This is a quickie, but it obviously deserves more comment...
There is a clear understanding, among many policy makers, that if you want to manipulate societal behavior - regardless of direction - one very common method is to adjust the TAXATION of a particular activity. If you want to encourage an activity, you reduce the associated taxes; if you want to discourage, increase the taxes. Simple.
Case in point: there have been numerous attempts to 'encourage' people to suspend or quit smoking. One primary motivation technique is to RAISE taxes on tobacco products. (Caveat: there are many different approaches currently in play on this issue, but let's focus on taxes.) The idea is that people will 'grow tired' of paying the additional taxes to the point they will subsequently modify their behavior to avoid the taxes by avoiding the product; which is the stated purpose of the policy in the first place. All agreed?
Ok, Let's also consider a group of folks out there I call "wealth generators". These are the folks producing wealth, by providing products and services. The desirability of a specific product/service doesn't matter: there is a financial flow from the consumer to the creator, creating wealth. The economy *depends* on these folks to continuing to create wealth, if for no other purpose than to generate the capital which can be consumed by paying taxes.
Logically, if follows that if one targets these 'wealth generators' with an ever-increasing tax burden, they WILL eventually modify their behavior to avoid the taxes. It seems the most likely behavior modification will be to REDUCE the creation of the wealth they will not be allowed to retain. After all, why work so hard to create something that will be taking away from you?
Thus - I pose the question: If we need these generators to keep doing what they do - and we REALLY do - then why do we seek to 'punish' them for their success? And worse, why do those same manipulators FAIL to consider the ramifications of taxation in predicting future revenues? I am reminded of the 60's humorist 'Brother' Dave Gardener, who suggested we should "tax the poor folks and give them an incentive to become something", which makes as much sense as anything else...
There has been a large amount of posturing recently (all sides) which are predominately concerned with "how much we will 'save' over the next X years". Hogwash. Those calculations assume the wealth creators will blindly continue to do what they've been doing, without changing their behavior at all, and without consideration of the increase in taxation. This is wishful thinking at best.
I submit that Human Nature will take over and the currently popular "Tax The Rich" class-warfare strategy will backfire in a big way. The economy will NOT recover as expected/predicted. At the very least, the recovery (if any) will be substantially blunted. This will result in the all-too-familiar cry, "we tried, but THOSE EVIL RICH have conspired against us: they're not paying 'their fair share'.
Perhaps we need a dose of honesty - something in very limited supply in D.C. - to clearly define precisely What Level of Taxation is Considered "FAIR". But then, IMHO, if they *were* honest about exactly how much the bureaucracy wants to collect and from who, the subsequent Behavior Modification which followed would *really* wreck the economy.
Bread and Circuses.