Tag: billionaire

Millionaires and Billionaires on Tax Day

In a high-profile speech last week, President Obama said: “We cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. We can’t afford it. And I refuse to renew them again.”

Mr. President, it’s their money, not yours. And note that your speechwriters gave you a wildly exaggerated dollar figure for tax hikes on millionaires and billionaires. 

What Americans “cannot afford” is the president’s ongoing demonization of high earners. Yahoo Finance ran an interesting story yesterday describing the crucial role played by high earners in the economy. Rather than the cartoonish image of high earners propagated by the political left, the article notes:

Today, most of those folks with a net worth of $1 million or more have earned it themselves. They’re mostly entrepreneurs who create everything from high-speed networks to garbage haulers. They dig ditches and build houses and grow corn and make jewelry. They deal stamps or coins or artwork and control pests and cut lawns. They also cure people and give them new teeth.

Perhaps the president wants to hike taxes on the wealthy because they were just lucky or benefited from misguided greed. Instead, the well-known researchers of the wealthy, Thomas Stanley and William Danko, note in the article:

It is seldom luck or inheritance or advanced degrees or even intelligence that enables people to amass fortunes … Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and, most of all, self discipline.

Ironically, those are probably the traits that made President Obama a successful political entrepreneur. Yet he doesn’t seem to appreciate that the same traits drive market entrepreneurs to generate growth and earn profits. Profits are the reward for “good behavior” in the free market, so punishing them with higher taxes makes no economic sense. 

Rather than breeding resentment against the wealthy, the president should use his bully pulpit to encourage people to emulate their success by working hard, increasing their savings, and eschewing debt. Unfortunately, those are the attributes that today’s income tax punishes, and on this Tax Day the president is pushing policies to make the situation even worse.

Revenge of the Laffer Curve, Part II

An earlier post revealed that higher tax rates in Maryland were backfiring, leading to less revenue from upper-income taxpayers. It seems New York politicians are running into a similar problem. According to an AP report, the state’s 100 richest taxpayers have paid $1 billion less than expected following a big tax hike. The story notes that several rich people have left the state, and all three examples are about people who have redomiciled in Florida, which has no state income tax. For more background information on why higher taxes on the rich do not necessarily raise revenue, see this three-part Laffer Curve video series (here, here, and here):

Early data from New York show the higher tax rates for the wealthy have yielded lower-than-expected state wealth.

…[New York Governor David] Paterson said last week that revenues from the income tax increases and other taxes enacted in April are running about 20 percent less than anticipated.

…So far this year, half of about $1 billion in expected revenue from New York’s 100 richest taxpayers is missing.

…State officials say they don’t know how much of the missing revenue is because any wealthy New Yorkers simply left. But at least two high-profile defectors have sounded off on the tax changes: Buffalo Sabres owner Tom Golisano, the billionaire who ran for governor three times and who was paying $13,000 a day in New York income taxes, and radio talk-show host Rush Limbaugh.

…Donald Trump told Fox News earlier this year that several of his millionaire friends were talking about leaving the state over the latest taxes.