Sigh.
Suppose we impose a 100% tax on all income over $200,000 a year. What happens?
1. The revenues collected don't come close to covering the profligacy of our spending on ourselves through federal, state, and local government. And it won't come close...
2. EVEN IF none of those earning over $200,000/year said "fuck you!" and tool their money and their productive capacity and their human ingenuity offshore and out of our reach for next year and beyond.
3. EVEN IF none of those earning over $200,000/year said "fuck you!" and stopped doing anything productive once they made their $200,000 since they couldn't keep it anyway.
4. EVEN IF none of those earning over $200,000/year said "fuck you" and spent 20 percent of their pre $200,000 income hiring tax lawyers and trying to evade classification of their official income as greater than $200,000.
5. EVEN IF none of those earning less than $200,000 stopped taking risks and innovating since their gains from risk-taking and innovation are going to be maxed at a paltry $200,000 grand a year.
NO INCREASE IN TAXES WILL EVER -- EVER -- KEEP US FROM GETTING SCREWED. Because the bigger they get, the more taxes screw with our incentives to produce and innovate.
An economy grows as its productivity increases. Productivity grows only with innovation. And innovation -- the putting of new knowledge to work in productive ways -- only takes place if innovators are willing to put in a crapload of work and take a crapload of risk.
And when innovation works, what happens to the distribution of income. It gets more and more skewed. Successful innovators end up earning a lot more. If we want to stay living in the richest economy in the history of the world, we have to be willing to LET people accumulate and keep incomes that are farther and farther away from us.
Even if some of those rich bastards do turn into Paris Hiltons.
Because that's the ONLY way to keep us from getting screwed.
Government can't increase our productivity. It can provide us with the occasional public goods -- national parks, national defense against hordes of rampaging Canadians. But apart, perhaps, from the occasional grant of temporary monopoly power to innovators (e.g. through patents), it simply isn't set up to provide incentives for innovation.
What the government does is manage an incredibly complicated system of transfer payments. Use a hundred thousand pages a year of laws and regulations to shift pieces of whatever pie has been created outside by real people and real innovators.
This is why "political solution" is an oxymoron, and why politicians on both sides are useless. ALL they can do is fight over ways of splitting up pies between this or that constituency as they take their own cut. They don't do anything that increases the pie.
They can't. When it comes to increasing innovation and productivity, politicians are as useless as extra nipples on a man.
And do not be conformed to this world, but be transformed by the renewing of your mind, that you may prove what is that good and acceptable and perfect will of God.
Romans 12:2 (NKJV)