Yes, but you forgot the last step. Eventually economic prosperity will grow and that 30K tax revenue will grow to $60K, (Laffer curve) 83% of which ($49.8K) will come from the rich guy.
I don’t think that disproves my point. Ceteris paribus, the change in the tax code makes it more progressive while simultaneously reducing the total amount of wealth from the richer taxpayer that is redistributed into government hands. A more progressive tax code does not necessarily increase wealth distribution as such. A more progressive tax code *coupled with a general increase in the wealth of taxpayers* will result in more money in government hands than a less progressive tax code would have. But that’s really just another way of saying that if more of the tax burden falls on the rich, and you have more rich people, they’ll pay more tax. Well, duh.
I’ll grant that tax cut stimulates economic growth, but progressive tax cuts are just as bad is progressive tax increases, in their progressivity. And as I called out in the linked thread, an increase in revenue only feeds statist tendencies in our govt. The true test would be what do Republican’s advocate when we crest the Laffer curve and tax cuts = revenue decreases.
I agree with this as a policy point. I’d prefer to see the tax code get flatter, not more progressive, and I’d prefer to see the total amount of wealth in government hands decrease, not increase. But I also find value in being able to keep more of my own hard-earned money, right here, right now – and the Bush tax cuts did do that for me. I would much prefer a progressive tax cut to a progressive tax increase for that reason alone.
The fundamental argument for tax cuts is moral, not economic. I earned my money through my own thought and effort. Government has no moral right to take it from me by force, and the lower the tax rate the less of my earned wealth they are taking. The Laffer curve argument, as you note, carries with it an implicit assumption that the proper goal of tax policy is to maximize government revenue – and could thus be deployed as an argument in support of a tax *increase* depending on where we are on the curve. In reality, the proper goal of tax policy is to minimize the amount of wealth the government forcibly takes from the hands of private citizens – all the way to $0 if possible.
Based on the fact that the Laffer function exists, Democrats who advocate tax increases to fund statist tendencies are idiots.
In spite of their rhetoric, Democratic tax policy is not intended to soak the rich. I’ve found that it makes much more sense if you assume that the goal of the Democrats is to prevent the upper middle class from *becoming* rich. (Bear in mind that there are actually more extremely wealthy supporters of the Democratic party than of the Republican.) If you are already rich (say with $10 million in assets or so), you can invest in tax-free municipal bonds and live a very comfortable lifestyle without having to pay income taxes at all. You don’t care about the income tax rate because most of your income isn’t subject to it. On the other hand, if you have a high salary but haven’t accumulated enough assets to be able to live off the investment income stream alone, the tax code hits you extremely hard. People and couples with adjusted gross income in the $150,000 to $300,000 range get hit extremely hard by the phase-out of deductions and by the alternative minimum tax.
If you really wanted a tax policy that would soak the *rich*, you would create a tax on the value of assets, say 5% annually on total assets owned in excess of $100 million. But no Democrat would go anywhere near a tax proposal like that because soaking the rich isn’t their real goal. (Leave that for the real hard-left whack jobs in the Green party.)
The poor guy gets $300 back, but this is out of proportion to what he was paying in the first place. The net effect is the rich guy shoulders more of the burden.
There’s sort of an ambiguity in this discussion centering around the term ‘more’. A progressive tax cut causes the richer taxpayer to pay a higher proportion of the total tax burden, but it will be a smaller absolute amount as a result of the rate cut. So there is a sense in which the rich pay more (they pay a higher percentage of the total tax burden) and a sense in which they, along with everyone else, pay less (everybody’s total tax bill is smaller). You have to be careful to keep track of which aspect is under discussion or things will get very confusing very quickly.
