Certain economists have devoted their lives to the addressing one question: How do governments maximize revenue? Art Laffer is the best known but there are others. Laffer pointed out what would later be obvious. That optimum taxation is not always higher taxation.
Zero taxation will produce zero government revenue. But 100% taxation will produce only slightly more revenue because people will stop working. What then, is the optimum level of taxation (for yielding government revenue. The optimum revenue for the individual is zero.)
Art Laffer invented the Laffer Curve. He discovered that when we tax beyond a certain level (roughly 28%,) government revenue declines. Technically 28% is not a magic number but optimum taxation is certainly in that neighborhood. In some years and some places 27% might yield higher revenue. In other places and times, 30% might yield more revenue. Laffer's enemies have tried to discredit his work by disputing minutiae.
But rest assured that a 28% tax rate will yield more government revenue than a 39.6% rate of taxation. Obama knows this but he does not care. What he calls "fairness" is a seething hostility towards all who have and will prosper. When we raise tax rates beyond the optimum rate of return, almost everyone loses. The taxpayer certainly loses but so does our national defense, our welfare state, our schools, etc., etc., etc. Who wins?
The winners are the envious. Not the fleeting envious. That group would include all of humanity at one time or another. No, I am referring to the bitter slobs who have adopted envy as a preferred lifestyle. These are the people who stay awake at night tormented by the fact that someone, somewhere, has prospered. Sad but true, Obama is one of those people.
Obama is willing to burn down the house to kill the mice. Then at last, we will attain "fairness." Or so it seems. The problem with hypertrophied envy is that it can never be satisfied. Never. The residents and occupants and butlers and chamber maids and the family dog flee the burning house in an unfair manner. They will be asked to make sacrifices.
Sacrifices are necessary for envy to triumph. Envy in the guise of fairness will continue to rule our day. Hope and change.
THE POLITICS OF ENVY
1 comment:
Whether one is of the supply side or Keynesian persuasion he cannot argue that raising taxes in a recession is good policy. The Democrats just want the money to spend so they won't have to take it from Medicare or food stamps.
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