This piece in today’s Wall Street Journal is a reminder that tax rates matter when it comes to investment capital. With capital becoming increasingly mobile, politicians need to consider the long-run consequences of their high-tax schemes. A low tax on a lot of business activity generates more money for them to play with than does a high tax on a low level of activity.
There are undoubtedly a few Democrats who understand that, but most of their base is composed to redistributionists who can’t think long-term. With the Republicans, the problem seems to be the reverse — much of the base favors low taxes but the politicians are too addicted to spending to pay attention.
