Years ago, an old politician gave me a lesson in why politicians vote for things that don’t seem to make much sense. I thought of him this week. That is because some politicians want to bring in tax policies that don’t make much sense.
They want to further increase taxes on big earners. More about that later. Meanwhile, back to the old politician.
We were on a city street. Houses lined the street. On the corners stood apartment buildings. Each contained maybe 50 apartments.
We chatted about how he voted to raise property taxes. The homeowners on the street opposed him, of course.
“You’re right,” he said. “But you are thinking about the owners of the twenty houses on this side of the street.” I was. “I’m thinking about the people who live in the two-hundred apartments in those buildings on the corners. Come next election…”
I thought of him this week because some Washington politicians are floating the idea of whacking big earners with a 3 percent surtax on high income.
We already tax them heavily. We already exempt nearly half our population from income tax. The last few years we have snuck in little increases here and there on those big earners.
People who read history know such taxes have damaged our economy in the past. Study the UK and the U.S. over the past 100 years. The higher the tax rates, the worse their economies grew. The lower the tax rates, the more their economies flourished. Thatcher slashed British taxes. Britain’s economy climbed out of its grave. Reagan slashed U.S. taxes. The U.S. economy grew more than any economy in history.
Politicians know this. So why do they recommend increasing taxes? They know higher taxes throttled our economy in the past.
And why make the U.S. nearly the highest-taxed country? Which is what we have become.
In the late 1980’s the U.S. was just about the lowest-taxed major economy in the world. And we created more new jobs than most industrialized nations put together. We were a new-business and job-creating phenomenon. Other countries envied us.
Today we are just about the highest-taxed major economy. And our jobs machine is doing diddly squat. These days you hear politicians crow that our economy is now, finally, beginning to create new jobs again. It is a lie.
Our economy is not producing any more new jobs than it was a year ago. Or two years ago. The only reason the total number of jobs has begun to climb is that companies are laying off fewer than they were.
So why do politicians suggest raising taxes further on the people who create jobs? Because elections are just around the corner. And because the number of voters who will pay those higher taxes is small. Just like the owners of the houses I mentioned. The number of voters who will not have to pay those taxes is big. Like the people who lived in those apartment buildings.
Often we think our politicians have no principles. They do, however, abide by one. That has to do with counting noses.
From Tom ... as in Morgan.
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