Raising taxes on the rich lowers the government's revenues

After Maryland raised its tax rates on people making a million dollars a year, there were fewer such people living in Maryland -- and less tax revenue was collected from them.

In 2009, many people specializing in high finance in Britain relocated to Switzerland after the British government announced plans to take 51 percent of high incomes in taxes.

Conversely, reductions in tax rates can lead to more tax revenue being collected. After the capital gains tax rate was cut in the United States in 1997, the government collected nearly twice as much revenue from capital gains taxes in the next four years as in the previous four years. Similar things have happened in India and in Iceland.

There is no automatic correlation between the direction in which tax rates move and the direction in which tax revenues move. Nor is this a new discovery.

Back in the 1920s, Secretary of the Treasury Andrew Mellon pointed out that people with high incomes were simply not paying the high tax rates that existed on paper, because they were putting their money into tax shelters.

After the tax rates were cut, as Mellon advocated, investments flowed back into the private economy, producing higher output, rising incomes, more tax revenue and more jobs. The annual unemployment rate in the next four years never exceeded 4.2 percent, and in one year was as low as 1.8 percent.

Despite political demagoguery about "tax cuts for the rich," in human terms the rich have less at stake than working people. Precisely because the rich have so many ways of avoiding taxes, a high tax rate is likely to do them far less harm than it does to the economy, on which millions of people depend for jobs.

Think about it this way; letting wealthy people keep more of their money is akin to a reverse, and GOOD pyramid scheme. Their cash spreads to other people who spread it to other people, ad infinitum, but...that means allowing John Q. Public to decide how the country's finances are run, and not some politician who is just dying to build that next bridge to nowhere. And yessiree, the people to whom the money flows pay MORE taxes in the long run so the government STILL makes out like a bandit, but to the liberals, you see, it is the principle of the thing. THEY KNOW BETTER how to spend your money.