Tuesday, March 30, 2010
We are facing an across-the-board tax-hike assault from federal, state, and local sources.
This, despite a precarious outlook of a return to long-term economic prosperity after an especially deep and painful recession.
Of course, tax hikes drain cash from the private-sector economy. In supply-side terms, they undermine incentives to work, invest, and take risks by reducing the after-tax take-home reward.
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After-tax incentives could drop 15 percent or more over the next few years, lifting the top tax rates on ordinary income to 45 percent from 35 percent, and to 25 percent from 15 percent on capital gains. Why in the world would we want to tax those who are most likely to invest, save, and take risks in an economy that desperately needs all three?
And let’s be very clear regarding class-warfare attacks on so-called rich people: A tax on investment is a tax on jobs, wages, and productivity. Without investment and risk-taking, the capitalist machine cannot and will not function efficiently. As Jack Kemp used to say, “You can’t have capitalism without capital. You can’t love the employee and hate the employer.”
Worse, these taxes are designed to finance an ever-growing government-spending share of the economy — even though government spending is itself the greatest tax of all on private enterprise, as Milton Friedman taught us years ago.
This article was posted: Tuesday, March 30, 2010 at 9:43 am