{"id":269,"date":"2009-07-13T04:57:18","date_gmt":"2009-07-13T11:57:18","guid":{"rendered":"https:\/\/vinsuprynowicz.com\/?p=269"},"modified":"2009-07-17T04:14:43","modified_gmt":"2009-07-17T11:14:43","slug":"269","status":"publish","type":"post","link":"https:\/\/vinsuprynowicz.com\/?p=269","title":{"rendered":"Why the rich people are packing their bags"},"content":{"rendered":"

\u201cPresident Obama believes America\u2019s wealthiest households have become too wealthy and that the best way to \u2018remedy\u2019 this situation is to increase their federal tax burden,\u201d Michael Franc of The Heritage Foundation wrote back on May 18. (www.heritage.org\/research\/taxes\/bg2271.cfm<\/a>)<\/p>\n

In a message accompanying his Fiscal Year 2010 budget, Mr. Obama explained: \u201cFor the better part of three decades, a disproportionate share of the Nation\u2019s wealth has been accumulated by the very wealthy. Yet, instead of using the tax code to lessen these increasing wage disparities, changes in the tax code over the past eight years exacerbated them.\u201d<\/p>\n

In fact, IRS figures show that the top 5 percent of wage earners already pay 60 percent of total income taxes, while the bottom 50 percent of income earners pay virtually zero. If a lot of Americans continued to grow rich and invest in new job creation despite such an unequal levy, how is that bad?<\/p>\n

Never mind. Mr. Obama and his congressional Democrats still believe the pie should be cut into equal pieces — the hard-working surgeon or engineer or factory owner making no more than the schoolmarm who can\u2019t spell or the guy who lives under the bridge. So, whether or not their proposals will really generate enough to \u201cpay for\u201d their ambitious plans to socialize medicine and ban fossil fuels, \u201cequalization\u201d takes on a life of its own.<\/p>\n

According to figures compiled by the U.S. Office of Management and Budget on May 8 of this year, Mr. Obama proposes to<\/p>\n

    \n
  1. Reinstate the 36 percent and 39.6 percent personal income tax rates (up from the current rates of 33 percent and 35 percent) for taxpayers earning more than $250,000 (married) and $200,000 (single);<\/li>\n
  2. Reinstate the personal exemption phase-out and limitation on itemized deductions for those taxpayers earning over $250,000 or $200,000, respectively; and<\/li>\n
  3. Increase the top rate on capital gains and dividends from 15 percent to 20 percent for those taxpayers earning more than $250,000 or $200,000, respectively.<\/li>\n<\/ol>\n

    Altogether, the White House OMB projected those changes would raise taxes on \u201cwealthy\u201d Americans by $636.7 billion over the next decade, with the increase projected to start at $28.4 billion in 2011 and rise quickly to $49 billion in 2012, $58.1 billion in 2013, and $98.6 billion by 2019.<\/p>\n

    All money \u201cthe rich\u201d will no longer have available to invest in a new pizza joint or software venture. But don\u2019t worry; the government will use it to make sure no bureaucrat in charge of \u201cdiversity\u201d ever goes without a \u201cstep raise,\u201d a gold-gilt tax-paid health plan, or a month-long paid summer vacation.<\/p>\n

    And it now appears that THOSE \u201ctax-the-rich\u201d plans were just for starters. Also being bandied about is elimination of the Social Security \u201ccap\u201d — the level beyond which additional wages are no longer subject to Social Security taxes, under the established and perfectly sensible rationale that there\u2019s also a cap on how high retirement benefits can rise under the program.<\/p>\n

    Eliminating the tax cap will complete the process of turning the federal retirement pension program into an outright wealth transfer scheme, since wealthy conscripts into the system will never be able to get all their \u201ccontributions\u201d back, even by living past 120.<\/p>\n

    Democrats including Mr. Obama also seek a jacked-up death tax, which punishes farm and small-business families, often requiring them to sell the hard-won family enterprise just to pay the federal taxes that accrue on a \u201ctransfer by death.\u201d<\/p>\n

    And — if you haven\u2019t heard enough — \u201cHouse Democrats at work on health legislation are narrowing in on an income tax surcharge on the highest-paid wage earners to help pay the cost of subsidizing insurance for the 50 million who lack it,\u201d The Associated Press reported this week.<\/p>\n

    THE LAFFER CURVE<\/strong><\/p>\n

    As discussed by the tax-writing House Ways and Means Committee, the new surtax would apply to individuals with adjusted gross income of more than $200,000 and couples over $250,000, according to officials involved in the discussion, who spoke to The AP on condition of anonymity because this vital public business is being done in secret.<\/p>\n

    In addition, \u201ckey lawmakers\u201d were expected to call for an additional new tax or fee on struggling small employers who offer no health benefits, equal to a percentage of their workers\u2019 salaries — thus creating yet another incentive to lay \u2019em off and hire no more.<\/p>\n

    Rep. Shelley Berkley, a Democrat from Nevada and a member of the panel, said the proposed surtax on high-income taxpayers appealed to her and others as a way to avoid a \u201cnickel-and-dime\u201d approach involving numerous smaller tax increases.<\/p>\n

    Yes, holding off the crying brats while breaking into the INDIVIDUAL little piggy banks can become so tedious, can\u2019t it?<\/p>\n

    Leaving aside the moral question of whether all a \u201cwealthy\u201d person\u2019s earnings really belong to folks like Mr. Obama and Ms. Berkley, who can arbitrarily decide how much we \u201cdeserve\u201d to retain and how much shall be seized and \u201cspread around,\u201d do such tax hikes even produce the revenues their sponsors hope for?<\/p>\n

    Generally not.<\/p>\n

    \u201cAs state tax revenues plunge, politicians are attempting to increase spending and cover budget deficits by imposing \u2018sin and millionaire taxes,\u2019 \u201d notes blogger Bill Zielinski<\/a>.<\/p>\n

    But \u201cFailed attempts by the state of Maryland to cover their budget deficit with \u2018sin and millionaire taxes\u2019 should be a textbook lesson to other states that this policy is counterproductive,\u201d Mr. Zielinski reports, as \u201cLarge tax increases have resulted in lower than expected tax revenues.\u201d<\/p>\n

    Maryland recently doubled its cigarette tax, from $1 to $2 a pack. In Fiscal Year 2007, the $1 cigarette tax brought in $269.1 million in revenue. In proposing the increase, Governor Martin O\u2019Malley estimated the increase would bring in $255 million a year — a 95 percent revenue increase.<\/p>\n

    But Maryland\u2019s 100 percent tobacco tax increase is now resulting in a revenue increase of only 51 percent. Smokers either quit or started getting their tobacco elsewhere.<\/p>\n

    Meantime, \u201cMaryland couldn\u2019t balance its budget last year, so the state tried to close the shortfall by fleecing the wealthy,\u201d Mr. Zielinski reports. \u201cGovernor Martin O\u2019Malley, a dedicated class warrior, declared that these richest 0.3 percent of filers were \u2018willing and able to pay their fair share.\u2019 The Baltimore Sun predicted the rich would \u2018grin and bear it.\u2019 \u201d<\/p>\n

    One year later, nobody\u2019s grinning. Instead, fully one-third of Maryland\u2019s millionaires have simply disappeared from the tax rolls.<\/p>\n

    \u201cIn 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April,\u201d Mr. Zielinski reports. \u201cThis year there were 2,000, which the state comptroller\u2019s office concedes is a \u2018substantial decline.\u2019 On those missing returns, the government collects 6.25 percent of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year — even at higher rates.\u201d<\/p>\n

    And \u201cMaryland is not alone in pursuing high income taxpayers, despite the documented futility of such action,\u201d Mr. Zielinski concludes. \u201cThe highest tax states are consistently losing population as taxpayers vote with their feet, leaving high tax states with less jobs, business and income.\u201d<\/p>\n

    PICK THAT CARPET UP OFF OF THE FLOOR . . .<\/strong><\/p>\n

    Arthur Laffer and Stephen Moore documented that trend in a recent Wall Street Journal article<\/a>, citing research from Richard Vedder of Ohio University, reporting that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states including California, New Jersey, New York and Ohio and relocated mostly to the nine states with no income tax, including Florida, New Hampshire, Texas and Nevada. \u201cWe also found that over these same years the no-income tax states created 89 percent more jobs and had 32 percent faster personal income growth than their high-tax counterparts,\u201d Mr. Laffer reports.<\/p>\n

    Hm. Any indication there of why Mr. \u201cSoak-the-Rich\u201d Obama\u2019s national economy may still be foundering?<\/p>\n

    Examining IRS tax return data by state, E.J. McMahon, a fiscal expert at the Manhattan Institute, measured the impact of large income-tax rate increases on the rich ($200,000 income or more) in Connecticut, in New Jersey, and in New York. Over the period 2002-2005, in each of these states, the \u201csoak the rich\u201d tax hike was followed by a significant reduction in the number of rich people paying taxes relative to the national average.<\/p>\n

    Take New Jersey — please. In the early 1960s, the state had no state income tax and no state sales tax. It grew rapidly and ran budget surpluses. Today its income and sales taxes are among the highest in the nation, it suffers from perpetual deficits, and its schools rank among the worst in the nation. \u201cMost of the massive infusion of tax dollars over the past 40 years has simply enriched the public-employee unions in the Garden State,\u201d Messrs. Laffer and Moore report. \u201cPeople are fleeing the state in droves.\u201d<\/p>\n

    Tax-lovers will likely respond, \u201cAha, but moving from Connecticut or New Jersey to New Hampshire or Nevada is one thing. We\u2019re talking about piling vast new tax burdens on those earning $200,000 or more, NATIONWIDE. There\u2019ll be no way to escape THAT. It\u2019s not like they can avoid our net by closing down their businesses or moving themselves or their money or their manufacturing operations out of the country, entirely!<\/p>\n

    Really? Wanna bet?<\/p>\n","protected":false},"excerpt":{"rendered":"

    \u201cPresident Obama believes America\u2019s wealthiest households have become too wealthy and that the best way to \u2018remedy\u2019 this situation is to increase their federal tax burden,\u201d Michael Franc of The Heritage Foundation wrote back on May 18. (www.heritage.org\/research\/taxes\/bg2271.cfm) In a message accompanying his Fiscal Year 2010 budget, Mr. Obama explained: \u201cFor the better part of […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[30,18,9],"tags":[],"class_list":["post-269","post","type-post","status-publish","format-standard","hentry","category-2008-election","category-economics","category-taxation"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/sWqFl-269","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/posts\/269","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=269"}],"version-history":[{"count":4,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/posts\/269\/revisions"}],"predecessor-version":[{"id":273,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/posts\/269\/revisions\/273"}],"wp:attachment":[{"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=269"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=269"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=269"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}