August 11, 2012 by Julia
Seriously, who is thinking up these so-called progressive policies? If I can disprove the central tenet of your platform without even using Google because I already have the evidence saved in my bookmarks . . . I seriously doubt your ability to govern a nation.
Oh, wait, what’s that? You’re not a progressive, but an Actual Socialist who wants to raise taxes on “the rich?” Oh, okay, NOW it all makes sense. Sigh, France, what are you getting yourself into?
That question is actually really easy to answer, because we’ve already tried that crap here in America. Guess what? It didn’t work. As Dr. Sowell points out,
Internal Revenue Service data show that there were 206 people who reported annual incomes of one million dollars or more in 1916. But, as the tax rate on high incomes skyrocketed under the Woodrow Wilson administration, that number plummeted to just 21 people reporting a million dollars a year in income five years later.
What happened to all those millionaires? Did they flee the country? Were they stricken with fatal diseases? Did they meet with foul play?
Not to worry. Right after Congress enacted the cuts in tax rates that Mellon had been urging, there were suddenly 207 people reporting taxable incomes of a million dollars or more in 1925. As Casey Stengel used to say, “You could look it up.” It is on page 21 of an Internal Revenue publication titled “Statistics of Income from Returns of Net Income for 1925.”
. . .
The government, which collected less than $50 million in taxes on capital gains in 1924, suddenly collected well over $100 million in capital gains taxes in 1925. At lower tax rates, it no longer made sense to keep so much invested in tax-exempt securities, when more money could be made by investing in the economy.
As for “the rich”– who really were rich in those days, when $100,000 was worth more than a million dollars is worth today– those in the highest income brackets paid 30 percent of all taxes in 1920 and 65 percent of all taxes by 1929, after “tax cuts for the rich.”
(yes, I know I’ve used this link before, and I’ll surely use it many more times. I love it–Dr. Sowell has validated my entire existence)
Anyway, according to a combination of math and common sense, we see that when you raise the tax rate on higher incomes, the people who own those incomes suddenly find ways to minimize them. They don’t like paying taxes any more than you and me; it’s not evil, it’s normal. If you call a “rich” person evil for legally minimizing his tax burden, you’d better call yourself evil too, unless you don’t take a single deduction or credit. With a smaller total amount of money to tax, even at higher rates, the total haul is smaller. When you lower taxes, though, and incentivize keeping that income in taxable accounts, the total pool of money grows, so even at a lower rate, the total haul is larger. Again, simple math and common sense. It has been PROVEN to be the case–the numbers don’t lie!
Further, it’s more than just shifting investments around: high income earners (both private citizens and businesses) end up leaving altogether. It’s happened in Maryland and California here in America, and all Hollande would have to do is spend a week in Switzerland to see it in his own backyard. There’s actually a lot of pushback on the Maryland and California numbers, on the grounds that the millionaires are leaving for other reasons, or the revenue from the ones who left is made up for by the increased taxes on the remaining millionaires. Here’s the problem: if the taxes keep going up, the number of people leaving (while perhaps small now) is going to get larger with each increase. At some point, the balance will tip, and the remaining millionaires will no longer be enough to make up the difference. How long do you think they will stick around after that? French millionaires may even take up Haley Barbour on his offer to move to Mississippi.
So, then, why in the world is President Hollande repeating history? Why is a guy who himself owns multiple vacation homes flying in the face of common sense to proceed with his campaign promises to soak the rich? Well, aside from him simply being a huge hypocrite who is using the politics of envy as a stepping stone toward accumulating power, as a socialist, Hollande likely holds the (completely unreasonable) belief that government will solve all of our problems.
I can’t read Hollande’s mind, and I don’t want to put in a million caveats, so let’s assume for the sake of argument that 1. he is truly a socialist; 2. he truly wants to help people; and 3. his plan to raise taxes will actually bring in more revenue. This means that he believes the government should control the means of production, and should be responsible for overseeing the distribution of goods and services (the infamous centrally planned economy). To believe that this system works takes a startling amount of naivete and willful ignorance, given the experiences of the Soviet Union. China, Cuba, etc. But, filled with idealism, Hollande must think that HIS government will centrally plan things correctly to the benefit of everyone (except those evil rich dudes, like himself).
Once this mythical paragon of government efficiency is ready to go, it needs money to redistribute, hence increased tax revenue. The idea is that the government is representative of the people/proletariat, and consensus among the people will lead to more efficient uses of the means and outputs of production, not least because the government does not make a profit:
Structurally, we have to take democratic control of what was–and is–social property, the means of production and reproduction of ourselves as a human community. The existing system of private, income-producing property embodies an institutionalized extortion, where those who control the means to work demand an unearned reward (profits, interest and rent) for granting permission to use what we as a society have already labored to create. The imperatives of capitalist development have shaped technologies for the domination of nature and of peoples in the interest of securing and enhancing capital accumulation for the few. Conquest, colonialism and imperialism are the products of these imperatives. Technologies in the service of such institutions have had devastating consequences, far beyond those of all pre-capitalist social formations combined. No other society has had such ecocidal relations with its environment or deployed such destructive technologies around the world.
By taking democratic control of the means of production, we can redesign the character and uses of technologies to harmonize with the human needs of those who are affected by them. The nature of work can be recreated in more satisfying contexts of producing to meet human needs. It will no longer be necessary to spend more than 50% of every tax dollar on military spending to prop up the profit margins of major arms manufacturers. With social ownership and worker control, we can turn our surplus productive capabilities to environmental reclamation at a global scale, to restore much of what has been damaged already. By learning how to live in gentle and ecologically enduring ways in our world, we can reach toward the biospherical egalitarianism and social justice that holds the most promise for our survival as a species.
There is so much about that theory that is obviously cuckoo crazypants, but let’s focus on the idea that, “with social ownership and worker control,” resources can be better directed instead of used “to prop up the profit margins of major arms manufacturers.” The bureaucrats running the government are expected to represent the best interests of the people and make correct decisions about how to allocate resources. Here’s the problem: name one time government bureaucrats have ever been good at doing that. Through a combination of sheer incompetence and corruption, money and resources mysteriously end up in the hands of (surprise!) the elite ruling class and its supporters instead of being doled out to all people, who theoretically own a portion of the means of production that created/developed the resources in the first place. Using entitlement programs for social engineering purposes (analogous to, but not the same as, socialism) hasn’t worked out much better. There is absolutely no reason to believe that the socialist French government would be any better.
To make the whole thing even more ridiculous, Hollande is ALSO promoting increasing taxes on second homes, which may in fact be unconstitutional.
This is what happens when you make policy (and vote!) using your emotions instead of your mind. Let’s try to avoid that in the USA in 2012, m’kay?