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October 30, 2004

Tax the Rich!!!

It's all about incentives -- something liberals just can't understand:

The reason America's standard of living is high - and why our poor would be considered middle class in the majority of other countries - is because we produce so many goods and services per person. Monetary rewards, and/or a desire to break out of one's current economic class, are largely what motivate us to produce those goods and services.

Raising taxes on the rich reduces those monetary rewards, which in turn lowers the incentive to work harder or smarter. That's bad enough. To raise taxes on the rich while reducing them on the middle class - Kerry's plan - reduces that incentive even more.

It's akin to your boss cutting your pay if you put in longer hours, and raising your pay if you work shorter hours.

Actually, lowering taxes on the middle class and raising them on the rich harms economic growth even more than leaving middle-class tax rates intact while raising them on the wealthy. It results in what economists call a higher marginal tax rate - the tax rate on what you earn above a certain dollar amount. It is marginal tax rates - not overall tax rates - that so affect our incentive to produce. Why put in extra work if the extra income that comes with it is going to be taxed higher?

Liberals don't care. Their only way to political power is through redistribution, so they'll be for that no matter what. Political power is their goal. Period.

Posted by Old Benjamin at 04:08 PM | Permalink

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