Comments about ‘Thomas Sowell: Raising taxes on rich won't increase the amount nation collects’

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Published: Thursday, May 24 2012 12:00 a.m. MDT

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UtahBlueDevil
Durham, NC

I find the double speak contained in this article mind bending. As a proof point to the fact that money will flee the country if taxes are raised, it sites the example of Mit Romney and his holdings in the Cayman Islands. Here is the problem with the authors argument... we already have historically low tax rates, and yet people like Mit are still shoving moving off shore to hide from taxes. Exactly how low does the author want taxes to be before people like Mit don't hid funds in off shore accounts. We are already at historical lows.... what is the answer - no taxes for the rich?

Second point. As a percent of GDP, the US already has one of the highest debt level percentage to income than any westernized nation (about 103 percent of gdp) This is higher than Spain (84 percent) and about the same as Ireland. Only Greece is higher. The majority of Europe, even with their heavy government services spending, averages between 40 percent (Norway) and 85 percent (England, Germany, France...).

This issue isn't too high taxes on the rich, it is the system is just fundamentally broken.

travelrus
murray, UT

Why do the conservitives think we should be giving entitlements to the wealthiest of Americans. Someone earning over $250000 a year does not need a tax break on their capital gains income. Mitt said he will give everyone a tax break on interest earned and capital gains. I don't know about you all but my interest earned last year was about $100 so thanks for nothing. Most of what I'm able to save goes into a retirement account and I won't see any income for years to come. Everyone should pay their fair share of taxes. The tax system should be made simpler. We need a balanced budget but not at the expense of education, infrastructure, the environment, and the saftey net programs our society relies on.

Invisible Hand
Provo, UT

When he was running in 2008 Obama said that he would raise taxes even if it meant lower revenues. For some people "fairness" is more important than revenue. He will cut off our collective noses to spite our face.

@Bluedevil: You are right about one thing, taxes aren't the biggest problem. The part of the system that is most broken is the spending side of the equation. Fix entitlement spending and the deficit looks far less problematic.

Gildas
LOGAN, UT

It's wrong to rob anyone, rich or poor, but it's despicable to rob a poor working man, and take away his ability to provide food and shelter for his family. There is really no need to rob anyone, however, and we would all be better off if politicians would quit robbing us all to "provide" us with, or to perpetuate, myriad micro-managing bureaucracies and a state of incessant warfare.

Mark l
SALT LAKE CITY, UT

An excellent article about the difference between tax rates vs tax revenues. More revenue is produced by lowering rates. When a store wants to make more money, it doesn't raise its prices (tax rates), it lowers prices, and makes more money through volume.

Incentives matter. We should want to promote hard work, and creativity and innovation. Productivity should be rewarded. I've seen this work well. When you remove the incentive for bonuses people won't work as hard as they could.

Corporations don't pay taxes, only people pay taxes. Any corporation has to recover all of its costs from its customers. The cost of taxes is passed through to its customers.

  • 8:34 a.m. May 24, 2012
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UtahBlueDevil
Durham, NC

Invisible Hand - problem with your hypothises that this is just a spending problem is that when compared to our peer countries (yes, I know, USA has no peers), we provide lower services already, and yet our debt level is higher. The problem is much deeper than that. They have socialized medicine, deeply funded transport, etc... and yet have lower debt levels.

Wish I had the silver bullet answer.. but I know it isn't as simple as just cut programs. We know that corrilary doesn't work.

atl134
Salt Lake City, UT

The CBO disagrees. Revenue charts for the 2000s show that revenue dropped after the Bush tax cuts were passed.

atl134
Salt Lake City, UT

IF tax cuts increased revenue then it'd be a no-brainer to pass them. We'd get lower taxes AND more money to spend. That'd be perfect, everyone would support it. Heck while we're at it why not lower taxes to 0%, then that'll generate the most revenue so we could buy everyone in america a pony. Oh wait... that's not how it works. Haven't conservatives ever learned that saying about things that sound too good to be true?

JoeCapitalist2
Orem, UT

Liberals love to point out a time in the past when the highest tax rates were higher they are now (e.g. 90% in 1920, 75% in 1961, etc.) as proof that current tax rates are lowest they have been for a long time. (BTW, I just made up those numbers so don't google them).

The truth is, almost no one ever paid those high rates. Once tax rates go above a certain percentage (15%, 20%, 25% ???) rich people have an ever increasing incentive to try and avoid them. They will hire accountants and tax attorneys to find ways to move their money into investments or countries where tax rates are lower.

The whole article is pointing out the obvious behaviour that is happening every day all around the world - raise your tax rates and money will move away from you (just like stores and prices).

If we want to stop people like Romney from opening foreign bank accounts, the Facebook guy from renouncing his US citizenship and moving to Singapore, or companies like GE from shifting profits to overseas subsidiaries, then make tax rates reasonable and competitive here. Demonizing them or trying to shame them won't work.

OHBU
Columbus, OH

This article doesn't prove that lowering tax rates, in our day, will actually increase revenue. Really, your source is from the 20s? No economists have written about it since? I find that hard to believe. The biggest problem is that we have a low rate on capital gains. The flaw with trickle-down economics is that the wealthy don't spend the money they have, but horde it. The trick is to encourage spending and active earning, rather than simply storing money and collecting interest. Raise the tax rate on capital gains and income, and build in tax shelters that help stimulate the economy: investment in company expansions, upgraded equipment for manufacturing, etc. The offshore bank account thing can be countered as well with a duty placed on international money transfers. They can store some money in a tax haven, but if they wish to use it, they pay the government for the transaction. We've used tarriffs to support domestic manufacturing and farming, there's no reason we can't do the same for domestic banking.

liberal larry
salt lake City, utah

The idea that tax cuts decrease deficits is an urban conservative myth. Just check out the numbers over the last 25 years. Clinton raised taxes to cut the deficit, and "W" cut taxes and it RAISED the deficit. Ever since Reagan, conservatives have developed an "entitlement mentality" and don't feel that they have to pay their fair share to support this exceptional nation!

Irony Guy
Bountiful, Utah

Not a good idea to invoke Mellon, father of the Great Depression. What a bizarre little hall of heroes Mr. Sowell has.

VST
Bountiful, UT

Raising taxes on the rich (aka the Buffett Rule) will NOT significantly reduce the deficit nor noticeably jolt the recovering economy. All it would do is provide $47 billion in new revenue vice $7 trillion increase in the national debt over 10 years. That new revenue from the rich folks would only reduce that runaway national debt by a mere 0.67 percent over those 10 years.

Democrats/Liberals might "feel good" about being "fair" through increased tax rates for the rich, but other than that, what is the point? It does not solve the long term REAL problem of stopping the runaway deficit.

UtahBlueDevil
Durham, NC

Its not just Liberals/Democrats...it was Adam Smith himself who said the system will only work if you have a progressive tax system. He was the father of all this capitalist mess. If he understood it, how come the "conservative" side doesn't get it.

No one - not a single person - is arguing that cost constraint also need to be part of the solution. As we see in Spain, constraint is what has plunged that economy into a tail spin- even though their actual debt level ratios are lower then our own. It has to be a balanced approach. And that balance means weaning the government off of long term debt, balancing revenue with spending, while still providing liquidity and stimulas to the markets. You can't just save your way into growth.

If the goal is to shrink the economy, then fine, give everyone a tax break. Decreased taxes does not equate to increased consumption... by any measure.

It has to be balanced - which means compromise. But we know compromise is now associated with socialism by some and is completely off the table.

Invisible Hand
Provo, UT

@BlueDevil: My biggest priority is a balanced budget. I think we should have taxes tied to programs so people can see where their money is going. You want a war in Iraq war? Pay for it with an Iraq War Tax. You want to extend unemployment insurance indefinitely? Levy a bigger tax to pay for it. Medicare is insolvent? Raise the tax until it's paid for. When people see their taxes going up they can either say "Good, I love having more government in my life" or they will call their representative and insist on cutting programs because deficit spending is NOT a sustainable solution.

Shawnm750
West Jordan, UT

This article, and many of the comments highlights exactly why this country needs to stop taxing income, and adopt a federal sales tax. Then, everybody pays, and there are no loop holes. When people think they can get around the tax by buying goods from outside the US, then you charge an incoming shipping tax. Not only will it encourage more domestic spending, it will put everyone on a level tax level. Sure, there are some details to work out, but I think that's the only way to ensure that everyone pays the same.

If they do continue to tax income, then it should be set rate for everyone, and do away with all the little exceptions, deductions, etc... Then we could stop dumping SO much funding into the IRS, one of the most bloated government entities there is.

a bit of reality
Shawnee Mission, KS

It seems to me that everybody ought to pay their fair share in such a way that total revenues are enough to cover total expenses. If you agree with that, do you think folks like Warren Buffett and Mitt Romney are paying his fair share?

If this article is true and folks like Mitt Romney would rather invest their money offshore than be forced to pay their fair share of taxes here, what does it say about their patriotism? Does Romney love money more than America?

Redshirt1701
Deep Space 9, Ut

To "UtahBlueDevil" the father of this capitalism mess that we are in is not Adam Smith, it is his ideas that keeping things going. There is not a single person who you could say caused this mess. The cause of the mess is Progressivism and the unending efforts to use tax money to give to people to buy future votes.

To those of you who think that taxing the rich is bright idea, look at the CBO estimate. They say the "Buffet tax" will raise $47 billion over 10 years. With deficits of $1.3 Trillion, raising taxes on the rich has virtually no effect.

To those who don't think tax cuts work, history proves you wrong.

After the Bush tax cuts, tax revenues INCREASED from $1.78 to $2.56 Trillion over 4 years. Under Reagan tax revenues went from $326 to $549 billion. Under JFK tax revenues went from $117 billion to $153 billion. Under Harding the tax rates on the wealthy were dropped, which lead to INCREASED tax revenues from the rich.

JoeCapitalist2
Orem, UT

Liberal Math Logic:

Given:

2001 - Tax Revenues = $1.9 Trillion, Spending = $1.8 Trillion (Surplus = $128 Billion)
ten years later
2011 - Tax Revenues = $2.3 Trillion, Spending = $3.6 Trillion (Deficit = $1.3 Trillion)

Therefore: Bush tax cuts caused the deficit!!!

Never mind that tax revenues increased by $400 Billion during those ten years (revenues were even higher in 2005, 2006, and 2007)
Never mind that spending more than doubled during that time. Tax cuts are the problem.

UtahBlueDevil
Durham, NC

Invisible Hand - absolutely... I think a huge problem is it has gotten so complex and conveluted, no one knows where the moneys flows and why. Transparancy needs to be part of any solution - which is something we don't have now.

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