I drove over to the golf course and played a round yesterday, as I do twice a week. I paid my green fee and enjoyed about 4 hours of bright sunshine, conversation and competition with my fellow retirees. I thank God for the days I have left to play golf and try to enjoy my life. But while I was doing that, the news was filled with the complaints of golfer Phil Michelson about the exorbitant taxes he has to pay as a resident of San Diego. http://msn.foxsports.com/golf/story/phil-mickelson-says-tax-talk-in... He makes $47 million a year but pays a rate of about 63% on his taxable income. This has been caused by tax increases at the federal, state and local levels. He has apologized for being insensitive but will probably join thousands of wealthy individuals who will exit the state of California for more tax-friendly environments. A large number of the professional golfers live in the Orlando, Florida area, including Tiger Woods. Florida has no state income tax and Orlando no city tax. I live about 50 miles away.
The past four years has seen the advent of the Taxed Enough Already party, complaining about increasing taxes. Their influence waned a bit in the last election but they are still a powerful force. Our federal government is sadly in debt to the tune of over $16 trillion and many states are underwater despite balanced budget amendments. The solution is either to cut back on spending or to raise revenues. But raising taxes has its drawbacks and doesn't always raise revenues.
I would imagine that most of the nation's income earners making over $400,000 a year are looking at ways to offset the 4.5% tax hike they will have starting this year. You can rest assured that CPAs and lawyers will find a way. Companies have found ways to pay zero taxes with all kinds of loopholes. Other businesses re-locate off-shore.
Tocqueville, the Frenchman who assessed the American democratic system, observed that a simple vote system of making decisions could end up being a “tyranny by the majority.” It's easy to say, “Let's tax the rich” but many countries that tried this (Sweden is an example) had the rich all move away. Right now the wealthy French are scurrying to get out of the country as the legislature has passed a 75% tax rate. I understand that former French President Sarkozy is one of them.
I pay my taxes every year and never question the total my H&R Block software says I owe. I'm not going anywhere although I did take advantage of the lower local taxes in Florida from my former Ohio home. But I would like to see the government look to cut back on expenses from time to time and not always be raising taxes. I wonder if this a productive way to increase revenues?