Tax the Rich Until they Are Gone : Good For Economy?

One thing we all can rely on is that the left, progressive liberal Democrats, will always use class warfare to gain ground in an election. They will other divisive tactics as well but it seems this one always seems to resonate with a large proportion of the population.


The scary part here is this group of voters that believes they have been left behind in the struggle for economic success is growing larger every year. One has to believe this is the plan for the progressives - divide the country into the haves and the have-nots all the while designing ways to increase the have-nots to enlarge the voter base.


The problem that results is at some point there won't be enough haves to support the have-nots. What happens then?

The Fortunate 400
Source: William McBride, "The Fortunate 400," Tax Foundation, June 29, 2012.

Since 1992, the IRS has tracked the top 400 earners in terms of adjusted gross income -- the so called Fortunate 400. Data regarding their adjustable gross income has indicated that both the members of this group and its primary sources of income have changed dramatically over time, says William McBride, an economist at the Tax Foundation.

That there is significant turnover among the Fortunate 400 speaks to the fact that the receipt of enormous amounts of wealth is a feat that is difficult to repeat. Many who make large sums in one year fail to do so again, and only a few manage to do so with regularity.

•Of all the filers who have made the list since 1992, 73 percent were on the list just once.
•Virtually no one has remained on the list for all years (the most recent data is based on 2009 returns); in last year's report, just 4 people remained on the list for 17 years.
•This suggests that most top earners do not have a portfolio of big investments that can be cashed in year after year, but rather one big asset, such as a family farm or business or stock, the sale of which triggers a capital gain.

The fleeting nature of this wealth is partially due to its source. While wage and salary income is mostly stable, income from capital gains and several other sources is highly volatile, often exaggerating gains or losses in the economy as a whole.

•In the early 1990s, capital gains remained low at about $12 billion (in aggregate), but then climbed to $62 billion in 2000 at the peak of the stock market.
•They then dropped in half to $31 billion in 2002, peaked again at $96 billion in 2007, and collapsed again to $37 billion in 2009.
•In every year since 1994, all 400 top earners reported capital gains.

One constant over the entire studies time period, however, has been the exceptionally large amount of taxes paid by this group of earners.

•The Fortunate 400 paid more in income taxes than they received in wages and salaries in every year studied.
•During that time, in which marginal income tax rates and capital gains taxation rates have decreased, tax revenue from the Fortunate 400 has doubled (from $8 billion to $16 billion).