Topic: Presidential Campaign 2008
Raising Taxes: The Real Objective It is well documented what effect raising income and capital gains taxes have on individual behavior. It is also well documented that tax increases do not bring in more revenue. What if the objective is not more revenue?by EJ Moosa
(libertarian)
Monday, September 8, 2008
Barack Obama has pledged to raise taxes on the top earners. He has pledged to reduce taxes on the rest. Most of us have always thought that raising taxes was to collect more income for the purposes of redistribution. What if we are wrong? Obama has told us we are.
The Laffer Curve regarding taxes is widely documented and referenced at this site. Most of us know what it implies. I am not even sure those that raise taxes can argue against the validity of the theory that lowering taxes increases tax revenue. Barack Obama does not even bother trying to argue against the results in dollars and cents.
So if anyone who really looks at how taxes work understands that raising tax rates reduces tax receipts, and at the same time eliminates the desire to earn more by those it affects, why do they support it? Maybe we are glossing over the real objective.
I would like to suggest that the goal of raising taxes is to do exactly what it does. Reduce realized gains and reduce investments by the top 5% of this nation's producers. By these reductions, you reduce opportunities.
Just as NASCAR constantly changes the rules to keep the best performers from lapping the field, so to do many of our nation's leaders attempt to keep the nation's best producers from getting too far ahead of the rest of the nation. We are placing a governor on those that are the producers.
Is it possible that the objective is to keep the top 5% of our nation from getting too far ahead of the rest of the 95%? Is it possible that some really think the best way to help the lower 95% is to stop the top 5% in their tracks? Take away the opportunities the top 5% have and redistribute them to the rest.
It would seem that Barack Obama agrees.
Quoting Barack Obama:
"If we're going to keep that social compact for a new century, we need a tax code that's fair - a tax code that rewards work and advances opportunity. Every American who is ready to work for their American dream should be able to trust that they have a government that works for them. I'll keep that trust by cutting taxes for working people, homeowners, and seniors, and by simplifying tax filing for middle class Americans."
It appears that the objective is to take away the advantages and opportunities that the top 5% of the income earners have garnered, and redistribute those opportunities to the rest, all in the name of fairness.
This is the just one of the new social compacts Obama is promising the American people.
The only compact I want to see fulfilled is the one called the Constitution of the United States. Only then will I know that the force of government will not be taking my opportunities and redistributing them to others, and only then I will know that the force of government is not being used to take someone else's opportunity and give it to me.
Obama is bringing change. If you listen carefully, he is stating the real objectives of what he wants as President. I encourage you to listen before it's too late.
What are your thoughts? Should the government be taking away from the top 5% to redistribute to everyone else?
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The views expressed in this
article are those of EJ Moosa only and do not represent
the views of Nolan Chart, LLC or its affiliates. EJ Moosa is
solely responsible for the contents of this article and is not an
employee or otherwise affiliated with Nolan Chart, LLC in his/her role as a columnist.
"It is also well documented that tax increases do not bring in more revenue. "
No, that is not document, it is not even correct. Anyone who has actually studied economics knows that there is a price curve that is generally "bell" shaped. At some price points raising prices brings in more money, at some points it lowers income. You need to know the local shape of your curve to know if an increae will increase or decrease revenue.
"I am not even sure those that raise taxes can argue against the validity of the theory that lowering taxes increases tax revenue."
By that logic lowing taxes to 0 should maximize tax revenue. I suggest that you go back and read about elasticity.
Paople change their behaviors to avoid paying the higher taxes. It's why Obama refers to all the "breaks" in the tax codes.
As an investor and financial analyst, I also know that that people would rather not make trades and not pay more taxes ,and miss potentially better investments when captial gains taxes are excessively high. The opportunities they are passing on are the ones Obama hopes someone else in the 95% that he is not targeting for higher taxes, will take. History will show that doesn't happen. Just look at the mortgage mess for people who do not grasp the idea of risk versus reward.
The higher the tax rates, the more people work to avoid them.
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