“Buffett Tax” not working out for California

President Obama and his “tax the rich” acolytes on the left would have us believe that the federal government will raise significant revenues if only Congress would raise taxes on the “rich.” Unfortunately for them, real-world economics doesn’t actually work that way. In fact, federal revenues over the span of decades have been approximately 19 percent of GDP.

At the state level, the tendency for the “rich” to avoid higher taxes has been even more dramatic. See California as an example where the top income tax rate is 10.3% and where tax revenues have plummeted in recent years.

See, the problem is (as Jonathan Williams of ALEC pointed out) that the way to grow revenues is to create new taxpayers, not gouge the ones you have. Rather than raising taxes and thus pushing people out of the labor market (either voluntarily or through job loss), Obama should be lowering marginal rates and reducing job-killing regulations to encourage economic growth that will in turn, generate more tax revenue.