Piketty is popular reading in U.S. university economics courses. His best-selling book, Capital in the Twenty-First Century, advocates a global wealth tax. Piketty also suggests the United States should impose a top personal income tax rate of 80% on incomes above $5M and a tax rate of 50% to 60% on incomes above $200k. What should be done with the taxes collected? Pay for a one-world and socially just, global government of course.
Ideas are ideas whose worth or worthlessness isn't determined in the real world as they are in university classrooms, namely, by how ideological professors feel about particular ideas. No, real worth in the real world is determined by "doing the math." For people like Piketty, that's "faire la calcul."
Well, the folks at the Tax Foundation did the math. Their analysis revealed:
- Taxing income at top rates of 80% and 55% would cause a drop in GDP of 3.5%, a 1.6% decrease in wages, and a 7.4% fall in capital stock. How's that for strengthening the U.S. economy and providing higher-wage job opportunities?
- There would also be 2.1M fewer jobs in the U.S. economy. Just add all of those folks to all of those other folks who are unemployed and have given up on seeking employment because Obamanomics are taking care of the folks.
Piketty's proposal is not clear about whether his tax rates apply to capital gains and dividends. But, if they do:
- GDP would drop 18.1% (that's equivalent to $3T), GDP would erode 42.3%, and wages would be 14.6% lower. How's that for strengthening the U.S. economy and providing higher-wage job opportunities?
- The United States would lose 4.9M jobs and the government would lose $250B in revenue. This presents some real problems in the real world with more unemployed and less "Uncle Sugar" to pass around. But, what the heck? Think of how bad things could have been!
- The poor and middle class would experience a 17% drop in after-tax incomes. As it ends up, "spread the wealth around a bit" really means "spread the pain all over" as the quality of life decreases for all.
How is this possible? As wages fall due to increased taxes, capital for investment is reduced. Believe it or not, workers need capital (such as equipment) to increase productivity and, thus, to be paid higher wages. Moreover, increased taxes cause businesses to grow more slowly and innovate less. In English: Fewer jobs and increased unemployment.
Question: With ideas like these not working to improve France's economy, why ever should the Wizards of Smart want those ideas imported into the United States?
Answer: Les français sont xénophobes et veulent à être remis les Américains à son place. (The French are xenophobes who wish to take America down a peg.)
Let the discussion begin...
To read the Tax Foundation analysis, click on the following link:
"What Would Piketty's 80 Percent Tax Rate Do to the U.S. Economy?"