Funny thing about taxing the rich: when all is said and done, everybody except the rich ends up paying. An example from 2009:
A new “super-tax” on bank bonuses will be introduced immediately, the chancellor [of the Exchequer] announced, in an attempt to stop banks using profits to pay large bonuses to bankers.
Alistair Darling attempted to appease critics who feared the tax on bonuses would prompt defections from the City by insisting the 50% tax rate on bonuses of more than £25,000 would be paid by the banks rather than employees.
The ostensible targets of the UK bonus supertax were high-earning bank employees, and since they bore the statutory incidence of the supertax, they did indeed pay more taxes. But since they were able to obtain increases that left their after-tax incomes untouched, they weren’t left out of pocket by the measure: the economic incidence was passed on to shareholders, other employees and bank customers in short, everyone except the original target. If the goal of the bonus supertax was to reduce the gap between high earners and the rest of the income distribution, it’s hard to see how it could be considered a success.
This lesson has been learned by well, evidently no one so far:
Ontario Premier Dalton McGuinty is making a major concession in a bid to save his minority Liberal government by agreeing to impose a new tax on the rich.
Those who earn more than $500,000 a year would be asked to pay a 2 per cent surtax, Mr. McGuinty announced at a news conference on Monday. The new tax would generate revenues of $470 million next year, all of which, he said, would be used to help reduce the deficit.
In McGuinty’s defense, at least he’s promising to reduce the provincial deficit. You won’t hear that kind of talk on this side of the 49th.
(Suggested by Blunt Object.)