It seems the Democrats are hell-bent on losing to Trump in 2020. Americans do not like taxes. They tolerate them because they’ve been conditioned to accept the fiction that society can’t function without top down central planning. But when given a choice of more or fewer, they’ll opt for fewer. Consider the candidacies of Michael Dukakis and George H. W. Bush. The former promised new taxes while the latter broke his promise to avoid them; they both were beaten badly. Perhaps an oversimplification, but the point is, don’t lead with “more dental work for all”. The near success of Bernie Sander’s prior candidacy has nearly every Democrat tripping over themselves to ironically capitalize on their perception of his voter appeal: envy. The message from the Democrats now is one of simple, base envy. Those people have stuff, we want it, let’s take it. The trite slogan of “making America work for everyone” can be parsed into “making” = “armed thugs will force you”, “America work” = “productive Americans to hand over your property”, “for everyone” = “to the unwilling, unskilled, and envious.”
The irony is they may succeed as they take a page from Trump’s political playbook. Trump used fear and vilification of “the other,” the illegal immigrant, to bolster support for his cause. The Democrats too vilify “the other,” except theirs is “the wealthy” or “the capitalists.” They make indulgent promises that rest on a bedrock of theft. Just raise their taxes to the roof and empty the pockets of the Kulaks, after all it’s our fair share right?
Alexandria Ocasio-Cortez’s plan of a 70% tax rates is built upon a foundation of either downright stupidity or deliberate misrepresentations. Neither are good options. Tax rates were at that level and higher in the past but so were allowable deductions! For example, if gross income were $10 then net AGI was only $3 when rates were 70%, but today the rules yield an AGI of $6 but at 35%. Obviously the tax obtained is identical. No matter the tax rate, the government only manages to bring in about 17% of GDP give or take since 1930. I’m sure the current plan is to raise rates and not deductions … but to equate the current goal as being equivalent to past policy is disingenuous – high deductions in the past means nobody paid those high rates.
Elizabeth Warren has an even more ghastly proposal – a direct wealth tax on assets. Settings aside the constitutional issues with such a tax any student of history should see where this is going. When the income tax was first implemented it was but a mere 1% on income over $50k in today’s dollars, and 6% on income over $8 million. We know how that went. Warren’s proposal has equally high thresholds of 2% on assets over $50 million and 3% over $1 billion. Only a fool would believe those rates will not rise and the thresholds fall in short order. But the big reveal for those thinking this would not affect them is the fact that even those not owing the tax will still have a filing burden. Everyone would in perpetuity endure the annual burden of submitting to our overlords a complete accounting of all that one owns in order to prove no tax is owed. Think property tax on steroids.
Those who may be persuaded that they will be better off if “others” are punished should be wary of the collateral damage from these financial grenades. When it comes to taxes, slippery slopes are the rule.