I have written on the subject of taxing the rich before. Basically, I think it’s a bad idea, for lots of excellent, well-documented reasons most politicians and voters choose to ignore.
This morning, over breakfast, my husband brought a recent article in the Wall Street Journal to my attention. Entitled “The Price of Taxing the Rich”, it offers another perspective on the subject, pointing to a real danger in the rush to address current budget shortfalls by taxing them even more.
The basic premise of the article is this: An over reliance on income tax and capital gains tax collected from the rich is dangerous because this income is so volatile. The rich are hit far worse in a downturn and governments relying too heavily on them for revenue bear the brunt.
The result: Without addressing the overspending that comes out of boom times, states take it in the shorts and wind up with huge deficits. The article uses California as a case in point. As the subtitle reads, “The top 1% of earners fill the coffers of states like California and New York during a boom – and leave them starved for revenue in a bust.” An eye-opening chart included with the article indicates that 43.9% of California’s revenue comes from income taxes. And 45% of their income tax receipts come from the top 1% of income earners. Wow!
Bottom line? Well, Washington D.C. is tending to go the way of California. And that’s not good!
I sometimes feel like a voice crying in the wilderness on tax issues, especially given that I live in deep blue Washington State. However, I encourage my readers to check out this article, and as many others as they can on this difficult subject. As voters, we simply MUST become better informed before we cast those all important votes for the people who will be setting our tax laws. And this applies at ALL levels of government.