Taxes: A Historical Perspective: It turns out that taxes kill jobs and cause a loss on revenue? Who would have thunk it?
With taxes on tanning salons and medical devises in the ObamaCare law, and the states proposing taxes on all sorts of services and products, I think it might be a good time to take a look at just how successful other taxes have been. In 1990, a luxury tax was passed to go after the "rich people" by taxing things that they buy, luxury yachts, private aircraft, specialty cars, and the like. They were dead set on making these evil rich people pay more. The results? Predictably, the results were completely forgotten by the left.
Note that all of these articles are take from different times during the existence of this tax, which was later repealed, but the damage was already done.
According to a survey of the largest boat dealers in Connecticut, conducted by the Marine Retailers Association of America (MRAA), sales of boats costing $ 100,000 or more have fallen 93 percent, from $ 7.879 million in 1990 to $ 545,000 for the same period this year. Nationwide, more than 19,000 people have been put out of work at boat making plants.
The 1990 budget deal also slapped a hefty luxury tax on boats… to draw more money from wealthy yacht owners. What actually happened? People bought fewer boats. So who really paid the price? The many nonwealthy boat builders who were put out of work by the tax… The [Washington] Post article reported estimates that 25,000 to 30,000 jobs were lost. These effects were so obvious that even the tax raisers in Congress now plan to repeal the yacht tax.
According to a study done for the Joint Economic Committee, the tax destroyed 330 jobs in jewelry manufacturing, 1,470 in the aircraft industry and 7,600 in the boating industry. The job losses cost the government a total of $ 24.2 million in unemployment benefits and lost income tax revenues. So the net effect of the taxes was a loss of $ 7.6 million in fiscal 1991, which means the government projection was off by $ 38.6 million.
So, just from this small sample, we see that the tax did significant damage to several industries. And once a business closes, it isn't likely to return. The job losses become permanent. Also, the government made no money on the tax, instead, they lost money on it.
This has continued to happen in other circumstances. NY's cigarette taxes created a great new business opportunity for the mafia. Maryland's "millionaire tax" caused millionaires to move away. In each situation, the government in question ended up either not making as much money as projected, or lost money. When you tax an activity, it either decreases, goes away, or goes underground. It's happened all through history, and in the end, it's the wage earner that takes the hit. He or she is the one who pays higher costs, or no longer has a job, but the elites can sit in the unreality bubble, secure in their belief that they've stuck it to the rich.
Here is some more info on new, (and completely insane) taxes from Dr. Bill Smith at ARRA News Service.
It is definitely odd to be quoting from the liberal NY Times. The below article reveals that the States are in trouble and looking for other sources of more money. Much of the States' problems are caused by the pending impact of Federal programs like national healthcare. More after the article.
The New York Times: [T]o generate more revenue, states are considering new taxes on virtually everything: garbage pickup, dating services, bowling night, haircuts, even clowns. . . . Opponents of imposing taxes on services like funerals, legal advice, helicopter rides and dry cleaning argue that this push comes as businesses are barely clinging to life and can ill afford to see customers further put off by new taxes. . . .
"This is born out of necessity," said Gov. Edward G. Rendell of Pennsylvania, a Democrat. His proposed budget, being debated in Harrisburg, would tax services including accounting, advertising and data processing. . . .Most states tax at least some services, particularly items like utilities.
Nevertheless, few states have gone where political leaders in Michigan and Pennsylvania are now suggesting: adding scores of services to their states' sales tax requirement and lowering the tax rate under a widened tax base. But from coast to coast, desperate governments are looking to tap into new revenue streams.
In Nebraska, a lawmaker has introduced a bill to tax armored car services, farm equipment repairs, shoe shines, taxidermy, reflexology and scooter repairs. In Kentucky,Jim Wayne, a state representative, and some fellow Democrats are proposing taxing high-end services: golf greens fees, limousine and hot-air-balloon rides, and private landscaping.
In June, voters in Maine will decide whether to accept a state overhaul of its tax system that would newly tax services like tailor alterations, blimp rides, and entertainment provided by clowns, comedians and jugglers. . .; [Full Article]
My first reaction to this, aside from knowing that these taxes will only punish wage earners and small entrepreneurs, is that they are going to tax CLOWNS? How much money are they expecting to get from that?
So, how many of these businesses will shed jobs, cut benefits, hire less people, or simply close due to these new taxes? It remains to be seen, but rest assured, we'll be talking about it.
Tens of thousands of jobs lost, paying out more in unemployment than was collected in taxes- this is our future if the regressives tax as they please. Of course, the results will be blamed on someone else. And yes, they actually suggested taxing CLOWNS!