What if rich people just quit being rich? Almost every time the “sin tax” is raised on cigarettes, the amount of revenue goes down for the taxing body. This is well documented. Why? Because with each new tax, more and more people get fed up with the cost of smoking and just quit or cut back (some go black market.) The amount of quitting and cutting back each time is more than enough to chew up the desired extra revenue from the higher tax.
The well-intentioned politicians want to raise more revenue from those “bad” smokers, but end up raising less because a lot of the “bad” people quit or cut back. Doesn’t it follow that if they make being rich a “sin” and tax it like it’s something bad, that many rich people will just quit being rich or more likely cut back?
Now, you can’t quit being rich cold turkey like smoking, but over time people will get just as fed up as the smokers, and will cut back. Just like smoking, not everyone will quit or cut back, but enough will to make sure the politicians will get less revenue in the long run. And just as higher taxes discourage aspiring smokers, higher taxes will also discourage aspiring rich people, so we will have less rich people in the future to tax.
If enough wealthy people quit or cut back generating wealth it could have a chilling effect on the rest of us. When being wealthy becomes a “sin” like smoking, which certainly appears to be happening, it is a sure recipe for aggressive taxation and enough people will just quit being rich or cut back enough to reduce total revenue. Then, being middle class will be the next “sin” because the revenue has to come from somewhere.
KildeerCopyright © 2013 Paddock Publications, Inc. All rights reserved.