Let me give a couple of examples from personal experience that illustrate the negative effect of taxing the rich: Back in the 1970’s I was in the real estate business and we listed an old family business for sale. This business went back to around 1900. It was priced to sell so I got right on it. I knew this gentleman who was very wealthy. As a matter of fact, he lent me the money to buy my home at 9% interest which we paid on for 25 years. I went to see him and gave him the details of the business just knowing he would jump at the opportunity. He gave me a blank stare as if to say, so what? He had no interest at all. Why I asked? Well he said, because I am in the 70% tax bracket and any additional income I make will be taxed at over 70%. If I made a 20% profit before taxes it would only be 6% or less after taxes which puts the investment in the risky range with negative leverage. He had no interest in making any more income. The business was purchased by someone that had little equity and no knowledge of how to run the business. He got a big loan from a local bank that also did the appraisal and whose trust department was the seller. The loan officer who made the loan did the appraisal. The owner went broke, lost everything, and sued the bank for fraud because they did the appraisal and made the sale. I went to the trial. It was a farce and the bank won. Business and jobs down the tubes not to mention everything the poor guy owned.
Our local airport was once part of a large dairy farm. The city purchased the land for the airport in the 1930’s from the dairy farm leaving as a residual all of the land fronting US Hwy 58 at a PVI intersection on the eastern edge of town. This was all commercial property. During the real estate boom in the 1980/90’s this land was in high demand for commercial development. It was owned by the only living heir of the dairy farm, a lady in her 80’s. She would not sell any land because if she did so she would have a huge tax problem. But, if she held the property until her death her children could inherit it tax free. So she held it until her death. Since then the area has development with hotels, banks, fast foods, shopping centers etc with no telling how many jobs. I am sure her tax bill if she had sold while alive would have been less than a million dollars so just look at how much tax revenue was being forgone by the government holding her hostage with the tax laws. Governments probably make more in taxes every year on these new enterprises than the total tax this lady would have had to pay. The bottom line is, the tax laws screwed the government and the local economy royally.
