Taxing the rich reduces the relative incentives and encourages more coasters. In school, smarter people should not get a harder test simply by the virtue that they work harder than the slackers that do not study. We should reward people for risking their personal capital to start a business that creates employment.
Rewarding lucky risk takers to take more risks seems like a sensible policy since they have demonstrated that they are good at it, and are more likely to be successful again. Rather than this, the current policy is to punish the successful risk taker with higher taxes so the government can redistribute their wealth and promote mediocrity. Rewarding people who take more risks encourages more risk-taking.
Risk takers are the investors who create jobs and advance the economy. When an entrepreneur makes an investment to start a business with employees, jobs are created. These employees get a salary for the work they perform that they can then use for consumption and to pay their bills. If the business fails the investor may lose everything, but the employees still received their paychecks. Some might say, well, it is different for big companies, so we should tax the corporations.
Any tax on a corporation is simply passed through to the consumer in the form of a higher price for the product or service. Therefore, increasing corporate taxes is more accurately a hidden tax on the people that use the products or services the corporation produces. Excessive taxes on profits from business investments kill any incentive for risk-taking.
My personal opinion is that we need to create more business investment incentives through lower taxes on profits to grow the economy and improve the revenue side of the national income statement, and not simply levy more taxes to pander to the coasters and promote mediocrity. If higher income taxes on corporate income and on profits made from business investments are on the horizon, now may be the best time to start a business.
If taxes are going up, are you ready to make the most of the current tax rates?
