Archive for March 18th, 2009

The Problem With “Taxing The Rich”

Wednesday, March 18th, 2009

Those who favor the current administration’s plan to generate billions and billions of dollars to fund their new entitlement programs often cite Scandinavia as a model of “spreading the wealth.” I’m married to a Dane and have traveled there, but would never call myself an authority. My wife Gina, however, has some very strong – and extremely unfavorable – opinions about what our government now proposes. Let me tell you why.

Indeed, in the 1960′s Denmark and Sweden enacted Tax The Rich legislation similar to what is now being proposed here. But what has occurred in those countries in the decades since provides a very good reason to not follow in their footsteps.

Why? Because 3 things happened there that will inevitably occur here, should we do so.

1. The rich took their money elsewhere. Rather than pay 90% and more of their income to the state in taxes, the rich either moved their families to less-taxed (or even un-taxed) havens, or they created corporations in those locales that sheltered their assets.

2. The middle class then had to take up the slack. Government programs, once created, rarely ever go away. So the burden in funding cradle-to-grave welfare and medical programs fell on those who were left behind. A registered nurse in Denmark began paying over 40% of her salary in income tax. A small business owner entered the 60% bracket. In time, even these monies fell short of feeding the Welfare Machine, so taxes were raised on every conceivable commodity (gasoline, especially.) When that wasn’t enough, Sales and Value Added Taxes went through the roof.

3. The best and brightest moved away, and the “takers” moved in. Immigrants (many from Turkey and the Middle East) came to Scandinavia on work visas, had babies, and thus qualified for all benefits of the nanny state. But they also refused to assimilate into the Scandinavian cultures. They were willing to take the Swedish and Danish kroners, but would not embrace the values of their hosts.

History repeats itself when we fail to heed its lessons. If we follow the Scandinavian model, your children and theirs will never know the opportunities and blessings you have always taken for granted.

(Of course, you could always move with them to Monte Carlo or the Cayman Islands. If “Spread The Wealth” becomes our national policy, they will be two of the places where our wealthy go.)