In the wake of the 2012 election, Republican leaders and some "conservative" (sic) pundits are suggesting that it's imperative that Republicans in the House soften their position on tax hikes. The day after the election, House Speaker Boehner all but forfeited conservative opposition.
Soon after, Bill Kristol (a commentator who has lost his conservative credentials and shouldn't be confused with comedian Billy Crystal) attempted to excuse this cave by stating "It won't kill the country if we raise taxes a little bit on millionaires."
Our political and opinion "leaders" are completely missing the point.
It's not that a small increase in taxes on the wealthy would kill the economy. It's that every tax increase hurts the economy.
Aside from the sufficiently objectionable taking of private property from citizens that rightfully earned it, tax increases make the economy less efficient, reduce the economy's ability to grow and create jobs, and increase the size and power of a government that is already increasingly stifling freedom and the economy.
The damage to the economy by tax increases is incremental. It's not like the economy can sustain a 40% tax rate with no problem but suddenly collapses at 40.1%. It's a gradual move in a destructive direction, and every dollar the government takes is a dollar the private sector can't use to hire the unemployed.
It's like mixing sand into the oil of your car's engine. A single grain of sand may not destroy the engine, but every grain you add does more and more damage and reduces the efficiency of the motor until eventually it seizes.
The Laffer curve addresses the optimal levels of taxation to maximize government revenue--but that's not the level of taxation that maximizes economic growth, wealth, employment, and freedom. A liberal may argue that the Laffer curve tells us that government revenue is maximized at 50% taxation, but maximizing government revenue is not our goal. Our goal is to maximize individual freedom and economic growth. Neither of these goals is achieved by maximizing government revenue.
Thus when Kristol argues that increasing taxes on the wealthy won't kill the economy, he misses the point. The question isn't whether or not increasing taxes will kill the economy, but whether or not raising taxes is good for the economy and freedom.
Obviously the cover story is that we have to raise taxes to reduce the deficit. This is nothing but smoke and mirrors because we don't have a revenue problem--we have a spending problem. We can't fix a spending problem by increasing taxes, and a tax hike in exchange for growing government a little less quickly won't fix the deficit. Further, increasing taxes will not help the business down the street expand and hire a new employee. It will do precisely the opposite.
When conservatives oppose increasing taxes it's not just some political talking point, nor is it out of some irrational concern we have for taxpayers that have more money than we have.
Conservatives oppose tax increases because they're bad for the economy--and our economy is bad enough already.
Contrary to what Kristol and Speaker Boehner apparently believe, last week's election doesn't change that.
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for September 1st, 2014 | John Ransom
In Other News: Mary Landrieu Connects with Millennials; Lists Parent’s Basement as Louisiana Address | Michael Schaus
Today, at 11:20 AM PT: Get the Market Movements in Advance: William's Edge Webinar for August 28th, 2014 | John Ransom
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for August 27th, 2014 | John Ransom