Democrats continue to demand an increase in taxes on the rich as critical to reducing the deficit.  This sound great, it ignores economic principles.  All tax payers are not created equal.  The average Joe reports his income, pays his tax and moves on.  He has no real alternative.  He must use nearly all of his income for living purposes.  He has little real disposable income.  But people with higher incomes are very different.  A much higher percentage of their income is disposable.  Since they don’t  need most of their real income for day to day living expenses, it is much easier for them to hide it.

The classic example is our hero, John Kerry.  How many of you remember his new $7 million sail boat.  Many of us are familiar with how he tried to dodge Massachusetts sales tax by berthing the boat in Rhode Island:

http://www.masslive.com/news/index.ssf/2010/07/sen_john_kerry_docks_new_boat.html

But while the main stream media picked up on the sales tax hypocrisy, they missed the main point.  Although the article refers to this as John Kerry’s yacht, it doesn’t actually belong to John Kerry.  It also doesn’t belong to his wife, Theresa Heinz.  The boat is owned by Great Point, LLC.  The following article shows how the ownership of this boat was structured to avoid paying tax:

 http://www.futureofcapitalism.com/2010/07/explaining-kerrys-yacht-tax-dodge

This is why people like John Kerry, who are filthy rich, are so willing to accept raising taxes on the rich.  They know they won’t pay them.  It is also why raising tax rates on the rich does not result in higher tax revenues.  Revenues will go up for a short period of time, but only long enough for the really rich to find a way to avoid them.  The more money you have, the easier it is to avoid taxes.  Closing tax loopholes is a joke, because rich people can always afford to hire an expert to find a replacement.  

When George W. Bush lowered tax rates on the wealthiest Americans, they actually ended up paying a higher percentage of total tax.  It’s just plain economic sense.  Just this week an MSNBC Reporter sneered at a Republican congressman and asked him if he had a degree in economics.  It turns out, to her horror, that he did.  Perhaps someone should ask Obama this question.  Personally I don’t think you have to have a degree in economics to understand common sense principles.  But, to provide full disclosure, I do have a degree in Economics and yes I did graduate with honors.

TDM 

http://www.examiner.com/starbucks-in-national/did-starbucks-raise-or-lower-prices-bothJoh