What do these individual instances of hypocrisy say about whether taxes should be increased on the so-called rich?
First, contrary to Buffett's assertion, people absolutely make decisions and change behavior in response to taxes. Compare the economies of Texas and California, two border states with similar immigrant populations.
Texas is a no-income-tax, right-to-work, business-friendly state with substantially less regulation than the Obama-like high-tax (especially on the "the rich" and on business), forced unionism, heavily regulated state of California. Texas also has one of the lowest per-capita spending rates, while California has one of the highest.
The result? According to Investor's Business Daily, state GDP growth in Texas was 3.3% in 2011 and 5.2% in 2010, while California was 2% in 2011 and 1.7% in 2010. Texas has created more than twice as many new jobs as California and has a below-the-national-average jobless rate of 6.8%. California's unemployment rate is 10.2%.
From 2008 to 2011, Texans' median hourly wages rose 8%, while Californians' rose 5.7%. And per-capita personal income during those years rose 1.3% in Texas, while falling almost 1% in California. California's poverty rate is 23.5%, to Texas' 16.5%, and Texas spends less on education, while its students outperform their California counterparts.
Second, because people change behavior in response to taxes, raising them can result in getting less revenue. John Kennedy said, "It is a paradoxical truth that tax rates are too high today and tax revenues are too low — and the soundest way to raise revenues in the long run is to cut rates now."
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