Walter E. Williams
by Walter E. Williams: Diversity
said that I wish there were some humane way to get rid of the rich.
If you asked why, I'd answer that getting rid of the rich would
save us from distraction by leftist hustlers promoting the politics
of envy. Not having the rich to fret over might enable us to better
focus our energies on what's in the best interest of the 99.99 percent
of the rest of us. Let's look at some facts about the rich laid
out by Bill Whittle citing statistics on his RealClearPolitics video
"Eat the Rich."
Congress will spend $3.7 trillion dollars. That turns out to be
about $10 billion per day. Can we prey upon the rich to cough up
the money? According to IRS statistics, roughly 2 percent of U.S.
households have an income of $250,000 and above. By the way, $250,000
per year hardly qualifies one as being rich. It's not even yacht
and Learjet money. All told, households earning $250,000 and above
account for 25 percent, or $1.97 trillion, of the nearly $8 trillion
of total household income. If Congress imposed a 100 percent tax,
taking all earnings above $250,000 per year, it would yield the
princely sum of $1.4 trillion. That would keep the government running
for 141 days, but there's a problem because there are 224 more days
left in the year.
How about corporate
profits to fill the gap? Fortune 500 companies earn nearly $400
billion in profits. Since leftists think profits are little less
than theft and greed, Congress might confiscate these ill-gotten
gains so that they can be returned to their rightful owners. Taking
corporate profits would keep the government running for another
40 days, but that along with confiscating all income above $250,000
would only get us to the end of June. Congress must search elsewhere.
Forbes 400, America has 400 billionaires with a combined net worth
of $1.3 trillion. Congress could confiscate their stocks and bonds,
and force them to sell their businesses, yachts, airplanes, mansions
and jewelry. The problem is that after fleecing the rich of their
income and net worth, and the Fortune 500 corporations of their
profits, it would only get us to mid-August. The fact of the matter
is there are not enough rich people to come anywhere close to satisfying
Congress' voracious spending appetite. They're going to have to
go after the non-rich.
But let's stick
with the rich and ask a few questions. Politicians, news media people
and leftists in general entertain what economists call a zero elasticity
view of the world. That's just fancy economic jargon for a view
that government can impose a tax and people will behave after the
tax just as they behaved before the tax, and the only change is
more government revenue. One example of that vision, at the state
and local levels of government, is the disappointing results of
confiscatory tobacco taxes. Confiscatory tobacco taxes have often
led to less state and local revenue because those taxes encouraged
when government taxes profits, corporations report fewer profits
and greater costs. When individuals face higher income taxes, they
report less income, buy tax shelters and hide their money. It's
not just rich people who try to avoid taxes, but all of us
liberals, conservatives and libertarians.
evidence? Federal tax collections have been between 15 and 20 percent
of the nation's Gross Domestic Product every year since 1960. However,
between 1960 and today, the top marginal tax rate has varied between
91 percent and 35 percent. That means whether taxes are high or
low, people make adjustments in their economic behavior so as to
keep the government tax take at 15 to 20 percent of the GDP. Differences
in tax rates have a far greater impact on economic growth than federal
So far as Congress'
ability to prey on the rich, we must keep in mind that rich people
didn't become rich by being stupid.
E. Williams is the John M. Olin distinguished professor of economics
at George Mason University, and a nationally syndicated columnist.
To find out more about Walter E. Williams and read features by other
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