One problem with socialism, besides running out of other people's money, is failure to account for human behavior. Are higher taxes on high earners the answer to our failing economy? History says no - quite the opposite.
Presidents Coolidge, Kennedy, Reagan, Clinton, and Bush each enacted reductions in tax rates on business, investment, and/or personal income at all levels. In every case, economic growth (GDP) and employment increased, sometimes dramatically, along with wealth creation at every level. Unemployment rates of 5 percent and below were considered the achievable norm. Furthermore, tax collections became more progressive, with 70 percent of taxes now paid by the top 10 percent of earners, and 37 percent paid by the top 1 percent alone. Finally, revenues to the Government increased as a result of these tax cuts.
For example, Clinton's 1993 tax hikes produced little new revenue; they did however create popular backlash and historic Republican Congressional majorities in 1994. It was the 1997 cuts in the capital gains tax rate, from 28 percent to 20 percent, signed by Clinton under Republican pressure, that liberated investment capital to productive use. Increased revenues to the Government and balanced budgets followed.
Consider now Obama's resolve to raise taxes on high earners. These include small business owners, our primary job creators. They often file as individuals and are now in Obama's crosshairs. Though most live modestly, and reinvest income back into their businesses, they will of necessity lay off employees that higher taxes render unaffordable, with job losses estimated at 700,000 nationwide. Other high earners just won't bear the risk and grief of putting hard-won income and capital to work in a feeble economy with increasingly oppressive taxation and regulation. They will send their money overseas and/or into tax exempt securities. Massive tax increases on investment, scheduled Jan. 1, 2013, will advance this trend and devastate retirement accounts for everyone.
Now Obamacare, the kill shot. Obamacare includes 21 new taxes on individuals, employers, insurers, medical devices, excise taxes, payroll taxes and more, with IRS access to personal bank accounts. Rich folks will be OK. It's the middle class these taxes hit. Hard. In a weak economy, with metastasizing debt, real unemployment at depression-era levels, productive Americans can look to be bled dry until wanton government spending is cut, and we return to tax policies that have been proven to create wealth, generate jobs, and increase revenues for necessary government functions.
Carol Costanzo
Athens
