Crush Liberalism

Obama’s reviving failed “redistributionism” plan

As economist Thomas Sowell says: “”  Well, go ahead and chunk the Obamessiah into that ignorant category.  From WSJ:

New data from the IRS will be out in a few weeks on who pays how much in taxes. My contacts at the Treasury Department tell me that for the first time in decades, and perhaps ever, the richest 1% of tax filers will have paid more than 40% of the income tax burden. The top 50% will account for 97% of all federal income taxes, while the bottom 50% will have paid just 3%.

But Barack Obama has decided the rich still don’t pay enough. He would redistribute the tax burden even more heavily on small business owners and the entrepreneurial class (two-thirds of the tax filers in the highest income tax bracket are small-business owners.) The nonpartisan Tax Foundation’s Scott Hodge has just crunched the numbers on the Obama plan and concludes that “more than $131 billion would be redistributed from the top 1 percent of taxpayers to all other taxpayers.”

Sounds fair, no? Only 1.13 million taxpayers, out of some 128 million, would end up paying higher taxes, according to the Obama camp.

But in the real world, who ends up paying a tax is not just the person on whose tax return it falls. History has demonstrated time and again that raising tax rates on the wealthy in the name of “redistribution” leads to so much income shifting, reduced work and investment, and redeployment of money into tax shelters, that the rich usually pay less, not more taxes, at higher rates. The burden of paying for government shifts to others, including some who may not file an income tax return at all – because they no longer have jobs or no longer earn enough to pay income tax.

Economist Glenn Hubbard of Columbia University has shown that in 1970, when the highest tax rate was 70%, the top 1% shouldered 16.7% of the income tax burden. Today the top tax rate is 35% and the same class of taxpayers pays a whopping 39% of the burden. The worst way to “soak the rich,” Mr. Hubbard finds, is to raise tax rates.

Somebody needs to give the Obama campaign a refresher on all this. The Tax Foundation’s Mr. Hodge wonders: “Can a tax system so focused on redistribution be compatible with economic growth?” Probably not but the Obama brain trust wants to give it a try anyway.

If you wealth envy nuts want to make sure that the evil b#stards who keep you gainfully employed “pay their fair share”, then the best way is to cut their taxes!  Why?  Because cutting taxes causes them to do things to earn more income (investment, economic expansion, etc.), and basic math says that a lower percentage of a higher amount still equals more money.

Example:  Would you rather have 10% of a million dollars, or 50% of $100,000?  If you’re a liberal, you want the 50%, because it is a higher percentage.  If you’re not an idiot, though, you’ll take the 10%…because it is $100,000 instead of the higher percentage (but lower amount) $50,000.

Another example: If a man earns $250k (taxable income) and has to pay 35% of it in income taxes, he pays $87,500 in taxes.  But if he gets a 5% tax cut, uses the extra money to engage in more economic productivity, and as a result, he earns $300k and has to pay 30% of it in income taxes, he pays $90,000 in taxes!  In other words, cutting his tax rate causes him to improve his economic activity, which puts more money in not only his pocket, but Uncle Sam’s.  Yet you class envy morons can’t get past the 5% tax cut trees to see the $2,500 extra tax revenue forest!

Every single time that tax cuts have been tried, they have succeeded in bringing in more money into the economy and into government coffers.  Economic ignorance isn’t only patently offensive, but highly dangerous…especially when the ignoramuses are in charge.

July 10, 2008 - Posted by crushliberalism | economic ignorance, Obama, taxes