The Patriot Post® · Moore: Soak-the-Rich Tax Schemes Don't Work

Stephen Moore: “Bernie Sanders, the socialist Vermont senator who is drawing throngs of fans everywhere he goes as if he were Justin Bieber, wants tax rates back up to 70 percent or more. This sock-it-to-the-rich line is a crowd pleaser, especially with young voters, and draws thunderous applause. Hillary Clinton is right behind him with her proposed 44 percent tax on capital gains investment income. So, to shrink the gap between rich and poor, why not follow the Clinton-Sanders tax model? Because soak-the-rich tax schemes rarely work. The last time tax rates were 70 percent, back in the 1970s, the government got 19 percent of its revenues from the rich. Now with a lower top rate of about 40 percent the government gets about twice as much — about 36 percent of all income taxes — from the rich. Meanwhile, the U.S. corporate tax of 35 percent is now so much higher than the rates in the rest of the world that a Tax Foundation study has recently concluded that we could raise as much money with a rate of 20 to 25 percent. That’s because more businesses would come here and start paying U.S. taxes instead of Irish, Chinese or Canadian taxes. If we can get the same revenue at a lower tax rate and create more jobs at the same time, why wouldn’t we take that deal? The only answer is that the left gets some kind of weird psychic income from knocking down the rich even if it benefits no one.”