Tax the Rich -
Connecticut and Maryland both found out this does not work.
Connecticut has raised income tax rates on wealthiest
residence last 2 years. Net tax revenues have not increased. Tax revenue from
the state's top 100 highest-paying taxpayers declined 45 percent from 2015 to
2016. The drop is a $200 million revenue loss for CT.
Maryland "millionaire's
tax" pushed through by Gov. Martin O'Malley in 2007 imposed a rate of
6.25 percent on incomes of more than $1 million a year. ~300 richest residents would pay. The following year only
~200 high incomes had to pay. Result was a net loss of tax revenue.
What is happening?
First assumption is no one will adjust to higher taxes.
Business owners and CFOs will find
alternative methods to reduce taxes. If Capital Gains are lower, pay me in
stock options instead of salary.
Second false assumption these wealthy people will make as
much money every year. The wealthy are not the same every year. You only sell
businesses and real estate every decade or two. Other years you earn much less.
Third wealthy people are mobile. They can move to another county, state or country. Record numbers of
people have given up their US Citizenship in last 5 years. Some of these are
people from other countries who built a business here, sold it and are moving
for lower taxes on their windfall.
The other reason Taxing the Rich does not work, the wealthy don’t earn enough. John
Stossel reports if the IRS took 100% of all incomes over $1 Million, the 2012 total
would be around $616 Billion. The US Government had a 2016 deficit of $593
Billion and borrowed additional $830 Billion totaling $1.417 Trillion. About 40% of this year’s deficit.
John Stossel points out no one works to earn nothing, so
those incomes would evaporate, resulting in No
tax revenue to reduce the deficit.
People, businesses and corporations earn wealth. The
government taxes and spends wealth for military, entitlements and programs. The
government has to control spending.
The Biggest Risk to
our Economy is Debt - personal, business and government. Next biggest risk
is government regulations and spending.
Based on the slow growth of the economy over the last
decade, your Entitlements will be
Lowered and Taxes Raised by our governments.
