Soak the RichCommentary by Pete du Pont
February 24, 1997
Host intro: Pete du Pont of the National Center for Policy Analysis has a plan that will make liberals happy: he wants to make the rich pay more taxes. But before left-wing hearts start to flutter, listen.
I want rich people to pay more taxes.
I want to cut the federal income tax rate.
The two are not mutually exclusive.
In fact, an analysis in the on-line magazine Intellectual Capital shows, for the umpteenth time, that when you lower the tax rates on the wealth, their share of tax payments will increase.
Four years after the Reagan tax cuts of 1981 overall tax collections increased by 16 percent, but people making more than $200,000 were paying 127 percent more in taxes. Those with incomes of more than $500,000 were paying 201 percent more.
Why? Because knowing their income won't be taxed as high, they look for non-sheltered investments, even for riskier investments. They make more money even after paying more money to the government.
The Bush tax increases of 1990 had just the opposite effect: the tax rates went up, revenues from the rich went down.
Why? Because faced with higher taxes, the rich simply changed behavior. They bought muni bonds, converted ordinary income to capital gains, worked less. They shifted a larger tax burden on less affluent tax payers.
It may sound counter-intuitive, but it's a fact, and we can prove it.
So soak the rich! Cut their taxes!
Those are my ideas. And at the NCPA, we know ideas can change the world. I'm Pete du Pont, and I'll see you tomorrow.