Higher taxes do not equal more revenue, example #85902479…

posted at 7:41 pm on November 28, 2012 by Erika Johnsen

Let’s put aside for a moment President Obama and the Democrats’ class-warmongering rhetoric about wanting “millionaires and billionaires” to pay their fair share (I’m pretty sure that dubbing families that make over $250k/year “millionaires” is an over-generalization, but yeah, sure), and forget that the projected revenue from hiking taxes on the wealthy is a laughably insincere, piddling effort at solving our wildly out-of-control binge-spending problem. Let’s just focus on the universally acknowledged wisdom that, when you want less of something, one always-viable option is to put a tax on it.

Exhibit A, via the Telegraph:

In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs.

This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election. …

George Osborne, the Chancellor, announced in the Budget earlier this year that the 50p top rate will be reduced to 45p from next April.

Since the announcement, the number of people declaring annual incomes of more than £1 million has risen to 10,000. …

Far from raising funds, it actually cost the UK £7 billion in lost tax revenue.

I.e., wealthy Britons probably invested a lot of resources into either reducing their taxable incomes or simply moving abroad — and no doubt our own dear Democrats would label this rational self-interest as malicious greed or a disdainful lack of patriotism. Whatever they want to call it, they can’t disguise the fact that the threat of more of your money being taken from you means you’re going to look for ways to avoid that fate — and when it starts to get really serious, there’s a disincentive to even try and make that much money in the first place.

Maybe these higher taxes alone might not spell economic doom and recession for the economy, but they certainly don’t encourage it along, and combined with the rest of President Obama’s agenda of more bureaucracy, more regulation and red tape, more costs, more redistribution, and the list goes on… These together are long-term trends for economic decline, and it’s not like ‘nobody could’ve seen this coming’ or anything.

This is the infamous Laffer Curve, and it’s simply the common-sense recognition that you should include changes in taxable income in your calculations when trying to measure the impact of higher or lower tax rates on tax revenues.

…[L]et’s now think about President Obama’s proposed class-warfare tax hike. He wants higher tax rates on investors, entrepreneurs, small business owners and other “rich” taxpayers. And he wants more double taxation of dividends and capital gains. And a higher death tax rate, even higher than the ones imposed by France and Venezuela. …

Those questions are hard to answer. Ask five economists and you’ll get nine answers, but there is compelling evidence that higher tax rates do have a negative impact.


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Wow, you mean tax rate and tax revenue are not the same thing? Who would a thunk?

STL_Vet on November 28, 2012 at 7:48 PM

Clearly taxes are racist, that’s the only possible reason why they act in opposition to Obimbo’s policies.

SoRight on November 28, 2012 at 7:49 PM

These pictures of Oblahblah are making me physically sick…

Seven Percent Solution on November 28, 2012 at 7:51 PM

The hard lefties know this. They also know the average ignorant American doesn’t know this. They are too busy worrying about who wins the mirror ball trophy and who will be the leading American Idol contestant in January.

Obama is deliberately holding firm on this because he can. He has the willing cooperation of the networks and the newspapers. He knows they will be lucky to get 8 days worth of deficit spending from this proposed tax hike on the “rich”. He also knows it will destroy wealth and jobs.

HE WANTS THIS. It is the only way to expand the dependent class and thus government power.

Liberty or Tyranny? I doubt if 50% of Americans know the difference.

karenhasfreedom on November 28, 2012 at 7:53 PM

change you can really believe in…. thanks to the morons in this country

ultracon on November 28, 2012 at 7:58 PM

Only 6000 ! For such former world power, that isn’t a lot of millionares…. Even when the number was 16,000, you would think it’s obvious to even the most ignorant leftist that you can not solve a country’s financial problems from the tax of 16,000 people. Once again a prime case of MSM coverup and propaganda. The MSM should have made a big deal out of this, and exposed the lie, instead of propagating it.

gozzak on November 28, 2012 at 7:59 PM

Which do most American’s prefer, a chance or a check?

The answer used to be clear.

Times they are a’changing. Or the public is being sold a sheep with some very suspicious looking fangs peeking out from underneath.

IndieDogg on November 28, 2012 at 8:00 PM

I never hear Boehner, McConnell or the other stupid Repubics using any of these arguments. God help us with those incompetents representing us. What all this is, boils down to an old problem…… taxation without representation.

ultracon on November 28, 2012 at 8:01 PM

Why do we call taxing high earners “taxing the wealthy” anyway? Let’s call it “taxing the earners.” If we ever get around to a net worth tax, then we can call it “taxing the wealthy.” Like that would ever happen.

The Reasonable Man on November 28, 2012 at 8:02 PM

Tax the $250K’ers in return for ending earned income credit, college tuition credits and mortgage interest deduction….then go out and poll the Libs and get back to me…

hillsoftx on November 28, 2012 at 8:06 PM

They are too busy worrying about who wins the mirror ball trophy and who will be the leading American Idol contestant in January.

karenhasfreedom on November 28, 2012 at 7:53 PM

We’d do better to engage the hordes of reality TV-watchers than dismiss them like this. They are low-information voters and respond to simple messages. We ignore them because we see it as beneath us to “cater” to them. But they don’t need catering to, they just need a little attention and a tad less condescension.

alwaysfiredup on November 28, 2012 at 8:07 PM

RESULTS?!?!?!?!

Results do not matter. Forward toward the fail and equal sharing of misery and death!!

jukin3 on November 28, 2012 at 8:07 PM

No shitsherlock!

KOOLAID2 on November 28, 2012 at 8:09 PM

We’d do better to engage the hordes of reality TV-watchers than dismiss them like this. They are low-information voters and respond to simple messages. We ignore them because we see it as beneath us to “cater” to them. But they don’t need catering to, they just need a little attention and a tad less condescension.

Yep. This is what cost us 2012. The low information and low IQ voters turned the election. Ignore them at our own peril.

jukin3 on November 28, 2012 at 8:09 PM

But…but…but Barry is an ECONOMIC GENIUS! He knows better than anyone. Just ask him!

GarandFan on November 28, 2012 at 8:23 PM

Clearly the Feds need to be buying millions of Powerball chances like now in order to solve the budget problem. Duuuuhhh

Dr. ZhivBlago on November 28, 2012 at 8:25 PM

From the Buffet thread:

Let’s review. You said:

I also understand that taxes on investment income is NOT intended to encourage people to invest less.
verbaluce on November 28, 2012 at 5:39 PM

I said – “intent is irrelevent”.
Why do you refuse to answer a simple question? (rhetorical question – you’re a lib so you can’t/won’t answer straight questions)
When taxes are increased on a particular product or activity, is consumption of said product or participation in said activity reduced or not? Simple yes or no.
The intent is irrelevant – does this happen or not?

Since you don’t seem to understand the economics involved, I can try to explain it for you, but I can’t comprehend it for you.
If the taxes go up for any particular activity – capital gains, dividends, wage income, etc, the wealthy will find ways to circumvent those increased taxes. They may invest less, or they may invest more in tax free bonds or other tax shelters, or they may invest more overseas, or they may defer earnings in some way – hoping eventually the rates will change again. But they will find a way to get out of paying those taxes. That’s what they pay their lawyers and accountants for. Why do you think your hero Buffet has been paying his lawyers to fight the IRS over the last 10 years of taxes on Berkshire-Hathaway? He’s the ultimate “do as I say, not as I do” hypocrit – as are nearly all liberals.

dentarthurdent on November 28, 2012 at 8:18 PM

dentarthurdent on November 28, 2012 at 8:39 PM

Democrats trying to balance budgets by increasing taxes is like watching your dog chase its tail.

Wigglesworth on November 28, 2012 at 9:06 PM

Yep. This is what cost us 2012. The low information and low IQ voters turned the election. Ignore them at our own peril.

jukin3 on November 28, 2012 at 8:09 PM

You got a nice short simple message message for them that will sink in better than…

“Elect me and I’ll give you more free stuff and tax other people to get it, people who made their ill gotten gains unfairly from your labor and by screwing you”

…that will work?

I’m all ears.

farsighted on November 28, 2012 at 9:07 PM

You don’t get it with your fake “curves” and diddly squat.

You have all these rich people with money, right? And you take some of it and feed poor children who need food and everything. And when you need more, you just go get more. And the poor kids who are children get fed, and the rich people just have one yacht.

There’s plenty of money — look at all these rich people who are all snickering around — and your right-wing curves and such are just liney-crap you draw for the Homo Moronomous’s who frequent your right wing sight which is for mouth-breathers.

*yawn*

Axe on November 28, 2012 at 9:13 PM

Oh come on. Any good leftist economist knows that doubling taxes will double revenues!

Nancy Pelosi said that each dollar spent by govt generates 1.30 in revenues.

Why are we out working when all we have to do is pass paper back and forth between ourselves?

DavidM on November 28, 2012 at 9:17 PM

Rs are in a vanishing minority among the political class

http://mobile.reuters.com/article/idUSBRE8AS02I20121129?irpc=932

here’s all the ‘business class’ weighing in..more taxes please.

like i’ve said before, don’t fight on this hill today. let it go. There’s much bigger fish to dry in the future

for example..what happens when PEU pension funds claim money due when there is none? Sue

http://blogs.the-american-interest.com/wrm/2012/11/28/california-pension-fund-takes-on-bankrupt-city-in-court/

r keller on November 28, 2012 at 9:27 PM

Puhlease. They are acting like raising taxes to raise revenue and reduce the deficit is what this is all about. They KNOW it’s a lie. Even if things work out the way they say, the new revenue will NOT reduce the deficit without spending cuts. It will NOT even cover the growth of the deficit projected for next year.

Without significant cuts to entitlement programs, we will not see any real deficit reduction. And this president and senate has no will to touch that third rail. And we will still drop off the fiscal cliff even with their tax plan.

Hold on tight, it’s going to be a bumpy ride!

Phil-351 on November 28, 2012 at 10:07 PM

I’m pretty sure this is too complicated for liberals to understand. They’re still struggling with the notion that money-hungry capitalists get richer by cutting prices. They’ll never grasp the distinction between tax raes and tax revenues.

tom on November 28, 2012 at 10:09 PM

We’d do better to engage the hordes of reality TV-watchers than dismiss them like this. They are low-information voters and respond to simple messages. We ignore them because we see it as beneath us to “cater” to them. But they don’t need catering to, they just need a little attention and a tad less condescension.

alwaysfiredup on November 28, 2012 at 8:07 PM

I think you misinterpreted my total disgust at our situation. I wasn’t intending to malign the couch potatoes that are completely wrapped up in popular culture.

I am absolutely disgusted that the GOP elite is so damn clueless in how to effectively get the message out.

H. Ross Perot very effectively got the message out back in 1992 through his very entertaining infomercials. Even in spite of the fact he went loony tunes crazy in the middle of the campaign, withdrew because of some unknown threats against his daughter’s wedding, and then re-entered the race, in spite of the fact he had a completely clueless VP on his ticket (the admiral was supposed to be a placeholder until someone else was found but due to several state laws on balloting, the admiral was stuck on the ticket), Perot STILL managed to get 20% of the popular vote. I believe he could have won the election had he not gotten cold feet when he began to pull even or even ahead in the polls.

These people who are completely engrossed in the popular culture need to be reached. Breitbart understood this. However, if you bring this up to our hapless leaders in Congress, they will blankly stare at you.

They STILL think they lost this election because of the amnesty issue. They rolled over immediately the very next day and got on their knees and began to offer up revenue enhancements to Obama.

Reagan and Bush I are STILL waiting for the promised spending cuts when they bargained in Congress back in the day and allowed tax increases to go through first. Michael Reagan was on the air today reminding people they are still waiting for those spending cuts from almost 25 years ago.

The Dems know this and know they can roll the GOP, always, each and every time. Are the rest of you as furious and I am about this?

karenhasfreedom on November 28, 2012 at 10:13 PM

Liberty or Tyranny? I doubt if 50% of Americans know the difference.

karenhasfreedom on November 28, 2012 at 7:53 PM

It’s worst. They don’t care.

Alabama Infidel on November 28, 2012 at 10:17 PM

Erika,
Isn’t the accepted goal of socialism, at some point, to run out of other people’s money anyway?

FlaMurph on November 28, 2012 at 10:21 PM

It’s worst. They don’t care.

Alabama Infidel on November 28, 2012 at 10:17 PM

Ouch, you are probably right. I chalk this up entirely to the deliberately dumbing down of 2 generations of Americans who were not taught about our founding fathers and their very careful deliberation on how they shaped our country. I am fairly certain the public school teachers and their unions wanted this disconnect so they could have a voting electorate willing to swallow the crap shelled out by the Dems.

karenhasfreedom on November 28, 2012 at 10:22 PM

Liberty or Tyranny? I doubt if 50% of Americans know the difference.

karenhasfreedom on November 28, 2012 at 7:53 PM

Democracy and socialism have nothing in common but one word, equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude. (Tocqueville)

And some commissars will be more equal than others.

FlaMurph on November 28, 2012 at 10:28 PM

Why do we call taxing high earners “taxing the wealthy” anyway? Let’s call it “taxing the earners.” If we ever get around to a net worth tax, then we can call it “taxing the wealthy.” Like that would ever happen.

The Reasonable Man on November 28, 2012 at 8:02 PM

Because democrats, (with the help of Republicans) have always controlled the language. Like now, they’re all running around talking about “revenue”. Instead of joining them, Rupublicans should make them say “TAX”, and stop all the BS about “revenue” and “investments”. Even if you’re just talking about talking away deductions, it’s still a tax increase. If your mortgage deduction is taken away, you will pay more TAX.

Alabama Infidel on November 28, 2012 at 10:30 PM

Anyone who calls them “revenue” is an utter fool.

Schadenfreude on November 28, 2012 at 10:37 PM

Wow, you mean tax rate and tax revenue are not the same thing? Who would a thunk?

STL_Vet on November 28, 2012 at 7:48 PM

^This.

I get so sick and tired of politicians deliberately confusing the two in order to get what they want.

The Rogue Tomato on November 28, 2012 at 10:59 PM

The Red Queen’s Law (“The more there is for you, the less there is for me!”) typifies zero-sum situations. Or to put it another way, in a zero-sum situation, if I win, you lose; and vice versa.

That is how Democrats see the economy: if you get more of the apple, I get less; if you get less of the apple I get more.

But the problem is an economy is not at all like an apple. It is not zero-sum. Rather, it is win-win or lose-lose like air in a balloon. That is, as more air is pumped into the balloon, the rich (let’s say the top two-thirds of the balloon) receives disproportionally more air (riches) than the bottom third. However, the bottom third also receives more air (riches). So, in other words, in a booming economy, the rich get disproportionally richer, but the middle and lower classes get richer also.

Yet try to let the air out of the balloon (by taking wealth away from the rich), and the whole balloon becomes smaller. That is, the rich get disproportionally poorer, but the middle-class and poor get poorer (have less air) too.

Consequently, you really only have two choices. Let the rich get even richer, but the middle-class and the poor will also get richer, or, make the rich poorer, and have the middle-class and poor become poorer too.

Most Conservatives (who believe people mainly operate in their own interests most of the time anyway) would choose the first option because they too, even if middle-class or poor, would become richer. But unfortunately, most Liberals are so ideological (jealous?) that they would rather cut off their own noses (become poorer themselves) just to spite the rich.

This latter desire, in the social sciences, is called a threat orientation. That is, I certainly lose by killing you when the divorce court grants you custody of the children–but you lose even more. And that’s my ultimate desire, to destroy you. So naa, naa, naa, naa, na!

Not very adult, is it? But then Liberals, in general, aren’t very adult, are they?

Dr. Charles G. Waugh on November 28, 2012 at 11:10 PM

Traitors are in charge now…of the children of the land…good ol’ Bryan Preston.

I’m not saying that this strategy is without risks, or that it is anywhere near something that a responsible president and party would even contemplate. But we’re dealing with a president who despite his rhetoric is far out of the mainstream on policy, and is quite capable of ignoring public opinion in the short term to achieve his goals in the long term. He could trade some pain in early 2013 for 18 months to spin that pain as the Republicans’ fault, and present himself and his party as the only defense for Americans who have found themselves depending on government services to survive. The Democrats are a party without elder statesmen who ever think of putting the country ahead of their party.

So the president may well not be bluffing, and he may be willing to risk hurting millions of Americans in order to make them loyal to him.

Bryan should not call them “revenues”. No one should.

Schadenfreude on November 28, 2012 at 11:29 PM

JFK & Reagan & Bush cut taxes, collections went UP, all 3 times, when Obama raises taxes collections will go down

DANEgerus on November 29, 2012 at 12:59 AM

Why do we call taxing high earners “taxing the wealthy” anyway? Let’s call it “taxing the earners.” If we ever get around to a net worth tax, then we can call it “taxing the wealthy.” Like that would ever happen.

The Reasonable Man on November 28, 2012 at 8:02 PM

Yes.

cptacek on November 29, 2012 at 1:26 AM

Tax every senator and congressman 100% of what they have gained/profited since becoming elected to serve and defend the constitution and that would be only $50,000,000,000.00. But, weren’t they the ones who caused all this. Please go back to every living retired senator and congressman still living, tax them. Make them feel like a middle class citizen. Don’t be easy on them either. Make them know what they have done. Do it.

HHW on November 29, 2012 at 1:43 AM

Sure gonna feel good when that millionares tax kicks in, for eight days. What a lying POS we
have in the WH. The whole thinng is going to collapse, cliff or not. The Piper is banging on the door, time to pay up Barry.

stormridercx4 on November 29, 2012 at 5:27 AM

I put this video together a few years ago.

Understanding Supply Side Economics

Pretty much says it all.

The Rock on November 29, 2012 at 8:23 AM

Revenue is irrelevant. The ‘rich’ must be punished for being ‘rich’.

CorporatePiggy on November 29, 2012 at 8:47 AM

Low to moderate income people are generally live pay check to pay check, and those weekly or bi-weekly checks are (essentially) all of their income. A tax rate change to them does linearly affect revenues raised or lost fromthe change.

They usually have no understanding of how the income of high income people works – those for whom a standard paycheck from a job is not the whole of income. When work bonuses, capital gains or other investment income is a big piece, the amount of income is much more manipulable, and rate changes do not give linearly related revenue changes (and can indeed give the opposite revenue effects).

krome on November 29, 2012 at 9:47 AM