The stunningly bad policy of higher taxes

"Obama’s soak-the-rich mentality" By Jeff Jacoby, Boston Globe

"IN APRIL, the British government decided to recoup revenues lost in the current recession by raising the country’s top income tax rate from 40 percent to 50 percent. That decision turned out to be a body blow to England’s Premier League, the professional soccer association that includes such storied teams as Manchester United and Arsenal.

"As Jonathan Last recounts in The Weekly Standard, the hike in the tax rate has led top soccer stars to decline lucrative offers to join or remain with England’s most celebrated teams. Cristiano Ronaldo, Jermaine Pennant, Karim Benzema, and David Villa are among the illustrious players who have spurned the Premier League in order to play in Spain. Why Spain? Because under Spanish tax law, they qualify as “foreign executives,’’ a status that caps their income tax rate at just 24 percent. ...

"Governments delude themselves when they imagine they can easily raise all the money they want by soaking the rich. The rich always have other options. ...

"“You can’t have employment and despise employers,’’ Massachusetts Senator Paul Tsongas used to say. “No goose, no golden eggs.’’

"But that isn’t the prevailing attitude today in Washington, where the Obama administration and congressional Democrats are playing soak-the-rich with a vengeance.
President Obama, who said last year that he would use the presidency to “spread the wealth around,’’ is seeking to raise the top marginal income tax rate...

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The belief that the tax code is skewed to benefit the rich is one that many Americans share. When pollsters ask whether high-income people are paying too much, too little, or their fair share in federal taxes, 60 percent or more of respondents routinely answer: too little.

"But the data tell a different story.

"By any reasonable standard the rich pay far more than their fair share. According to the latest (2007) IRS data, the top 1 percent of US taxpayers earn 22.8 percent of adjusted gross income but pay 40.4 percent of all federal income taxes. By contrast, the bottom 95 percent of taxpayers, who earn 62.5 percent of the income, pay just 39.4 percent of the income tax burden. That bears repeating: The income tax burden of the top 1 percent, who comprise just 1.4 million taxpayers, now exceeds that of the bottom 134 million combined....

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