Democrats and the deep well of money

Stuart Schneiderman:

So, you have a city like New York that is increasingly being hollowed out by high tax rates. New York is increasingly becoming a city of the rich and the rest.

Under the circumstances, how long do you think it will be before the rich decide to decamp? Even if the crime rate remains stable, there comes a point where even billionaires will have had enough of the abuse inflicted by high tax rates.

They might even become demoralized by the crowds of protester outside their offices telling them where to go.

We do know that when states levy surcharges on millionaires the millionaires tend to pick up and leave. Maryland and Oregon passed millionaire surcharges and discovered that so many rich people left their states that they received less tax revenue than before.

Higher taxes do not necessarily produce higher revenues.

Well, there can be little dispute that the Left really does think that the duty of the wealthy is to be robbed by the government.

Everyone is legally obligated to pay the taxes s/he rightfully owes - but not one cent more. As Justice Learned Hand wrote in Helvering v. Gregory (1934),

Anyone may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes.

The wealthy always pay more in taxes. They have to, because, as Willie Sutton famously explained why he robbed banks, "That's where the money is." Government is expensive and only the comparatively wealthy have enough money to fund it. Hence, about half of all citizens pay practically nothing. In large measure, the federal revenue system is designed to transfer money from the top half to the bottom half.

As I wrote before,

Somewhat cynically, I might observe that the federal government really is a money-distribution organization. We govern ourselves by the way we spend each others' money. How much gets spent and for what is determined by how much agreement can be reached by a majority. But whether Left or Right, whether Democrat or Republican, the only real questions of American government and governance are, "Who will be be the beneficiaries of government spending? How much shall we exact from the public for it, and by what means?"

All matters of governance come down to that, no matter where they start.

Stuart is right - once you start to make policy that income more than a certain amount should be forfeit to the government, those earning the income do one of three things:

1. Shelter or hide income over the topline allowed,

2. Cut back and stop earning, or earning much, more than the topline,

3. Move where Jesse James didn't get elected governor/legislature/president

What the Left never has grasped is that wealth is created, it does not just happen, it doesn't just materialize. When President Obama talks of " the most fortunate among us can afford to pay a little more," he displays his real belief:

Whenever President Obama discusses the wealthy, he refers to them in a manner that assumes they simply fell into piles of money and didn’t have to work for it. They are just “fortunate, ” or “benefitted most from our way of life.”

Rep. Eric Cantor explained the Democrats' basic world view this way to the Wall Street Journal:

"The assumption . . . is that there is some kind of perpetual engine of economic prosperity in America that is going to just continue. And therefore they are able to take from those who create and give to those who don't."

But, as former marketing professor Thomas Stanley pointed out, 80 percent of American millionaires were not born into money. They earned it. Wealth and well being are not resources that can be mined. They are creations. They do not just happen. They are made to happen. As I heard growing up, "money does not grow on trees," although I am convinced that Democrats think it does.