To cover the $1 trillion cost of heath care “reform”, Team Obama has proposed raising taxes by $544 billion, almost all on the “rich” — those in the top 5% of incomes.
That raises a couple of issues:
1) What if the rich “lay down” – working less as their prospective marginal take home pay gets cut? (see chart below)
2) How to inspire the next generation to bust their butts to grab for the golden ring? Maybe “doing good” will be enough motivation, but I’ll be betting “under” on that one.
3) What happens when the filthy rich are fully taxed and there’s still a big budget gap? My hunch: they’ll be coming after the rest of us.
Source: IBD, Tax Hike Comin’,July 16, 2009
http://www.ibdeditorials.com/IBDArticles.aspx?id=332637892829537
For details (local + state + federal)– all states — see Tax Foundation Report
http://www.taxfoundation.org/publications/show/24863.html
* * * * *
The Homa Files 
July 17, 2009 at 10:01 am |
The argument that taxation drives the behavior of the rich is nonsense.
I love the idea that a guy earning $1mm will stop working because he is being taxed too heavily. Because earning $0 and not paying taxes will be some kind of a moral victory? Really? Won’t we just hire the next guy on the rung and tax his $1mm salary? Do people REALLY still believe that there is such a finite number of competent managers?
Most wealthy people are not cleaning toilets or doing physical labor. I would argue that the majority actually ENJOY what they are doing and will not be incented to stop because their taxes increased.
What about entrepreneurs? I can only speak for myself, but tax levels never entered my mind when I started my business. Motivated people do things. Talkers make excuses and do nothing (see:Joe the Plumber) .
Only in the sanctity of his tax specialists office does the rich man really start thinking about taxes – and that is to consider the best way to keep from paying them. If he has enough money he is typically successful.
July 17, 2009 at 7:01 pm |
“The argument that taxation drives the behavior of the rich is nonsense.”
Stating a position as controversial as this with such absolute confidence is the sign of a true ideologue. Find out how many corporations and wealthy people relocate businesses and investments in the face of higher taxes, usually on the advice of investment banks and private wealth managers. That should be enough to show that your argument should at the very least be made with nuance, not loudly bleated.
July 17, 2009 at 7:03 pm |
Let me give one simple example – why did Tiger Woods move to Florida when he started golfing and why does he still live there?
July 18, 2009 at 11:22 am |
Three reasons why I disagree with you:
a) Folks that I work with earning north of $300K/year work 40-50 hours/week on average. They work smarter, not harder.
b) I don’t see the big money earners working any less because of the higher taxation rates.
c) High income earners are currently undertaxed. Example: Warren Buffet paid 17% effective tax rate last year which is completely ridiculous.
One reason why I agree with you:
At the margin, people will make decisions about working incremental hours. We saw this during times when taxation rates were much higher. You see this behaviour in Europe where taxation rates are higher. At the margins, people begin to value free time ahead of working extra hours because of higher effective taxation rates.