Ignorance, Stupidity or Connivance?

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Back then, Congress told us that the luxury tax on boats, aircraft and jewelry would raise $31 million in revenue a year. Instead, the tax destroyed 330 jobs in jewelry manufacturing and 1,470 in the aircraft industry, in addition to the thousands destroyed in the yacht industry. Those job losses cost the government a total of $24.2 million in unemployment benefits and lost income tax revenues. The net effect of the luxury tax was a loss of $7.6 million in fiscal 1991, which means Congress’ projection was off by $38.6 million. The Joint Economic Committee concluded that the value of jobs lost in just the first six months of the luxury tax was $159.6 million.

Congress repealed the luxury tax in 1993 after realizing it was a job killer and raised little net revenue. Why did congressional dreams of greater revenues turn into a nightmare? Kennedy, Mitchell and their congressional colleagues simply assumed that the rich would act the same after the imposition of the luxury tax as they did before and that the only difference would be more money in the government’s coffers. Like most politicians then and now, they had what economists call a zero-elasticity vision of the world, a fancy way of saying they believed that people do not respond to price changes. People always respond to price changes. The only debatable issue is how much and over what period.

Here’s my question for you: Is it likely that in the two decades since 1990, American human nature has changed? If Congress imposes a luxury tax on corporate jets and other luxury items, will Americans behave differently this time? In other words, can we expect federal tax revenues to rise and unemployment to fall as a result of Obama’s tax proposal?

I don’t believe that Obama is dumb enough to believe that a tax on corporate jets would be a revenue generator. His agenda is to inspire envy and resentment against wealthy Americans as a tool in pursuit of his higher-tax agenda.

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  • http://www.dikaesha.pbwiki.com Foolster41

    It’s Atlas Shrugs coming true! Looter mentality of “social responsibility” (Stealing from the rich to give to the poor, while those opposing economic suicide are called “anti-social”), and policies that destroy industries!

    Of course, this began quite a while ago with the practical nationalization of the auto and health industries (bail outs, big government “helping” run things, socialized medicine rather than free trade).

    I pray we vote out of power these socialist looters before the damage is too great. Otherwise we might see the realization of Wyatt’s torch.

  • alexander

    as usual: Leftist imbeciles hit us with their UNFORSEEN CONSEQUENCES.
    Liberalism IS a mental disorder

  • StephenD

    Mr. Williams, this is a great article! I wish the MSM would take it and run with it. I think you're closer to the truth on Obama knowing this won't work but instead he is counting on envy to feed the class warfare. Listen, the closest I'll get to a yacht or a corporate jet is to see them in a movie but still I have to see that people worked to make them, sell parts for them, maintain them and since they will be bought anyway it may as well be made by Americans!

  • mrbean

    When Obama uses the tax the rich guys in corporate jets mantra it is leftist code words for them "rich white honky crackas" have to pay their fair share (which would be 100% if Chairman Obama had his way)

  • Lisa Richards

    You are right Mr. Williams. I have already stopped spending, as has everyone I know. We Americans did over 20 years-ago despite what Kenendy assumed and we are not spending now. We are holding on to what we have and saving and waiting for 2012