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How do high taxes on the wealthy impact an economy?

Dinesh D

The wealthy in a society are the people who do two things:

The first is that they provide capital for new investments, new inventions and new products. So if you look, for example, at the computer, the first computers cost a lot of money, likewise the first cell phones. The wealthy at the time bought the computers for $7,000 and the cell phones for $2,500, which subsidized the research that then allowed Apple and other companies to now sell the cell phone for $49.95. So the prices of things come down, from cars to computers to cell phones because the rich are the initial purchasers, and that money then goes towards making this new technology more widely available and cheaper.}

Another function of the wealthy in an economy is that they are the people who hire the rest of us, so that most people who have a job are being employed by a wealthy guy or a wealthy group of guys under the name of a corporation.

The bottom line is that if you penalize the wealthy and have confiscatory taxation on them, you’re going to dry up or diminish both the capital that goes into the creation of newer and cheaper products and their ability to hire more people.

Ultimately, in my mind, the question is not about, for example, looking at Bill Gates who has something like $55 billion, deciding that he only needs $1 billion, and asking why we shouldn’t take the remaining $54 billion away. Rather the real question is if that $54 billion were to be taken away , who would be better to spend it? 535 guys in congress who didn’t do anything to earn that money, or Bill Gates himself? Who is more likely to be careful in spending the money and making sure that if it’s going to used philanthropically that it does a lot of good?

So then, it’s not simply a matter of whether it’s right to take the money, but it’s also a question of who’s money it is and who should have the say in deciding how that money is to benefit society.

Author, Commentator and President of The King's College, Dinesh D'Souza

Peter Schiff

An economy suffers when money is taken from a rich person and sent to the government because this is the very money that the rich would have otherwise used to fund the growth of their own or other people's businesses which in turn creates jobs for a population. The premise behind taxing the rich is that society as a whole will be better off when this money is transferred into the hands of the government but there is absolutely no historical data to suggest that this is true. All of the available evidence shows the opposite to be true - that private individuals and businesses are far more effective at creating businesses and jobs with their own money than government is.

Economist, investment advisor, author and commentator, Peter Schiff

Star Parker

The wealthy don’t simply horde their money, or bury it in the ground, they invest it in such a way that all of society benefits, by producing products and services that people want which then creates jobs which people need. An obvious example of this is Apple Inc.’s Steve Jobs who started with a single idea which lead to more ideas which have now produced directly and indirectly not just money for himself, but countless jobs and technology for the entire world.

Although it may not be presented or perceived as such, taxes on the wealthy act to punish and disincentivize this kind of innovation. And instead of using their money to innovate, they will be forced to use it to avoid paying higher taxes.

It’s the nature of money to grow and the problem is that when people decide to punish this growth through taxation or regulation, then businesses will simply stop production in one place and move it to another, whether it be to another state or country.

Quite apart from this, confiscating a person’s wealth is a violation of his or her right to be responsible for their own money. For he who has much, much is required.

President of the Center for Urban Renewal and Education, Star Parker

Carrie Lukas

Many mistakenly assume that taxing the wealthy hurts only the wealthy, but the effects actually ripple throughout the economy. When the rich have less money to spend and invest, that means fewer customers and less capital for businesses, and fewer jobs for the rest of us. And of course, many of those who are demeaned “rich” through the tax code are actually small businesses. When these small businesses are hit with high taxes, they have to cut other costs (for example, by employing fewer people) or raise prices.

Independent Women's Forum director and Goldwater Institute senior fellow, Carrie Lukas

Steven Malanga

The way in which taxes on the wealthy impact a society depends on how high the taxes are. At some point, if taxes become too high, they become a disincentive for people to do additional work, because the additional value that is earned from that work is diminished. The point at which this happens, however, changes over time. This principle, nevertheless, is not exclusive to the wealthy, it’s actually a basic principle that affects everyone. The only reason that we apply it more often to the wealthy is because in our graduated, or progressive tax system, they’re the ones who are most likely to reach the point where there’s some disincentive.

Contributing editor of City Journal and Manhattan Institute senior fellow, Steven Malanga

Pete Sepp

“High taxes on the wealthy” is a political public relations talking point. In reality taxes that are raised on the “so-called rich” hurt a wide range of small business owners, and stifle job creation. There are numerous myths surrounding the burden of taxes that the wealthy shoulder; one of the most popular destinations on NTU’s website is "Who Pays Income Taxes?" which many people find to be a real eye-opener. But even by other measurements, the wealthy bear a huge amount of the tax load, often to the detriment of our economy.

Vice President of the National Taxpayers Union, Pete Sepp

Ben Shapiro

The wealthy in this country are by and large the job creators. Tax them, and they will cut jobs because it impedes their ability to create. Money only stretches so far so it's not a matter of the wealthy simply wanting to earn more, but a matter of making prudent decisions that don't deplete their capital in a time when they could lose everything in a weak market. If they're not creating jobs now, they'll be cutting jobs if the taxes rise.

Syndicated columnist and author, Ben Shapiro

 

It depends on how one defines "high". During the 1960s, top marginal rates in the United States were 90 percent and the economy grew strongly boneless. (Effective rates were somewhat lower). Conversely, the top rate in the 2000s was 35 percent and the economy grew slowly. When President Clinton and the Democrats raised taxes in 1993, Republicans all predicted the economy would stall. But the tax hike did nothing to dampen the tech boom. There is little or no evidence that high taxes on the wealthy--if high is defined as under 40 percent top rate--do anything to harm entrepreneurship or wealth creation.

Author, commentator and lead Bloomberg View columnist, Jonathan Alter

Steve Deace

Every job I've ever had came from a rich person, so I'm not sure how punitively punishing the very people who provide jobs will create more of them.

Talk radio host and author, Steve Deace

Rabbi Aryeh Spero

If used to penalize the wealthy simply for being wealthy, it shrinks the pool of investment money for projects that will create jobs and sends the message that wealth is unsavory and ill-obtained thus the wealthy are somehow guilty. One can share with others by giving to the charities of his choice. It is not government's role to decide which causes are worthy nor to extract money, in the name of sharing, to programs and projects that bolster left wing causes and statism.

Columnist and commentator, Rabbi Aryeh Spero