Thomas Sowell

While talk about "fairness" may provide a fig leaf to cover politicians' naked attempts to grab more and more of the nation's resources to spend, there is no assurance that raising tax rates on "the rich" will result in any more tax revenue for the government. High tax rates have too often simply caused wealthy people to put their money into tax-free securities or to send it overseas.

Four years ago, TV interviewer Charles Gibson pointed out to candidate Barack Obama that raising capital gains tax rates had on a number of occasions led to less capital gains tax revenue being collected -- and, conversely, lowering the capital gains tax rates had on other occasions increased the amount of capital gains revenue collected by the government.

Obama readily admitted that. But he said that "fairness" justified a higher tax rate on "the rich." Yet how does a higher tax rate on paper, without a real increase in the amount of taxes actually collected, promote fairness?

However, raising tax rates on "the rich" pays off politically, even if the government loses revenues when the rich put their money into tax shelters.

High tax rates in the upper income brackets allow politicians to win votes with class warfare rhetoric, painting their opponents as defenders of the rich. Meanwhile, the same politicians can win donations from the rich by creating tax loopholes that can keep the rich from actually paying those higher tax rates -- or perhaps any taxes at all.

What is worse than class warfare is phony class warfare. Slippery talk about "fairness" is at the heart of this fraud by politicians seeking to squander more of the nation's resources.


Thomas Sowell

Thomas Sowell is a senior fellow at the Hoover Institute and author of The Housing Boom and Bust.

Creators Syndicate