Why "Taxing the Rich" Always Ends Up Landing on the Middle Class Instead

darth-cryptic (58)in #news • 6 years ago (edited)

The cost to save Social Security, fund universal healthcare, pay down the national debt, and launch a Green New Deal will be borne by wealthy, middle class, and poor Americans.

Source: Why "Taxing the Rich" Always Ends Up Landing on the Middle Class Instead - Foundation for Economic Education

Often, instead of making hard decisions like cutting spending, people opt to support perceived simple solutions like taxing the rich, who can obviously afford it, to pay for ever increasing budgets. However, the world doesn't work that way. This assumes that spending is inelastic and that isn't true even among the rich.

One particular example is cited in this article of a 10% luxury tax implemented in the 1990s. One of the results of this tax was that the wealthy purchased fewer yachts. Sure, nobody is going to cry because some rich person can't or won't buy a yacht but this has effects on the middle class as well. Boat makers went out of business and jobs were lost because of this tax. And because fewer yachts were purchased, the net increase in tax revenue was negligible at best. There is no way to target a tax only at the wealthy. Such a tax will have negative effects on everyone else as well and the economy as a whole.