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Wednesday, April 13, 2016

Raising Taxes Is Economic Suicide

It's strange to watch some of the garbage that passes for "wisdom" in the current political season.  Bernie Sanders wants to spread the wealth around by raising taxes by trillions upon trillions of dollars.  To be fair, that won't spread the wealth, it will just destroy the wealth of those who have more.  Sanders' view of equality is that he wants everyone to be equally poor.  For her part Hillary Clinton has now conceded that her tax plan is to collect more than an extra trillion dollars in federal taxes.  This extra taxation is supposed to help "grow" the economy.  The reality, however, is that sucking another trillion dollars out of a stagnant economy will just lead us into recession or depression.  Most likely tax revenues will sag, not grow as Hillary raises rates.

Why is it that the Democrats cannot understand that giving people incentives for working hard and starting new ventures is the way to increase revenues?  Each time that capital gains taxes were cut in the past, tax revenues soared.  More important, economic activity grew more quickly than before the tax cut.  Right now, America is losing jobs to foreign countries, not because of unfair trade but because of corporate taxation that discourages growth in America.  Why put a new plant in Ohio if the resulting federal taxes means there is less profit than putting that same plant in China?  The Democrats want to punish those who have not yet moved to China.  The Republicans want to reward those who come back.  The Democrats seek to slow American decline.  The Republicans are trying to reverse that decline and to restore rapid growth.  It is an argument that the Democrats cannot win on the merits.

There is a reason why Democrats speak so often of income inequality and so little of economic growth.  The Democrat economic philosophy does not allow for much economic growth.  That means that incomes of the average American will not rise under the Democrats.  In order to distract the middle income groups from the failure of Democratic economic policies, that party tries instead to promote class warfare by claiming that the system is rigged and the rich are taking all the spoils.  The rich need to be punished (or so the Democrats contend.)  But if this argument appeals to you, ask yourself this:  if the system is rigged, why haven't the Democrats fixed it during the seven plus years of Obama?  The GOP has not been able to get anything passed during the last seven years.  If the system is indeed rigged, is that the fault of the Democrats?  Why should the Democrats be trusted to undo what they have been doing over the last seven years?

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