Tax Hikes vs. Tax Revenues

You got to wonder why people don't get this, but apparently they don't.

'Mr. Rangel and House Democrats are also banking on the idea that raising tax rates by 20% will raise 20% more tax revenue, but that's like telling Wal-Mart it can raise prices by 20% and get 20% more profit.'

Too many people are willing to ignore what they know to be true in favor of the leftist pipe dream, that taxing the rich is going to pay for all the things that Democrats have convinced them they're entitled to get from their government.

Comments

[Geoff Brown]

Howdy
I got here from Maggie's Farm. I'm just beginning to peruse your site.
Your point about tax rates and tax revenues is so very important and so poorly understood, especially by those who would play Robin Hood. Increasing tax rates on any tax that is at all progressive, like the income tax, almost always results in lower revenues. There is some revenue-optimal point of tax rate for each situation but it's very hard to locate. President Reagan and President Bush thought it was probably lower than the tax rates they inherited and events seem to bear them out.
Sales taxes are also regressive and high sales tax rates are also likely to reduce revenues. I can keep a car going a long time before I pay 5% on $22k to get a new vehicle (a replacement, chances are I won't buy a new car from the lot).
Property tax rates can go up with probably the least direct loss of revenue, but property taxes tend to be very regressive. And the revenue from higher property tax rates probably cuts the revenue from sales and income taxes directly (I pay property tax, I don't buy soda) and indirectly (the people I don't buy soda from don't buy stuff either).

[Tom Bowler]

Isn't Maggie's Farm a great site. I mean after all, you were able to find your way here from it.

One reason people miss the relationship between tax rates and tax revenues is that our "progressive" friends, who actually do get it by the way, intentionally mislead them. Progressives have no interest whatever in maximizing government revenues. The progressive goal is "equality" and they'll be quite pleased to drive us all into poverty in order to achieve it. Envy is the straw that stirs progressive drinks. Plenty of it.

[Geoff Brown]

Howdy Tom
Progressives do seem so fixated on equality that they would prefer equal poverty to unequal wealth. I like the comparison: A progressive sees a wealthy family and asks, "Why should they have so much?" A free-marketer sees a wealthy family and says, "We can all have this much."

[Geoff Brown]

As long as I'm on a roll: the answer to a food shortage is to produce more food. The answer to a shortage of clothing is to produce more clothing. The answer to a shortage of affordable health care is to -- ruin the exisiting health care system? The answer to an energy shortage is to -- produce less energy at higher costs? The answer to a job shortage is to -- interfere with the businesses that produce jobs?

[Tom Bowler]

Excellent points. I often say that I wonder, but I don't really, why does the discussion of the rising costs of health care never touch on health care, only insurance.