We’ve said again and again that hiking taxes on the "rich" won’t increase revenue – instead, all it will do will be to retard economic growth, and hurt working families through job losses. Well, writing in yesterday’s Wall Street Journal, Cato’s Alan Reynolds explains exactly how the hike on the rich under Obamacare will work:
"President Barack Obama’s new health-care legislation aims to raise $210 billion over 10 years to pay for the extensive new entitlements. How? By slapping a 3.8% "Medicare tax" on interest and rental income, dividends and capital gains of couples earning more than $250,000, or singles with more than $200,000.
The president also hopes to raise $364 billion over 10 years from the same taxpayers by raising the top two tax rates to 36%-39.6% from 33%-35%, plus another $105 billion by raising the tax on dividends and capital gains to 20% from 15%, and another $500 billion by capping and phasing out exemptions and deductions.
Add it up and the government is counting on squeezing an extra $1.2 trillion over 10 years from a tiny sliver of taxpayers who already pay more than half of all individual taxes.
It won’t work. It never works. Punitive tax rates on high-income individuals do not increase revenue. Successful people are not docile sheep just waiting to be shorn."
Spot on.
Mark Perry, Professor of Economics at the University of Michigan, makes the following additional comments:
Here are some reports on how tax increases on millionaires worked out in Maryland:
1. Wall Street Journal — "Maryland’s Mobile Millionaires: Income tax rates go up, rich taxpayers vanish."
2. Washingont Post — "The number of self-reported million-dollar earners in Maryland has dropped by roughly a third compared with this time last year, renewing debate yesterday about whether the state’s year-old "millionaires’ tax" is driving rich people beyond its borders."
3. Baltimore Sun — Top Payers Fade Away; Maryland Was Depending On Taxing Millionaires, But They’re Disappearing.
4. Wall Street Journal — Millionaires Go Missing; Maryland’s fleeced taxpayers fight back.
This madness really must stop.