the Wall Street Journal

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This article, from “To the Point News,” a subscription website with conservative commentary, reviews the French Revolution, but it also makes the important point that increasing taxes and regulation on “the rich” will decrease the incentive and the ability of the “the rich” to earn the money to pay those taxes. (A slightly different version of the column is available, here, for free.)

(See addendum at bottom.)

Of the 80% of Americans who still have jobs, most have experienced very little decline in living standards. But for those who have lost their job and been unable to find a new one, the shock, both to their pocketbook and psyche, has been severe.


In poor societies, there are always a few rich people; and in rich societies, there are always a few poor people. A successful society is characterized by fewer poor each year and more middle class and rich. Revolutions take place when the number of poor rises faster than the number of middle class and rich. The poor, being less educated and having more of a static view of the world, blame their increasing hardship and numbers on the rich.

The real villains are those in the political class who pandered to the voter by promising more in benefits to be paid for by others, whom are demonized as “the evil rich.” But if the rich people are taxed too much, they opt out by moving or no longer being rich, and then the tax revenues fail to keep up with the increases in spending until finally, the debt burden slowly sinks the ship.

This is precisely what is going on in the United States and most European countries at the moment.

As more and more people lose their jobs, the demand for government payments grows, making the situation worse and worse. The U.S. government is spending roughly 40 percent more than it is taking in. President Obama and others are demanding higher taxes on the “rich” – more correctly known as job creators – to pay for more government benefits. The self-delusion of the political class goes on, and the numbers get worse.

Notice that the president, when arguing that his “jobs” bill is going to increase jobs, quotes the same economists who also said his “stimulus” would keep unemployment under 8 percent, rather than referring to those economists who were correct in saying it would fail. The president’s assertion that by increasing the taxes on the rich he will be able to “pay” for all his new spending is fantasy, or worse.

The simple fact is that the amount of explicit and implicit debt that the United States and other governments have incurred cannot and will not be paid back in full. The political class will try to cure the debt mess with inflation, price controls, tax increases and confiscation, but it will only make things worse.

Greece is only the first canary to die. As more and more jobs and homes are destroyed by the debt crisis, the ranks of the revolutionaries will grow until, finally, the new “peasants” realize that the rich are gone and it is the political class who is responsible for the mess.

As Mr. Obama and many liberal Democrats embrace the Wall Street protesters, I wonder if they have not only forgotten (or ever knew) good economics, but also the lessons of history. Maximilien Robespierre, a great orator, most certainly did not intend for himself to be guillotined as he and his colleagues unleashed the Reign of Terror during the French Revolution.

As his Committee of Public Safety replaced the Committee of General Defense and his Committee of General Security (sounds all too much like “Homeland Security” organized the secret police, it is most unlikely that he thought the organizations he headed would end up beheading him.

The Reign of Terror was launched with the King of France, Louis XVI, guillotined in the Place de la Revolution (now the Place de la Concorde) in Paris on January 21, 1793, and reached full fury with the Queen of France, Marie Antoinette, guillotined there 9 months later on October 16. The revolutionary slaughter ended with the “National Razor” falling on Robespierre’s own neck on July 28, 1794.

The French were subsequently slow to follow the American democratic model – the ballot box – which is a much cleaner and more civilized way to get rid of failed leaders.

We can look forward to the day when the current political actors, like Jimmy Carter now, merely dance around us with occasional annoying utterances rather than stealing from our pocketbooks and chipping away at our liberties.

Richard W. Rahn is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.


As evidence in support of the above, here are links to two Wall Street Journal articles, one from 2009 and one from this year:

“Millionaires Go Missing”

Maryland couldn’t balance its budget last year, so the state tried to close the shortfall by fleecing the wealthy. Politicians in Annapolis created a millionaire tax bracket, raising the top marginal income-tax rate to 6.25%. And because cities such as Baltimore and Bethesda also impose income taxes, the state-local tax rate can go as high as 9.45%. Governor Martin O’Malley, a dedicated class warrior, declared that these richest 0.3% of filers were “willing and able to pay their fair share.” The Baltimore Sun predicted the rich would “grin and bear it.”

One year later, nobody’s grinning. One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April.

And: “Review: Millionaires Go Missing”

Speaking of “millionaires and billionaires” (see here), the real tax news is that there are fewer of both these days. This month the IRS released more detailed tax data for 2009, and the nearby table records the decline of the taxpaying rich.

In 2007, 390,000 tax filers reported adjusted gross income of $1 million or more and paid $309 billion in taxes. In 2009, there were only 237,000 such filers, a decline of 39%. Almost four of 10 millionaires vanished in two years, and the total taxes they paid in 2009 declined to $178 billion, a drop of 42%.

Spin on Spin (What Sarah Palin’s supporters are saying about Rick Perry)

I could be writing funny jokes about President Obama missing the bus under which he intends to throw America.

Instead, I got side tracked by a tweet claiming that Governor Perry is not honest.

“A Time for Choosing” is a pro-Sarah Palin blog that published an August 29, 2011 post titled, “Perry Campaign: Everything in “Fed Up!” Was Meaningless BS,”

Needless to say, no Perry staffer said such a thing. Instead, the author takes a mish mash of articles from the Los Angeles Times, the Hill, the Washington Post, and the Wall Street Journal  and builds himself a strawman.

He claims the Governor lies because he repeatedly told us he had no desire to run for President, ignoring the fact that the Governor told us that conversations with his wife in June of this year led him to have a change of heart.

As for the rest of the piece, A Time for Choosing’s author, who claims to have read the Governor’s book, Fed Up!: Our Fight to Save America from Washington, echoes the claims that the Perry campaign is denying the book has any relevance, and that the Governor is “walking back” or has “tempered” his stand  on the strong views expressed in it.

Perry told a Wall Street Journal reporter to read the book when the reporter repeatedly insisted that Perry

 “. . . suggested the program’s creation violated the Constitution. The program was put in place, “at the expense of respect for the Constitution and limited government,” he wrote, comparing the program to a “bad disease” that has continued to spread. Instead of “a retirement system that is no longer set up like an illegal Ponzi scheme,” he wrote, he would prefer a system that “will allow individuals to own and control their own retirement.”

However bad it is for SS to be “at the expense of respect for the Constitution,” nowhere in the book does it say that Social Security violates the Constitution.The reporter suggests that the Governor “suggests.”

The author quotes the Hill referring to the Washington Post’s comments on an email from Perry staffer, Mark Miner:

The 16th Amendment instituting a federal income tax starting at one percent has exploded into onerous, complex and confusing tax rates and rules for American workers over the last century. The need for job creation in the wake of the explosion of federal debt and costly entitlement programs, mean the best course of action in the near future is a simpler, flatter and broader tax system that unleashes production, creates jobs, and creates more taxpayers. We can’t undo more than 70 years of progressive taxation and worsening debt obligations overnight.

Here’s what the book actually proposes:

“Second, we should restrict the unlimited source of revenue that the federal government has used to grow beyond its constitutionally prescribed powers. One option would be to totally scrap the current tax code in favor of a flat tax, and thereby make taxation much simpler, easier to follow, and harder to manipulate. Another option would be to repeal the Sixteenth Amendment to the Constitution (providing the power for the income tax) altogether, and then pursue an alternative model of taxation such as a national sales tax or the Fair Tax. The time has come to stop talking about fixing the broken and burdensome tax code and to take bold action to replace it with one that is not a burden for the taxpayer and that provides only the modest revenue needed to perform the basic constitutional functions of the federal government. America needs a fairer, flatter, and simpler system, one which working families can complete without having to hire a bevy of professionals to assist them.”   Perry, Rick; Newt Gingrich (2010-11-15). Fed Up!: Our Fight to Save America from Washington (pp. 182-183). Little, Brown and Company. Kindle PC Edition. (accessed 8/29/11)

I want to believe that the bloggers’ problem is using interpretations/spins from several reporters, on a book they evidently either didn’t read or didn’t understand to build your premise on. If that is the case, though, why would he a headline that appears to be a quote from a staff member when it’s an obvious, biased interpretation by the blogger?


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