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Thomas Sowell: Raising taxes on rich won't increase the amount nation collects

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  • 1aggie SALT LAKE CITY, UT
    May 25, 2012 11:19 p.m.

    The Congressional Budget Office, the Treasury Department, the Joint Committee on Taxation, the White House's Council of Economic Advisers and a former Bush administration economist all say that tax cuts lead to revenues that are lower than they otherwise would have been -- even if they spur some economic growth. [FactCheck.org, 6/11/07]

  • Cats Somewhere in Time, UT
    May 25, 2012 11:44 a.m.

    It just is so funny that whenever a true expert writes an article which makes the true case for low taxes, the Democrats attack like crazy even though they have nothing to support their position. It guess it hurts when the facts aren't on your side. They don't want to hear anything that disagrees with their own dogma. It's just funny.

    Sowell is a Harvard educated economist who knows what he's talking about and he has the facts to back it up.

    It's amazing how people can refuse to face the truth.

  • JoeCapitalist2 Orem, UT
    May 25, 2012 8:44 a.m.

    Shaun, Give me a break. Conservatives do not want the rich to pay zero taxes so just cut out that nonsense.

    The rich should pay lots of taxes and they do. We want them all to pay their fair share. What the whole disagreement is about is what is a "fair share" for rich people. Should they have to give the majority of their income and wealth to the government? Should other people be able to pay less in taxes than they take out in benefits?

    Mark Zuckerberg is the latest super rich dude. He is now worth many billions of dollars. Should he have to pay 99.9% of his wealth to the government just because he could pay that and still have several million left over? Same question for everyone like Warren Buffett, Bill Gates, Tiger Woods, Kobe Bryant, Payton Manning, Matt Damon, George Clooney, etc., etc..

  • Roland Kayser Cottonwood Heights, UT
    May 24, 2012 9:40 p.m.

    To Invisible Hand: I like your idea. (post 11:50)

  • Twin Lights Louisville, KY
    May 24, 2012 8:01 p.m.

    David Stockman, Reagan’s Budget Director has repudiated the concept that lower tax rates will result in higher revenues. The converse is also true, higher tax rates will not result in lower revenues.

    Will some money move off shore in response? Maybe some. But not all and not even most. The taxes on that money will get collected and add to our revenues.

    Is there some rate at which nearly all money will flee and revenues will in fact be lower? Perhaps. But what we are talking about does not even take us back to the tax rates under Reagan. How can the Reagan tax rates be terrible for our economy?

    Atl134 said it best. "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."

    Why aren't we there? Because both sides know that is not how it really works.

    Will a tax increase solve all of our problems? Nope. Will we have to control expenses as well? Yup. But please. Let's stop the silliness of saying up is down and down is up.

  • Shaun Sandy, UT
    May 24, 2012 2:40 p.m.

    I guess the rich should just pay a zero in taxes. Then they can reinvest their savings into giving me a job even though there is weak demand.

    If this was the situation then us regular folk could no only foot the entire tax bill for the nation but we could still the honor of dying in their wars so they can become even more wealthy.

  • UtahBlueDevil Durham, NC
    May 24, 2012 1:56 p.m.

    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.

  • JoeCapitalist2 Orem, UT
    May 24, 2012 1:34 p.m.

    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.

  • Redshirt1701 Deep Space 9, Ut
    May 24, 2012 12:53 p.m.

    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.

  • a bit of reality Shawnee Mission, KS
    May 24, 2012 12:21 p.m.

    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?

  • Shawnm750 West Jordan, UT
    May 24, 2012 12:18 p.m.

    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.

  • Invisible Hand Provo, UT
    May 24, 2012 11:50 a.m.

    @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.

  • UtahBlueDevil Durham, NC
    May 24, 2012 11:37 a.m.

    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.

  • Irony Guy Bountiful, Utah
    May 24, 2012 11:01 a.m.

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

  • liberal larry salt lake City, utah
    May 24, 2012 10:56 a.m.

    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!

  • OHBU Columbus, OH
    May 24, 2012 10:50 a.m.

    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.

  • JoeCapitalist2 Orem, UT
    May 24, 2012 10:40 a.m.

    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.

  • atl134 Salt Lake City, UT
    May 24, 2012 10:08 a.m.

    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?

  • atl134 Salt Lake City, UT
    May 24, 2012 10:06 a.m.

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

  • UtahBlueDevil Durham, NC
    May 24, 2012 9:47 a.m.

    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.

  • Mark l SALT LAKE CITY, UT
    May 24, 2012 8:34 a.m.

    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.

  • Gildas LOGAN, UT
    May 24, 2012 8:22 a.m.

    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.

  • Invisible Hand Provo, UT
    May 24, 2012 8:02 a.m.

    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.

  • travelrus murray, UT
    May 24, 2012 7:50 a.m.

    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.

  • UtahBlueDevil Durham, NC
    May 24, 2012 6:16 a.m.

    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.