For decades we have heard Democrats and their media cronies decry “tax cuts for the rich” as a ploy by Republican legislators to help their wealthy friends and business owners.
But high taxes expose the truth. In 1990 a much higher new federal tax was imposed on the sale of luxury yachts. This was intended to get more money from “the rich” when they bought their favorite toys.
The law ended up backfiring, however, by steeply cutting into the sales of luxury yachts as “the rich” balked at the high tax. This threw thousands of people out of work in the yacht-building industry and it actually reduced the amount of tax revenue that the government was receiving from yacht sales.
Here is another everyday example:
In states with high gasoline taxes like New York residents near the border with other states will simply drive a few miles over the border to buy gasoline, saving many dollars on every single fill-up. It can add up to hundreds of dollars in savings per year. This naturally moves money spent for gasoline out of the high-tax state.
It’s the same with sales taxes; shoppers often go to lower-tax states to do business. You certainly have noticed the big increase in shopping on days when the sales tax is eliminated, i.e., lower taxes spur economic activity.
New York has a statewide sales tax of 8.25% that is soaking every resident every day including the poor, and depressing the New York economy along with other high taxes. This is driving younger, educated and skilled people out of New York leaving behind older, poorer and sicker people (i.e., socialism).
One of the main causes of the Great Depression was a huge tax increase in 1932. The Foundation for Economic Education reports:
The Revenue Act of 1932 doubled the income tax, the sharpest increase in the Federal tax burden in American history. Under the new Revenue Act:
Tax exemptions were lowered.
“Earned income credit” was eliminated.
Normal tax rates were raised from a range of 1.5% to 5% to a range of 4% to 8%.
Surtax rates were raised from 20% to a maximum of 55%.
Corporation tax rates were boosted from 12% to 13.75 and 14.5%.
Estate taxes were raised.
Gift taxes were imposed with rates from .75 to 33.5%.
On top of all these, a 10% gasoline tax was imposed, a 3% automobile tax, a telegraph and telephone tax, a 2¢ check tax, and many other excise taxes. And, finally, postal rates were increased substantially.
These are just a few examples out of many throughout history showing that high taxes, including high tax rates on rich people and on business, have a dampening effect on the economy.
When president Ronald Reagan cut tax rates on the wealthiest Americans by a whopping 60% Democrats and their media friends declared that revenue to the federal government would certainly sink dramatically.
Yet the increased economic activity from the tax rate reduction led to a 91% increase in the amount of money that flowed to the government over the next eight years.
Since president Trump passed his tax plan with reduced taxes on business it has spurred the economy and led to the return of tens of billions of dollars in corporate money that was “parked” overseas to avoid US taxes. It also is leading to a surge in foreign investment in America.
This process needs to continue for at least 10 years in order to start to undo the harm that Democrat policies have done to our economy (high business taxes and regulation, ‘green’ laws, radical labor union activism, etc.)
Germany had a business tax rate in 1995 of 56% which produced a very stagnant economy. But they have lowered that rate in Germany and even in socialistic Japan. President Trump is setting the global example by lowering the US business rate from 39% to 20%. This is producing a booming American economy and drawing international businesses to the US.
Bloomberg News recently offered this information about the US economy. Each item is followed by a Nikitas3.com comment:
Bloomberg reports: In 2016, $1.44 trillion income taxes were paid by 140.9 million taxpayers reporting a total of $10.2 trillion in adjusted gross income, according to data recently released by the Internal Revenue Service.
Nikitas3.com comment: $10.2 trillion is only about half of America’s total annual wealth (GDP) which is $21 trillion. This is the highest figure on earth. America is the “economic engine of the world” since the United States produces about 25% of the world’s total wealth (about $85 trillion annually).
China is reputed to be second with $11 trillion, but that figure is suspect since it comes from a communist government. Japan is third with $4.8 trillion. Germany is $3.7 trillion.
Bloomberg reports: The top 1 percent paid a greater share of individual income taxes (37.3 percent) than the bottom 90 percent combined (30.5 percent).
Nikitas3.com comment: So all the caterwauling from the Democrats that “the rich” and The Top 1% don’t pay enough in taxes is bunk. Nikitas3.com believes that “the poor” must start paying some income taxes – even if it is only $25 a year – so as to share the financial burden of running the country after they have been getting a totally free ride for many decades.
Bloomberg reports: The top 50 percent of all taxpayers paid 97 percent of total individual income taxes.
Nikitas3.com comment: That means that the bottom 50 percent paid 3% of all federal income taxes. In short, the poor are getting a massive gift from socialism. They pay nothing and get much or all of what they have for free. In other words it can be great to be poor.
Nikitas3.com has seen how great it can be. I have worked for a brief period at a food pantry. Some of “the poor” are truly needy but some of them are picky, fat, greedy, selfish and obnoxious and they drive nice cars and live in nice, free apartments. They get their medical care and education for free.
In the parking lot at the pantry the oldest car with the most miles on it belongs to…. Nikitas3.com.
Nikitas3.com calculates that Americans have given up to $150 trillion in handouts, both public and private, to “the poor” over the last 60 years. Yet we have more poor people than ever. It proves the point – that if we subsidize poor people and make them comfortable than we get more poor people.
Bloomberg reports: It is the top 0.001%, or about 1,400 taxpayers. That group alone paid 3.25 percent of all income taxes.
Nikitas3.com comment: Amazing. And this list has many liberal Democrats at the top like Jeff Bezos, Mark Zuckerberg, Larry Page and Sergey Brin of Google, and Michael Bloomberg, founder of Bloomberg News.
Meanwhile CNBC.com reported in September:
Job openings hit a record in August, indicating companies could face more inflationary pressures ahead with a tight labor market.
The vacancies level hit 7.14 million for the month, according to the Job Openings and Labor Turnover Survey, a report Federal Reserve officials watch closely for clues about where employment stands.
The total number of hires also reached a record of 5.78 million.
Openings dwarfed the total level of workers looking for jobs, which stood at 6.23 million for that month and fell to 5.96 million in September, recent Labor Department statistics show. The JOLTS survey, as it is known, lags the government’s nonfarm payrolls count by a month. The survey began in December 2000.
Amazing. Help Wanted signs are everywhere. Most nations would love to have such an economy. Unemployment is a plague all over the world.
Nikitas3.com recently saw a sign at a convenience store in a tiny town in Vermont offering low-skill cashier/clerk jobs starting at $11.50 an hour. This would easily translate into $15 an hour in a big city like Seattle when you compare the much higher cost of living in Seattle.
This $11.50 an hour wage has developed naturally as employers seek to draw scarce workers with higher pay in the booming Trump economy. Thus we do not need this $15-an-hour crusade for artificially higher wages mandated by government. A stronger economy will produce higher wages naturally, which is happening all over the US. Amazon recently raised its minimum wage to $15 an hour without being forced by the government.
Meanwhile Breitbart News reported recently:
The World Economic Forum, which hosts the annual conference of global elites in Switzerland, said on Tuesday that the United States is the most competitive economy in the world.
The U.S. has not held the number one spot since 2008, when the aftermath of the financial crisis and bungled recovery efforts left the U.S. economy limping.
“The United States, as one of the world’s great innovation powerhouses, is very well positioned in this new competitive landscape,” the Forum said in an article explaining its ranking. “It ranks first overall in the world in three of our twelve pillars; business dynamism, labour markets and financial system.”
This is very encouraging after the United States has been derided for decades for being “too conservative” and “too capitalistic” without enough programs like national health insurance and high-speed passenger trains.
Nonsense. America always has been the greatest country in the world and the greatest economy because we have Constitutional freedoms and a growth-oriented, free market economy. We indeed have been the “economic engine of the world”.