By Larry Elder, Dec. 6. 2012
Ah, the hypocrisy of tax-hikers who do everything they can
to avoid the taxes they wish to impose on others.
Sen. John Kerry, D-Mass.: He tried to avoid $500K in his
home state's sales and excise taxes by docking his newly purchased $7 million
76-foot yacht in Rhode Island.
Massachusetts lowered its state income tax in 2001. Given
the presumably large number of rich people who pine to pay more taxes, the
state allowed tax filers to check a box and voluntarily pay the old, higher
rate. In a liberal state of over 3 million tax filers, how many volunteered to
pay the higher rate in 2004? A tiny fraction of 1 percent -- 930 taxpayers.
Among those who refused to pay the higher rate? Sen. Kerry
and Rep. Barney Frank. In Frank's case, he refused to pay the higher rate because,
he says, "I don't trust the legislative leadership and Gov. (Mitt) Romney
to make the right decisions." Instead, Frank said, "I'll donate the
money myself."
John Edwards, former senator and Democratic presidential
candidate: His wife, Elizabeth, once called him a person of
"character" because Edwards voted against his own economic
"interests" by voting for higher taxes. Well, OK, but like
billionaire investor Warren Buffett, who urges higher taxes, Edwards is less
than keen on paying them. As a lawyer winning major jury awards, John set up a
subchapter S corporation to pay himself through dividends -- and thus avoid
$600K in Medicare payroll taxes.
Kennedy patriarch Joe Kennedy: The late Ted Kennedy and his
family shield their money through a series of complicated family trusts first
begun by father Joe Kennedy. The trusts transfer wealth from generation to
generation while avoiding estate taxes.
The late Ohio Democratic Sen. Howard Metzenbaum: A liberal's
liberal, Metzenbaum enjoyed a lifetime rating from Americans for Democratic
Action of 95 (100 being perfect) and a zero from the American Conservative
Union. He never met a tax hike he did not like. He moved to Florida when he
retired from the Senate. Why Florida? No state estate or personal income taxes.
"Civil rights" leader and MSNB-Hee Haw host Al
Sharpton: Though he supports increasing taxes on the rich, Sharpton, it seems,
fails to do his part as a member of the 1 percent. As of last year, according
to the New York Post, Sharpton owed $3.5 million in state and federal income
taxes. His nonprofit, the National Action Network, as of 2011 owes nearly $900K
in unpaid federal payroll taxes.
What do these individual instances of hypocrisy say about
whether taxes should be increased on the so-called rich?
First, contrary to Buffett's assertion, people absolutely
make decisions and change behavior in response to taxes. Compare the economies
of Texas and California, two border states with similar immigrant populations.
Texas is a no-income-tax, right-to-work, business-friendly state with
substantially less regulation than the Obama-like high-tax (especially on the
"the rich" and on business), forced unionism, heavily regulated state
of California. Texas also has one of the lowest per-capita spending rates, while
California has one of the highest.
The result? According to Investor's Business Daily, state
gross domestic product growth in Texas was 3.3 percent in 2011 and 5.2 percent
in 2010, while California was 2 percent in 2011 and 1.7 percent in 2010. Texas
has created more than twice as many new jobs as California and has a
below-the-national-average jobless rate of 6.8 percent. California's
unemployment rate is 10.2 percent.
From 2008 to 2011, Texans' median hourly wages rose 8
percent, while Californians' rose 5.7 percent. And per-capita personal income
during those years rose 1.3 percent in Texas, while (SET ITAL) falling (END
ITAL) almost 1 percent in California. California's poverty rate is 23.5
percent, to Texas' 16.5 percent, and Texas spends less on education, while its
students outperform their California counterparts.
Second, because people change behavior in response to taxes,
raising them can result in getting less revenue. John Kennedy said,
"It is a paradoxical truth that tax rates are too high today and tax
revenues are too low -- and the soundest way to raise revenues in the long run
is to cut rates now."
The Congressional Budget Office just issued a report on what
would happen to the economy if Congress fails to retain the Bush-era tax rates.
Keeping the Bush-era rates for all but the rich, the CBO says, adds 1.25
percentage points to GDP. Retaining tax rates for all, including the rich,
however, adds 1.5 percent to the economy. In other words, raising taxes on the
rich lowers economic output. Does a quarter of a percentage matter? The CBO
says it will "only" reduce job growth by about 200,000 jobs --
although other reputable studies put the number at 700,000 jobs.
Taxes matter.
Related: Al Sharpton, FBI Informant--Untold Story Of How ActivistOnce Aided Probes Of NYC Wiseguys --Probably cut a deal
Related: Al Sharpton, FBI Informant--Untold Story Of How ActivistOnce Aided Probes Of NYC Wiseguys --Probably cut a deal
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