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Thomas Sowell on tax and dogmatism

There was a time when Democrats and Republicans alike could talk sense about tax rates, in terms of what is best for the economy, without demagoguery about “tax cuts for the rich.” Democratic presidents Woodrow Wilson and John F. Kennedy spoke plainly about the fact that higher tax rates on individuals and businesses did not automatically translate into higher tax revenues for the government. Beyond some point, high tax rates on those with high incomes simply led to those incomes being invested in tax-free bonds, with the revenue from those bonds being completely lost to the government - and the investments lost to the economy.

As President John F. Kennedy put it, “it is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.” This was because investors’ “efforts to avoid tax liabilities” make “certain types of less productive activity more profitable than more valuable undertakings,” and this in turn “inhibits our growth and efficiency.” Both Democratic president Woodrow Wilson and Republican presidents Calvin Coolidge, Ronald Reagan and George W. Bush said virtually the same thing. This disconnect between higher tax rates and higher tax revenues is not peculiar to the United States. Iceland and India both collected more tax revenue after tax rates were cut. In Iceland the corporate tax rate was cut from 45 percent to 18 percent between 1991 and 2001 - and the revenue from corporate taxes tripled at the lower rate.

Related, this

You can only confiscate the wealth that exists at a given moment. You cannot confiscate future wealth - and that future wealth is less likely to be produced when people see that it is going to be confiscated.

A point that seems to have escaped the New Statesman’s class warrior Peter Tatchell. [Added via Anna in the comments.] 

And Heather Mac Donald on the parallel universe of campus ‘diversity’ spending:

The creation of a massive diversity bureaucracy to police the faculty for bias against women and “underrepresented minorities” can be justified only if there is evidence that the faculty need such policing. No one has yet presented a single example of UC San Diego’s faculty discriminating against a highly ranked female or URM candidate because of skin colour or gender. The opposite is of course the case: female and URM PhDs enjoy enormous advantages in the hiring market at UCSD and everywhere else.

As Mac Donald noted previously, UC San Diego has to scrape by with only the most skeletal diversity apparatus, including, 

The Chancellor’s Diversity Office, the associate vice chancellor for faculty equity, the assistant vice chancellor for diversity, the faculty equity advisors, the graduate diversity coordinators, the staff diversity liaison, the undergraduate student diversity liaison, the graduate student diversity liaison, the chief diversity officer, the director of development for diversity initiatives, the Office of Academic Diversity and Equal Opportunity, the Committee on Gender Identity and Sexual Orientation Issues, the Committee on the Status of Women, the Campus Council on Climate, Culture and Inclusion, the Diversity Council, and the directors of the Cross-Cultural Centre, the Lesbian Gay Bisexual Transgender Resource Centre, and the Women’s Centre.

Clearly, that just won’t do. Catering to students’ colossal self-involvement is a full-time job. For at least 18 people. At one university. 

Feel free to add your own links and snippets in the comments. 



You can only confiscate the wealth that exists at a given moment. You cannot confiscate future wealth - and that future wealth is less likely to be produced when people see that it is going to be confiscated.

Lefties are only interested in the confiscation part. See Peter Tatchell in the New Statesman.

What happens next is someone else's problem.



“What happens next is someone else’s problem.”

Yes, I saw the Tatchell piece. Peter Risdon is trying to explain some of the more obvious problems to Mr Tatchell and his admirers.


Actually you should shift taxation away from taxing comparative advantage (Income, Saving, Investment, sales, employment) and onto things the state creates, such and land entitlements, patents and copyrights.


“What happens next is someone else’s problem.”

Peter Tatchell seems to think that arbitrary and retrospective taxation is the way to “rebalance” the economy and allow an overbearing state to go on spending way beyond its means, thus ensuring the problem at hand arises all over again. The practical effects of his ‘solution’ would be ruinous to millions, be morally outrageous, prompt mass emigration and leave the UK an investment wasteland for years, maybe decades to come. But hey, it’s a Big Socialist Gesture To Screw Those Evil Rich People. And for some, that’s what matters. “Finer minds than mine can work out the precise details,” says Mr Tatchell without a flicker of irony.


"Finer minds than mine can work out the precise details."

Fiscal liberalism lives in the ideals and dies in the details. No one would argue that, purely in theory, it would be nice if everyone had the best health care, if no one was poor, and if everyone, no matter how compromised their position in the cosmos, had an open path to a better future. But folly and iniquity appear exactly when you try to work out the precise details for attaining these lofty ideals.

For instance, liberals often complain about income inequality. Just try to pin them down as to what constitutes an unfair distribution of wealth, and not just "It's not right when one man has gold-plated faucets and another can't feed his family from working a full-time job," but actual specifics that could be translated into law. They have no answers because there are none.



It’s almost as if these people don’t quite grasp the concepts of incentives and consequences. As Anna pointed out, there’s apparently no thought given to what happens after the people being targeted have responded to these authoritarian measures. Say, by moving their wealth, leaving the country, laying off staff or simply going bust. What happens then? When no-one wants to invest here, when enterprise and risk have been discouraged, when the middle class has been punished for being middle class, where does the next round of redistribution come from?

Still, Mr Tatchell and his supporters have done us all a favour, albeit unwittingly. I mean, it’s easy to forget that these people would be dangerous if given the power they want.


According to Peter Tatchell my parents are "mega rich". That will be news to them. They'll be able to buy a new car.

David Gillies

The reasons why a wealth tax, in addition to being iniquitous, would be utterly unworkable have been hashed out many times, but just to recap: in order to raise money through liquidation of assets, there has to be a buyer of those assets. Who? If a market is oversupplied with a good then its price will fall until the market clears. This is not even redistribution of wealth via confiscation. It is wealth destruction, pure and simple. At the end of the process the 'wealthy' will have lost some percentage of their property, but that property will not have been reapportioned to the less well-off in any meaningful sense. This is of course the real aim of the scheme: not to make poor people richer but to make rich people poorer. Of course, as with so much Leftist cant in this area, it reeks of question begging. My having gold-plated taps or a collection of Aston Martins is the not the cause of your being poor, either proximate or indirect, and there is no moral onus on me as a result.

As an aside, I notice either Tatchell or the New Statesman subs are too thick to know how to spell Jackson Pollock.


"Catering to students’ colossal self-involvement is a full-time job. For at least 18 people. At one university."

The real cost to the university is likely enormous.

Apart from these 18 people, the bureaucratic load on the rest of the faculty is increased substantially due to the reports and extra procedures they must undergo. Everything costs more as the entire university performs the "diversity shuffle".

carbon based lifeform

in order to raise money through liquidation of assets, there has to be a buyer of those assets. Who? …This is not even redistribution of wealth via confiscation. It is wealth destruction, pure and simple.

If everyone's worse off and they're in power it still counts as a success (for them). #socialistmaths


Who will buy the assets?

Who bought the confiscated assets of the Church in the French Revolution? The peasantry? The nobility? The bourgeousie, or rather, the anti-clerical equivalent of the Bolshevik nomenklatura. That the assets didn't raise what was promised? Who cares? The anti-clerical bourgeosie got the assets at a knock down price. That will be the real object of the neo-Bolsheviks. Or, in the progressive Left's favourite world, the State will own the assets, which then 'lets' the properties, rather like the dachas ringing Moscow, to the new elite.


The Laffer Curve laughs last.


David Gillies and Tolkein,

That question is the one that's always met with a deathly silence by my leftist friends and family, namely: 'What next?'

The Bill Whittle video 'Eat the Rich' tells you.
It should be obligatory viewing. But I expect most leftists would just shrug, a la Tatchell, and say, "At least it would be fairer."

Yes. Everyone having nothing is much much 'fairer'.

the wolf

Yes. Everyone having nothing is much much 'fairer'.

Because they value this concept of 'fairness' much more than they value freedom. They value the concept of comfort more than they value freedom. At the very least, they falsely believe that fairness and comfort can coexist with freedom, but they cannot. Freedom can sometimes result in undesired outcomes, in the short term, but surrendering that freedom so that government can deliver fairness and comfort will always result in a bad outcome in perpetuity, while government fails to deliver either.



“Yes. Everyone having nothing is much, much ‘fairer’.”

A sceptical soul might wonder if it were even about fairness, even fairness so defined. To quote Sowell again, “When politicians say, ‘spread the wealth,’ translate that as ‘concentrate the power,’ because that is the only way they can spread the wealth.”

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