New York Rep. Alexandria Ocasio-Cortez famously said, "I do think a system that allows billionaires to exist when there are parts of Alabama where people are still getting ringworm because they don't have access to public health is wrong,"
But in a counterintuitive article at Reason, Steven Greenhut explains the dirty little secret of the left: they NEED rich people.
Elected officials, you see, will always promise more free stuff, as Greenhut observes. Who will pay for this free stuff? Why, the rich of course, through their tax dollars.
We actually are discussing whether the government should allow the existence of billionaires.
Here is an economic conundrum. The progressive experiment depends on wealthy people's continued economic success.
California, which smugly touts itself as the national resistance to the Trump administration, is particularly dependent on tax revenues from billionaires and capital gains taxes.
Earth to Ocasio-Cortez and others who share her views: Those universal healthcare proposals that California Democrats are cooking up could not move forward if not for the large share of wealthy people existing in the Golden State.
A CNBC News report from late December focused on how that month's stock-market drops were "very bad news" for California's state budget. The market has largely recovered, but the article noted a fact we should all keep in mind: "(T)he state's top 1 percent of personal income tax earners—roughly 164,000 tax returns—generate about half of the personal income taxes in California." That sounds like they are paying well beyond their "fair share."
A famous quote attributed to the late Margaret Thatcher complains that the problem with socialism is that "eventually you run out of other people's money."
But what if you run out of people with money (to keep government programs running)? Well, as Greenhut reports, California is worried about just that:
No wonder the Franchise Tax Board zealously polices whether high-income Californians who claim to have moved out of state actually have moved their permanent residences elsewhere. No wonder state officials noticed when 138 residents fled after voters approved Proposition 30 tax increases in 2012. That is a small number in a state with nearly 40 million people, but it matters if they are particularly wealthy. Last year, even Democratic legislators expressed concern after the federal tax bill reduced deductions for wealthy Californians.
This progressive approach to income taxes is reminiscent of their approach to tobacco taxation. They want fewer billionaires to exist and want to level the playing field by approving punitive, confiscatory tax rates. Every time they increase these income-tax rates, however, the state becomes more dependent on the revenue from the wealthiest people. Likewise, lawmakers pass more tobacco taxes to discourage smoking, but instead the states have become addicted to tens of billions of dollars in revenue from their sales. A CBS report from 2012 found that only 3 percent of the money from taxes and settlements were funding anti-tobacco programs.
Here are some more dismal truths. Government officials want as much revenue as possible so it can spend it with wild abandon. There will never be enough to satisfy them. In California, record-setting revenue has not stopped the calls for new taxes—on commercial properties, for instance—to fund ever-more costly programs.
Government is like rust. It never sleeps. Thinking of Ocasio-Cortez's statement, maybe it is more like ringworm: it keeps spreading unless one takes definitive steps to stop it. Returning to the old days of super-high tax rates is a fool's errand. As the Cato Institute's Chris Edwards wrote, "globalization has dramatically changed the economy over recent decades," leading to movable tax bases that can escape the clutches of the big spenders.
An interesting article by demographer Joel Kotkin reports that two states are gaining migrants from the high tax states–Texas and Florida, where the sun shines bright and taxes are low. States with low regulations and employment opportunities(so it is not just the rich who are adopting new state loyalties) are also population gainers.