate.

Transcript of the April 16, 2008 debate between Barack Obama and Hillary Clinton, moderated by Charles Gibson. [edited excerpt]

Gibson:  You favor an increase in the capital gains tax. You said on CNBC,  "I certainly would not go above what existed under Bill Clinton."

The capital gains tax is now 15%. It was 28% under Bill Clinton, almost double what it is now. Actually, Bill Clinton in 1997 signed legislation that lowered the capital gains tax to 20%. And George Bush has taken it down to 15%.

Obama:  Right.

Gibson:  In the 1980s, when the capital gains tax increased to 28%, revenues went down. And in each instance when the tax rate decreased, revenues from that tax went up and the government took in more money.

So why raise it at all, given that 100 million people in this country own stock and would be affected?

Obama:  What I've said is that I would look at raising the capital gains tax for purposes of fairness.

We saw an article today that the top 50 hedge fund managers made $29 billion last year. But, they are paying a lower tax rate than their secretaries. That's not fair.  [And not correct] Click, then see the entry "Rich Pay Higher Tax Rates Than Secretaries" at the upper right.

Economist Mark J. Perry:  The US federal income tax is highly progressive. Warren Buffett is wrong in his "analysis" of tax rates on himself and his employees.

Most secretaries would pay a federal tax rate averaging 9-12%. Most "super-rich" bosses with incomes of $200,000+ would pay a tax rate averaging at least 25%, about three times the average of their secretarial staff. If you include payroll taxes on everyone, the super-rich are paying at twice the average rate of secretaries.

I do not want oppressive taxation. I want businesses to thrive, and I want people to be rewarded for their success. But, I also want our tax system to be fair, and to finance health care, and to invest in infrastructure and schools.

You can't take out a credit card  [borrow massively]  from the Bank of China in the name of our children and our grandchildren, and then say that you're cutting taxes.

I believe that you pay as you go. You don't propose tax cuts unless you are closing other tax breaks for individuals. You don't increase spending unless you are eliminating some spending or you are finding some new revenue. That's how we got an additional $4 trillion worth of debt under George Bush which is helping to undermine our economy. This is going to change when I'm President of the United States.

Gibson:  But, history shows that when you drop the capital gains tax, revenues go up.

Obama:  Well, that might happen, or it might not. It depends on what's happening on Wall Street and how business is going. The biggest problem that we have on Wall Street is that we have a housing crisis that President Bush has not been attentive to, and that it took John McCain three tries before he got it right.

If we can stabilize that market and we can get credit flowing again, then I think we'll see stocks do well. And once again, I think we can generate the revenue that we need to run this government and hopefully to pay down some of this debt.

 

Repeated experience shows that lower tax rates produce higher economic growth, more jobs, and increased tax revenue. Despite this experience, Obama says "maybe yes, and maybe no".

Obama has two priorities: A fair tax system, and one that raises more revenue. These oppose each other at our current levels of taxation. Higher tax rates are more fair in Obama's judgment, but they will raise less revenue. What does he really want?

Actually, to collect much more revenue, he must collect more tax from the people earning $50,000 to $200,000 per year, because that is where most of the personal income is. Sorry.

Obama proposes the goal to "stabilize the housing market and get credit flowing again."  But, he does not provide a policy which would accomplish that. Lowering tax rates has brought countries out of recession. Raising rates has never done it.
 

The 50% Rate English Experiment

We don't have to rely on past results. England has run the experiment again, at great cost, to show us how the world works. They raised the income tax rate on the rich.

50% tax rate 'failing to boost revenues’
02/21/12 - Telegraph UK by Robert Winnett and James Kirkup

[edited, rearranged]
The amount of income tax collected fell sharply last month. This is the first formal indication that the new, higher 50% rate is not raising the expected amount of revenue.

The British Treasury received £10.35 billion in personal income tax payments in January, £509 million  (5%)  less than January 2011. Most other taxes produced higher revenues over the same period. This is the first year following the introduction of the 50% rate, which was expected to raise individual tax revenues by more than £1 billion.

A Treasury source said the drop in revenues was partly due to highly-paid individuals arranging their affairs. There is some fear that it is forcing entrepreneurs to relocate abroad.

Liberal Democrats have insisted that the 50% rate must stay, because it is important to demonstrate that the rich are paying their fair share.

Like Obama, the English Left is determined to take more money from successful people, regardless of raising more funds for government. That is true dedication to an ideology of "fairness".
 

Where the Money Is

The bank robber Willie Sutton was asked why he robbed banks. He supposedly replied "Because that is where the money is". His full reply is more interesting.

[edited]  Why did I rob banks? Because I enjoyed it. I loved it. I was more alive when I was inside a bank, robbing it, than at any other time in my life. I enjoyed everything about it so much that one or two weeks later I'd be out looking for the next job. To me the money was the chips, that's all. Go where the money is, and go there often.

Maybe the Left is more like Willie Sutton than like an efficient, pragmatic manager. They want to go for the money and go often. The amount collected is of secondary importance.

Tennessee Mosque

Reporter:  There is another side to the "Hate the Mosque" story.
Editor:  Islamaphobic bigot.

Ex-Kos-mmunicated
02/22/12 - Advice Goddess Blog by Amy Alkon

[edited]  Amy Alkon:  Eric Allen Bell at The Daily Kos started a film about a mosque being built in Tennessee. The Kos party line is that it is Islamophobia to criticize Islam. He toed that line, then some research changed his tune. He was unwelcome back in Kos-land.

[edited]  Eric Allen Bell:  I wanted to show what happens to countries when they gain a Muslim majority, how women are treated, that homosexuals were executed, that free speech did not exist, that the forced Islamic Law was not consistent with Democratic values. I reported anything and everything I could think of that ought to strike a chord with the Liberal mindset.

The response I received was, "Eric you are starting to sound like an Islamophobe. We don't want to make a movie that promotes fear. Let's just stick with the existing plan, okay?"

The Oil Market Panic

Fred:  Gas prices are going up. The oil companies are gouging us.
Mike:  Iran's desire for nuclear weapons is shaking up the Middle East. Oil companies are just mice among the elephants.

Fred:  Well, the government should limit the price.
Mike:  Do you want shortages, rationing, and two-hour lines at $3.00 per gallon, or to adapt in your own way at $4.50 per gallon? You are going to use less gas either way.

The Oil Market Panic
02/20/12 - Hoover.org by Richard A. Epstein

[edited and paraphrased]:  The rise in oil prices traces to a renegade Iran. The West sees that the Iranian nuclear threat is not just bluster. Iran poses far greater risks to world peace and the political order than even a major disruption in oil supplies.

An anxious West is making a concerted, effective effort to cut off Iran from the world’s banking system and to block the international use of Iranian oil. The Saudis have helped the West by expanding their shipments into world markets. One-third of world oil travels through the Strait of Hormuz. The Iranian threat to close the Strait and the movement of the U.S. aircraft carrier Abraham Lincoln into the Strait are serious.

These developments have driven the price of North Sea Brent crude oil to around $119 per barrel, a potential gasoline price of $4.25 per gallon. Ordinary Americans are being forced to tighten their belts. The best response is to allow this free-market adaptation to reality. A worse response is for the government to undermine the market by capping price increases or dictating its vision of the right price.

Any system of government subsidies or controls will disrupt the vital market process of continuous adaptation. It will also cost a fortune. The “hands off” motto of laissez-faire capitalism has never been more pertinent than in this oil crisis. Government interference in the market will make the effects worse.

Leading political figures on both sides have responded sophomorically. Their shared, incorrect premise is that price changes are evidence of a market failure, and this justifies intervention. It doesn't. Price increases should not lead to a call for price limits.

The real problem is the trouble brewing in Iran and the Strait of Hormuz. Politicians should neither panic nor pander. Their political energies are needed to reach a diplomatic or military solution for a serious international breakdown that requires our urgent and unified national attention.

The current rise in US oil and gasoline prices comes from reasonable fear of a conflict with Iran, and the current attempt by the US and other countries to cut off Iran's income through buying less Iranian oil, to pressure an agreement on nuclear weapons. This necessarily increases oil prices, but hopefully this will be less expensive than going to war.

This price increase is not primarily Obama's fault. But, we can rightfully blame him for denying the US much productive work and jobs developing the huge US oil reserves, and for refusing to make the US less dependent on foreign sources.

Development of domestic oil would not completely change the world oil price. Oil is an international commodity. But, a large domestic supply would more insulate the US from threats to foreign supplies.

We rely now on the  Strategic Petroleum Reserve, storing 726 million barrels of oil, to back up US consumption of 21 million bbl/day (34 days usage). It would be much better if the US were producing that 21 MMbbl domestically, rather than the current 5.8 MMbbl/day.

Hating Lottery Winners

Max:  Big companies are making obscene profits. Those lucky bastards should be paying their windfall profits back into the government, to help me.
Fred:  Yeah, and let's get back more money from those lucky bastard lottery winners, and from top athletes and movie stars, and popular writers, and super models.

Max:  Uh, I don't think you see the point.
Fred:  I thought the point was that no one should be lucky.

Why should businessmen be disliked and pay high taxes because their success is partly luck, while all-luck lottery winners are generally accepted as deserving their winnings?

Lotteries are a bad bet

Lotteries return only 60% of what is bet, and only 18-30% in the big prizes. Many people with a social conscience hate lotteries because they are designed to take money from people without much money, and states promote this scam on the people.

The following explains nicely the odds against winning anything and gives the social argument.

I hate the lottery  -  10/10/2010  -  Graham Templeton

[edited excerpts]  What kind of government runs a crooked game on its citizens? Well, it appears that is the Government of Canada.

The odds of hitting the jackpot on the Lotto 6/49 are about 1 in 64 million. Some unkind fellows have referred to this as a “stupidity tax,” arguing that if the players are dumb enough to take such a fool’s bet, they deserve the resultant siphoning off of their finances.

In some circumstances, I would be okay with that. Freedom costs money sometimes. But, rugged individualists refer to the right of a citizen to run a successful business. That argument does not apply to the government, which should not play on the mathematical illiteracy of its population.

This government runs massive ad campaigns to convince you to throw your money away on the lottery. But it won’t let you start a casino because gambling is bad for the community. Lottery rackets have been highly illegal, and they still are, unless you’re the government.

The government restricts our freedom, moralizing at us, and empowering itself to make our financial decisions for us. But, it plays commercials for its own brand of cocaine, while telling us to Just Say No to other brands.

Lottery winners and businessmen ...

Lottery winners are OK

Many people don't like the lottery because it doesn't pay enough or because the winnings are taxed. Almost no one hates lottery winners. I Googled "hate lottery winners" and found just one post hating a particular winner.

I hate lotto winners  - 07/06/10  -  Bun Boy Eats LA

[edited]  This woman with a stupid name just won a multi-million dollar lottery. For the 4th time with a friggin’ scratch ticket!!!

That’s just not right. I don’t believe in the lottery, I think it’s obnoxious. I think it’s worse than Miley Cyrus’s gummy smile. I don’t believe in getting ones’ hopes up that high. No one with teeth and a desire to own outside of a trailer park ever wins.

Yes, I’m jealous. Jealous that Joan Stupidface will get to add a wing to her tacky, faux finish Vegas crack den and procure a few dozen more mangy cats to poop in all the corners.

This is why I LOVE to watch programs such as “Curse of the Lottery!”

The complaint is that few lottery winners are admirable. Even so, there is no sentiment to take away most of their winnings through special taxes. The feeling is "they took their chances and won". Canada doesn't tax lottery winnings. That shows public support for the winners to keep all of their lucky gains.

Businessmen are Not OK

Businessmen (or women) play a type of productive lottery. They use their own money (and money from voluntary investors) to produce goods and services which people want to buy. This involves much planning, skill, and persistence, with a component of luck.

Some people seem to live in a sunbeam, creating a profitable business despite character flaws. Some people fail despite the best planning. Most businesses achieve a middle success, and some find super success, making millions and even billions.

The odd part is that successful businessmen are often disliked, especially for their success. A common sentiment is that they should pay more and more taxes because they were partly lucky, and so should give back most of their gains to the rest of us.

This sentiment is common even though these businesses add to the well being of customers and workers. A lottery only moves money from some people to others, giving the state a big cut along the way. A business creates well-being at the expense of no one, actually helping people, and paying taxes along the way.

If successful people and businesses are disliked and are supposed to pay for the rest of us, then why aren't lottery winners even more disliked? There is some luck in business, but the lottery is all luck. If we dislike businessmen who are somewhat lucky in the course of delivering goods and services, then why don't we despise lottery winners, who have done nothing more than pay for a ticket?

There is nothing to dislike about businessmen or lottery winners. They each put their resources toward a strategy for success. Many of both lose their investment. Of the two, the businessmen and investors should be admired for creating good things along the way. We shouldn't be grabbing at their winnings.