Squeezing the wealthy with wealth taxes on their income and assets.
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Democrats love taxing the well-to-do. Why aren’t Republicans making tax cuts a huge issue?
The party with the donkey as its symbol thinks it has a winning election-year issue in whacking the rich with higher exactions on their incomes and assets with so-called wealth taxes. This frenzy is nothing new in blue states.
• Maine, one of the highest-taxed states in the country, is the latest to join this envy parade. Its governor, Janet Mills, is proposing a 2% surcharge on incomes above $1 million. One motivation, in addition to the usual political addiction to spending other people’s money, is to counter her ultra-leftist opponent in the Democratic primary for the U.S. Senate nomination. She also wants to show she’s no friend of the rich.
• Rhode Island is readying a surcharge that will hike its top income tax rate from almost 6% to almost 9%.
• Washington state recently enacted a 9.9% levy on incomes above $1 million.
• California is headed for a referendum on a 5% wealth tax on everything a billionaire owns.
• New York State and City are going for a big tax on people’s second homes.
• Massachusetts, aka Taxachusetts, not long ago put a 4% surcharge on incomes of $1 million or more.
Some Democratic U.S. senators are proposing eliminating the federal income tax on people making less than, say, $75,000 and making up the revenue shortfall by soaking people who earn more.
Democrats figure voters will think hitting the well-to-do is free money. Real-world experience, of course, demonstrates the opposite. Capital, that is money and people, goes where it’s welcome and stays where it’s well treated. High-tax blue states are losing population and businesses. Low-tax red states are growing.
Many small and mid-size businesses are taxed at personal rates and will get walloped. They’re hardly your big-yacht stereotypes. This will damage local economies.
While Democrats claim they’re merely picking the ample pockets of the rich, they slam others—using fairly low thresholds of incomes—with stiff rates. For instance, a single worker in California hits the 9.3% bracket at a mere $72,000 in income. Top income-earners at the federal level pay about 40% of federal income tax receipts. Blue states such as California are examples of this pattern.
Democrats nurture the illusion that the wealthy are rolling in cash, like the Disney character Scrooge McDuck, sitting in his money bin filled with money, gold and jewels. Actually, most wealth is the value of such assets as stocks, bonds or real estate.
In a hostile economic environment asset values go down—or flee to better climes.
The far left, and Democrats fearful of them, fan one of seven deadly sins: envy. This poisons the political atmosphere and thwarts progress. It is truly unAmerican.
This is why Republicans should respond to these tax moves not only with the irrefutable arguments against them but also with big tax cuts that foster economic growth. Prosperity defuses anger and anxiety.
The GOP and the president should push a reconciliation bill through Congress with big tax reductions of the kind that have historically fueled fantastic economic growth. Reduce the capital gains rate to 15% and index gains for inflation. The 22% and 24% personal income tax brackets should both be knocked down to 15%. The 12% bracket should be eliminated, leaving those incomes taxed at the 10% level. Eliminate the 35% bracket, leaving those incomes taxed at 32%. Take the 32% and 37% levels and knock each down by three points. The corporate rate should be cut to 15%.
Democrats will howl. So what? A booming economy is needed. And how we get it will be a model for other nations to truly grow their economies again.