Thomas Sowell

What is the real argument of those who want to prevent taxes from rising above a certain percentage, even for people with high incomes? It has nothing to do with making them more prosperous so that their prosperity will "trickle down."

A Democratic president -- John F. Kennedy -- stated the issue plainly. Under the existing tax rates, he explained, investors' "efforts to avoid tax liabilities" made them put their money in tax shelters, because existing tax laws made "certain types of less productive activity more profitable than other more valuable undertakings" for the country.

Ironically, the Obama campaign's attacks on Mitt Romney for putting his money in the Cayman Islands substantiate the point that President Kennedy and others have made, that higher tax rates can drive money into tax shelters, whether tax-exempt municipal bonds or investments in other countries.

In other words, raising tax rates does not automatically raise tax revenues for the government. Higher tax rates have often led to lower tax revenues for states, the federal government and other countries. Conversely, lower tax rates have often led to higher tax revenues. It all depends on the circumstances.

But none of this matters to Barack Obama. If class warfare rhetoric about taxes leads to more votes for him, that is his bottom line, whether the government gets a dime more revenue or not. So long as his lies go unchallenged, a second term will be the end result for him and a lasting calamity for the country.


Thomas Sowell

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

Creators Syndicate



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