Bernie Shows us how we get free stuff!
Nice Ideas – but they fail to recognize the mistakes of past leaders – going back to Rehoboam, who had to flea after overtaxing his kingdom. Even King George III lost a massive part of his empire – and only over a 2% tax on tea!
Let’s look at what happened when Obama’s predecessor George H.W. Bush (a republican but not a conservative) signed the Omnibus Budget Reconciliation Act of 1990 and broke his “read my lips” vow not to agree to new taxes.
If you’d like to read this amazing piece of legislation it’s here: https://www.congress.gov/bill/101st-congress/house-bill/5835
That bill imposed a 10 percent luxury tax on yachts, private airplanes and expensive automobiles. Teddy Chappaquiddick Kennedy (worth about a hundred fifty million, mostly from his daddy’s trust fund at the time of his demise) and then-Senate Majority Leader George Mitchell (currently sitting on about $2Billion) puffed up their chests and hollered at every microphone they could find,
“Millionaires and Billionaires need to pay their fair share”.
What actually happened is laid out in a Heartland Institute blog post by Edmund Contoski titled “Economically illiterate Obama, re: Corporate Jets” found here: http://blog.heartland.org/2011/07/economically-illiterate-obama-re-corporate-jets/
Within eight months of the change in the law took effect, Viking Yachts, the largest U.S. yacht manufacturer, laid off 1,140 of its 1,400 employees and closed one of its two manufacturing plants. Before it was all over, Viking Yachts was down to 68 employees. In the first year, one-third of U.S. yacht-building companies stopped production, and according to a report by the congressional Joint Economic Committee, the industry lost 7,600 jobs. When it was over, 25,000 workers had lost their jobs building yachts, and 75,000 more jobs were lost in companies that supplied yacht parts and material. Ocean Yachts trimmed its workforce from 350 to 50. Egg Harbor Yachts went from 200 employees to five and later filed for bankruptcy. The U.S., which had been a net EXPORTER of yachts, became a net IMPORTER as U.S. companies closed. Jobs shifted to companies in Europe and the Bahamas. The U.S. Treasury collected ZERO revenue from the sales driven overseas.
Back then, Congress told us that the luxury tax on boats, aircraft and jewelry would raise $31 million in revenue a year. Instead, the tax destroyed 330 jobs in jewelry manufacturing and 1,470 in the aircraft industry, in addition to the thousands destroyed in the yacht industry. Those job losses cost the government a total of $24.2 million in unemployment benefits and lost income tax revenues. The net effect of the luxury tax was a loss of $7.6 million in fiscal 1991, which means Congress’ projection was off by $38.6 million. The Joint Economic Committee concluded that the value of jobs lost in just the first six months of the luxury tax was $159.6 million.
Congress repealed the luxury tax in 1993 after realizing it was a job killer and raised little net revenue. Why did congressional dreams of greater revenues turn into a nightmare? Why were their plans not fortuitous? And why are the ones Bernie is proposing not going to make magic money for the poor?
Kennedy, Mitchell and their congressional colleagues simply assumed that the rich would act the same after the imposition of the luxury tax as they did before and that the only difference would be more money in the government’s coffers. Like most politicians before them, Berney and the socialists to follow after his star has faded, they had what economists call a “zero-elasticity” vision of the world, a fancy way of saying they believed that people do not respond to price changes. People always respond to price changes. The only debatable issue is how much and over what period.
Money is like water, it will seek the lowest level and take the path of least resistance. If the feds lowered corporate tax rates then corporations would bring offshore money back and the gubmint could collect a decent amount. Instead they press hard and get greedy for other people’s profit – and the money goes to banks in Paraguay (or where ever the taxes are lowest).
The only things from that plan that will stick is the raises in income tax that working people will pay.