We all know elections have consequences, and this is a great concrete example of how taxing the rich has consequences. Sure, the new Obama tax affects the 1%, but it also hurts our tax revenue, economy, but also the 99%. Not only will our government lose Pacquia’s $7.9M of income tax, but also all the hotel taxes, sales and income taxes from everyone who would have been associated with the fight. Those 99%’ers, ranging from taxi drivers, hotel and casino staff, airline workers, servers, etc., now will have one less big Vegas event weekend to work and less money in their pocket-books (yes, this is called supply-side economics).
What the left doesn’t understand is with technology and travel, the USA is competing in a worldwide market where people and organizations can more easily choose where to work, live and invest. We need to stop assuming people will want to work, live and invest here just because we’re America. There is only a finite amount of wealth of the 1% Americans we can tap into. And they are more and more looking to work less and invest and move oversees because of higher taxes. The USA is only 5% of the world population, so we will need put in conditions to make doing business in USA desirable for the other 95%.
Just think of America as a store or restaurant, we just can’t assume that we can raise prices (taxes) X% and get a correlating X% in tax revenue. Economics do not work that way, and in fact, many times, when you raise prices, you end up getting less revenue. That’s why McDonald’s doesn’t have a $2 value menu, because they know they will end up bringing in less revenue than if they keep it at $1. If Mickey D’s raises prices too much, it will drive business to other fast-food joints. Just as our government got greedy that 35% tax rate wasn’t enough and now Pacquia has decided to go to Asia, which has less taxes and, non-coincidentally, is seeing much more economic growth than here at home. It’s time to stop this Keynesian notion that we can tax and spend our way to prosperity.