MasterPo says: This blog is about topics and issues that are of importance to me. I am not one of the countless blogging lemmings that are tripping over each other scurrying down the hill and off the cliff of blogging oblivion trying to write the greatest blog on the latest topic de'jour. Your comments are welcome.

March 30, 2009

Soaking "The Rich" - A One-Time Well

It is no secret that many in the country feel "the rich" (defined currently by our savior – I mean President - Barak Hussein Obama as someone making $250,000 or more) should be taxed to the hilt. Never mind that the top 25% of earners pay over 80% of the tax bill in the U.S. already. They should pay more.

To that end there are a number of proposals for sticking it to "the rich". I'm not going to outline them all. That info is easy to find on the web.

But there is one very significant point that all liberals and soak "the rich" types quickly forget:

People's lives are dynamic.

People adjust to the changing environment. "The rich" will adjust to new taxes too.

Despite what you think and hope "the rich" aren't going to just lean forward, grab the ankles and take it with a smile. They will change their behaviors to minimize (if not totally negate) the effects of new and/or higher taxes.

This means they will sell taxable income producing investments like corporate bonds and dividend paying stocks and buy tax-free municipal bonds and non-income growth stocks. They will buy more tax-deferred products like annuities, IRAs and cash value life insurance. And they will likely buy more gold, silver, platinum and other metals and jewelry that are non-taxed (and untraceable for all intents and purposes). Maybe even some collectables too.

So the first year this new soak "the rich" taxes probably will increase tax collection. It takes time for "the rich' to reposition themselves. And in so reposition will incur some taxable transactions (like selling one stock to buy another).

But the second year the tax collection will be far less than predicted. Same for the third year. And by the forth year the actual tax collection will be much lower than what the experts predicted would be by soaking "the rich".

At that point there will only be two choices open to the Messiah:

1 – Try to pass new laws that make investments and vehicles that are currently tax-free or tax-differed no longer such;


2 – Raise taxes even more for another short burst of tax revenue increase.
(or some combination of the two.)

Either way, raising taxes to soak "the rich" is a well that ha a very limited supply. You can only go to that well so many times before it runs dry.

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Anonymous said...

Okay MasterPo, let me ask you a question if I may. The gap that separates the wealthy from the poor has grown significantly for the last twenty years or so. While, I have no doubt that many have done "well" through honest hard work and earned every dime of their money. But then there are the "others". You know who they are, you see them jumping from business to positions in the government that ensures their continued wealth (Exxon, AIG, are just a few to mention). How do we strip them of their "false" income while insuring that people who have worked for their money get to keep it? How do we determine the scumbags from the incredibly gifted and hard working? How do we protect an individuals right to succeed and yet punish the disgustingly immoral?

Regulate, nope you don't want that.... Tax, hell no, you don't want that.... Specifically tax evil doers, ditto, hell no. So what do we do MasterPo? Continue to stick our collective heads in the sand and hope it gets all better?

Before you answer, consider history for a moment and the repercussions of not addressing this adequately.

You may hate the populists, but remember they get nasty when they can't provide for their families adequately.

Just a thought.
Rick Beagle

MasterPo said...


First, thanks for your comments.

Second, your presumptions are all on false foundations.

Just look at what you're saying!

That nameless/faceless "government" should decided who has earned their position in life and who hasn't! And then that same government should 'strip' people of the income and wealth they have obtained in life! My G-d man this is AMERICA not the old USSR!!!

Government does not have the power nor the right (or obligation) to separate hard workers from deadwood (BTW, I've worked with plenty of the ladder in government work!).

Neither is it government's job to decide these people over here should be shielded from the realities of life while punishing those people over there.

Why in Heaven's name would anyone work hard to achieve more if people like you are going to claim they are somehow undeserving of it?! Or I suppose make them somehow prove they really earned their income (fat chance of proving that!).

Third, if you want to talk history let's talk history. How about that great "luxury tax" in the 80's that your arch nemises President Reagan signed into law? The tax was going to stick it to "the rich" when the bought yahts and limos and furs etc.

Guess what? It didn't work!

Well it did in so far as it nearly destoryed the American boating industry!

The tax was repealed a few years later after having only generated pennies in taxes instead of the hundreds of millions expected. Why? "The rich" just didn't buy things with the tax on it!

Of course today in the era of Obama it's immoral to have money.

Thank you.

Anonymous said...


Not to be rude, but you realize that you did not answer my question right? A nice rant on the government and a few swats in my general direction, but you provided nothing even close to substantive.

MasterPo said...

Still waiting for you to show some evidence that President Carter allowing inflation to rise and double-digit interest rates was a good thing for the country that should have been allowed to continue.

The facts speak for themselves. Who is going to spend years and years of long hard work and the risk of devouting the best parts of your life to work just to have the rewards (if any, there is NO guarantee in life!) taxed away?!

I wouldn't. And I bet a week's pay that if you surveyed all "the rich" at last 90% wouldn't either.

ps- Want to rebuttle the Luxury Tax issue?