When it comes to resolving issues surrounding income inequality, Democrats want it both ways.
They say they want a fairer and more equal system of wealth distribution, while the face of their party, Rep. Alexandria Ocasio-Cortez, a far-left “democratic socialist,” is calling for a 70 percent marginal tax rate for the top income bracket. Borrowing from Mafia terminology, that’s what was colloquially known in the Prohibition era as a good old-fashioned shakedown. The only difference is that today, in 2019, the rising star of the Democratic Party, widely known as AOC, wants big government to do the pilfering.
Perhaps the youngest member of Congress – who, at 29 years of age, has never built a business or created a single job in the private sector outside of her campaign for office in New York’s 14th Congressional District – can explain to the American people how the government’s sucking 70 percent of a taxpayer’s hard-earned marginal income would be “fair” or “equal.” If the true goal is to achieve income “equality,” there would need to be a more equitable marginal tax cap, one not exceeding 50 percent, as taxpayers’ being forced to pay a disproportionately high tax rate versus what they earn would be definitively unequal – especially given the fact that the wealthy are already contributing the lion’s share of taxes while nearly half the country doesn’t pay any income tax at all.
That said, even if one puts aside the moral or amoral aspects of the 70 percent income tax AOC is thunderously proposing to media outlets en masse, the broader question is: Do these types of exorbitant taxes on the rich even work? One need not travel far back in history to see that a “supertax” imposed on the rich in France in 2012 under former President Francois Hollande’s Socialist regime was a total disaster.
Not only did scores of businesses flee France to avoid its exorbitant taxes – or they swiftly sought tax havens abroad, causing significant capital flight – but also many wealthy French citizens earning over 1 million euros, who were subjected to Hollande’s 75 percent supertax, packed their bags, causing a mass exodus to the U.K., Belgium and other countries whose taxes were less crushing.
Most notably, France’s supertax damaged the country’s overall economy by shrinking its tax base, not widening it.
Forbes reported, “As a result of a reduced labor supply and discouraged investment in France following the 75 percent top marginal income tax rate announced in September 2012, French revenues for 2013 came in at only 16 billion euros, a 14 billion euro shortfall below the French government’s expected 30 billion in tax collections.”
That compelled the French government to scrap its supertax plan altogether in 2015 – something Alexandria Ocasio-Cortez ought to consider before pushing her ill-conceived 70 percent marginal income tax.
History has a funny way of repeating itself.