Adam Lerrick, writing for the American Enterprise Institute, writes that we only need to look to other nations to see what’s to come for the United States, now that we have a President-Elect who promises “fairness” via punitive tax policy.
From Lerrick’s piece, “Obama and the Tax Tipping Point”: (emphasis is mine)
Calculating how far top earners can be pushed before they stop–or cut back on–producing is difficult. But the incentives are easy to see. Voters who benefit from government programs will push for higher tax rates on higher earners–at least until those who power the economy and create jobs and wealth stop working, stop investing, or move out of the country.
Other nations have tried the ideology of fairness in the place of incentives and found that reward without work is a recipe for decline. In the late 1970s and throughout the 1980s, Margaret Thatcher took on the unions and slashed taxes to restore growth and jobs in the United Kingdom. A few years ago, in Germany, Gerhard Schröder defied his party’s dogma and loosened labor’s grip on the economy to end stagnation. More recently, in France, Nicolas Sarkozy was swept to power on a platform of restoring flexibility to the economy.
The sequence is always the same: high-tax, big-spending policies force the economy to lose momentum. Then growth in government spending outstrips revenues, causing fiscal and trade deficits to soar. Public debt, excessive taxation, and unemployment follow. The central bank tries to solve the problem by print-ing money. International competitiveness is lost, the currency depreciates, and the system stagnates. And then a frightened electorate returns conservatives to power.
